Everything You Need to Know About Employee Benefits
5 August 2025
From the best physical, mental, and financial wellbeing employee benefits to how to make them cost-neutral. We cover the ins and outs of employee benefits, why they matter to your people now more than ever, and what the workforce of tomorrow expects.
5 key take aways: Why employee benefits matter to your people and business
1. Employee benefits are essential, not optional: Especially during the cost-of-living crisis, benefits are no longer just nice-to-haves but critical for helping employees manage financial pressures, improve physical and mental wellbeing, and maintain engagement and productivity.
2. Tailor benefits to employee needs and communicate clearly: Many employees don’t know what benefits they have or how to access them. Conduct surveys to understand what your diverse workforce truly values—financial, mental, and physical wellbeing benefits—and communicate these effectively to boost uptake.
3. Financial wellbeing benefits help stretch salaries without increasing payroll costs: Benefits like cashback cards, employee discount platforms, salary-deduct schemes, and refurbished tech options provide practical, cost-effective support that helps employees manage expenses without employers having to raise wages unsustainably.
4. Mental and physical health benefits are critical and linked to productivity: Supporting mental health through Employee Assistance Programmes and providing accessible physical health benefits (like fitness discounts and online GP access) can reduce burnout, presenteeism, absenteeism, and associated costs while improving overall workforce wellbeing.
5. Sustainable, cost-neutral benefits strengthen your Employee Value Proposition (EVP) and retain talent: Using schemes like salary sacrifice and annual leave purchase can fund benefits without extra cost to the business. A strong, well-communicated benefits package helps retain employees, attract new talent, and future-proof the workforce by appealing especially to younger generations like Gen Z.
If you have time to stick around, let's dive a little deeper.
What are employee benefits?
Employee benefits, also known as staff or workplace perks are the non-contractual extras employers offer their workforce in addition to their annual salary. There are many products in the employee benefits space to support financial, mental, and physical wellbeing.
More than a nice-to-have, employee benefits tackle people and business issues. When done right, they support growth ambitions and deliver a tangible return on investment (ROI). Dive into our blog, ‘What Are Fringe Benefits for Employees?’, for more.
Once you've explored everything you need to know about employee benefits here, pop over to our blog, 'What to Ask from an Employee Benefits Platform and Partner', to discover the next steps to take to make the most of your strategy.
During times of prosperity, many employees would think of an employee benefit as a bonus, but today, in the current climate, that last point is coming more into the conversation. Simply put, your employees’ wages aren't stretching as far as they once did.
86% of the population has had to make cuts because of the cost-of-living crisis, with just 12% of Britons saying they have not made any cuts yet nor expect to have to make any (YouGov).
If you apply this statistic to a business with 250 employees, 245 of them are being financially impacted and have to make cuts to afford daily essentials such as heating, food, and fuel, with only five unaffected by the rising cost of living. So, we’ll ask the question again. What do employee benefits mean to your employees?
Why employee benefits are important
Employee benefits are important to your people and business. They can help make lie more affordable, get employees fitter and make medical and mental health support more accessible.
During this blog, we’ll explore numerous ways employee benefits are important for your workforce and your business.
Employee benefits and the cost-of-living crisis
To explore the idea of benefits as a means of helping employees during the cost-of-living crisis, let’s review some more stats from the 2022 report by YouGov.
When asked whether they’d been able to afford key essentials, these were the results:
- 49% have already had to make cuts to their usual spending and expect to have to make further cuts.
- 25% have been able to maintain their usual spending so far but expect to have to make cuts soon.
Almost half of the survey respondents said that not only had they made cuts, but they expect to have to make even more.
Where are these cuts happening?
According to a supporting article by YouGov, Britons are cutting back in the following ways:
- 42% cut on non-essential food items.
- 42% cut on holidays.
- 45% cut on going to the cinema.
- 42% of Britons cancelled their gym memberships.
- 34% have cut back on pursuing a hobby.
All the above cuts negatively impact your workforce's physical and mental health, affecting their engagement, motivation, and productivity levels.
Why employee benefits matter
We haven’t included these statistics for shock value. The cost-of-living crisis is shaping the world of employee benefits. 61% of our employee respondents want their workplace to help them more with the cost-of-living crisis.
We saw in December 2022 that many UK businesses gifted their employees with a cash bonus, labelled as a cost-of-living bonus. Some organisations offered pay raises, but unfortunately, not all were in line with the rate of inflation.The reality is that not all employers can afford to increase their payroll costs. A more sustainable and cost-effective approach to supporting employees’ financial wellbeing is needed; this is where employee benefits come in.
Take a moment to read Professor Amanda Kirby's guest blog, 'Making Employee Benefits Work'.
Who employee benefits help
Employee benefits help improve employee quality of life while helping businesses tackle specific issues, like boosting employee engagement, retention and productivity. During this next section, we’ll explore the impact workplace perks have on employees and employers.
Employee perks: Making employee benefits impactful
When it comes to ensuring your employee benefits package is impactful, there are several factors to consider, such as the diversity of your workforce and the generational divide.
According to our research, 29% of employees often don’t know where to find information about workplace benefits and rewards, and 27% don’t know who to ask about their employee benefits. It’s clear that ineffective and inconsistent communication on employee benefits is a cause of low uptake, but it isn’t the only reason your employees aren’t engaging with their benefits.
43% of our employee respondents in the healthcare industry said their employee benefits don’t align with their needs, and 67% said that their organisation could do more to support employees and offset cost-of-living pressures.
Employees across all sectors are crying out for their employers to provide impactful and relevant employee benefits to support them during the cost-of-living crisis and beyond.
We recommend starting with your people, conducting surveys to discover what employee benefits matter to them and making data-driven decisions. However, there are three core pillars in which employees seek support: their physical, mental, and financial wellbeing.
Employee benefits and financial Wellbeing
The financial wellbeing pillar needs no introduction, given we’ve already painted a clear picture of the impact the rising cost of living is having on the nation. The truth is the majority of your workforce wants and needs financial support.We’ve established that not all companies can afford salary increases or to continually offer cash bonuses, and financial employee benefits are the answer.
Employee benefits and physical wellbeing
Whilst the physical health of your employees is a topic of conversation in isolation since it impacts their energy, focus, productivity, and level of absenteeism, there is still a link back to the cost-of-living crisis.
Helping employees get active
As we highlighted above, 42% of Brits have cancelled their gym membership due to the cost-of-living crisis, and the Mental Health Foundation suggests as a nation, we’re exercising 12% less often than we used to before the cost-of-living crisis.
Our blog, 'Inclusive Lifestyle Benefits: Wellbeing for Employees', explores how to meet a variety of employee needs through an inclusive rang of physical wellbeing benefits.
To make your physical health employee benefits impactful, individuality and inclusivity are essential. Our article explains the importance of providing an employee benefit that has something for everyone, regardless of lifestyle, time, ability, and interests.
Keeping Your Employees Healthy
30% of people admitted that they never see their GP when they feel unwell because taking time off work is too difficult. We don’t always care for ourselves as best as possible, especially when seeking help feels like another job.
This stat isn’t good news for employee health or your business’s bottom line.
At first glance, it may seem like employees not taking time off when they’re ill is a good thing, especially when employers pay £500 on average in absenteeism costs per employee per year. However, the flip side is that working whilst ill, known as presenteeism, is estimated to cost £600 per employee annually.
Let’s not forget that this is about more than a loss of business productivity. Preventative measures and acting on health concerns quickly save lives. As part of embedding employee wellbeing into your company’s core values, your people should be encouraged to prioritise their health.
Our Online GP employee benefit provides your workforce with access to a digital health platform, ensuring they get the proper care at the right time. Whether they need to speak to a healthcare professional or have their prescription delivered to their door, Online GP, provides access to appointments - 24 hours a day, 365 days a year, from anywhere in the world.
The NHS is in a state of crisis, and the UK is facing a shortage of GPs, putting a strain on the service and impacting patients.
NHS data from January 2023 states that 26% of patients had to wait more than one week to get a GP appointment. Compare that with Online GP statistics from 2022, highlighting that 73% of appointments were booked within 16 hours.
We all appreciate our NHS, but we understand it’s under tremendous strain.
Utilising Online GP as an employee benefit doesn’t mean leaving your local NHS surgery. With permission, your digital healthcare notes can be shared with your NHS doctor, and that service can remain as normal.
38% of people say that accessing an Online GP would improve their mental wellbeing because of the speed and ease of booking an appointment. Furthermore, an accessible Online GP service could save UK businesses £1.5 billion in lost time.
Employee benefits and mental wellbeing
The cost-of-living crisis is heightening cases of financial anxiety; your employees are cutting back on the things that bring them joy, and they’re not exercising as much as they used to. Of course, this is not true for all people, but the statistics show it is true for many.
All these elements contribute to additional stress, leading to further mental health problems and the risk of burnout.
Burnout costs UK businesses an estimated £26 billion each year. This figure comprises the costs of absenteeism, reduced productivity due to presenteeism, and the cost of replacing employees who resign due to burnout.
Strong leadership and managerial support are essential, as is the need to break the stigma around discussing mental ill-health.
Only 2% of employees would feel comfortable discussing their mental health with their employer. We can’t be at our best when burdened by stress or mental ill-health, and seeking help is the first step towards positive change.
Our Employee Assistance Programme is the mental wellbeing employee benefit your people need. Provide them with access to BACP-accredited counsellors face-to-face, by phone and email, 24 hours a day, 365 days a year, and you’re well on your way to boosting your employees’ mental health. Our popular and impactful mental health employee benefit also includes an online counselling and live chat facility for those uncomfortable picking up the phone.
Employer wins: Achieving a return
Employee benefits are an investment in your business via the wellbeing of your people. Our Mountain of Lost Benefits research proved that if you don’t implement a benefits strategy, they could go to waste.
When done right, they yield a significant return and tackle common ‘HR headaches’.
Making employee benefits sustainable and cost-neutral
57% of HR professionals feel pressured by senior leadership to cut down on benefits. The need to support employees via employee benefits has never been greater. Neither has the need to do so sustainably and cost-effectively.
There are many ways a business can make savings from the employee benefits they offer, especially when those benefits boost employee engagement, performance, wellbeing, and productivity. Additionally, salary sacrifice schemes are an effective way to make your employee benefits cost-neutral and sustainable in the long term.
When an employee purchases a bike, car, or annual leave through a salary sacrifice scheme, the business saves on the national insurance contributions they’re liable for on behalf of that employee.
Once your Annual Leave Purchase Scheme is embedded into your business, you can assess uptake and patterns of behaviour and make data-driven predictions on the potential savings. These predictions will enable you to estimate the funds you can invest in further employee benefits.
Our eVouchers are a popular way of delivering a cost-of-living payment or employee reward, so let’s see how we can make them cost-neutral.
If we use the savings from the annual purchase leave scheme (detailed above), there would be enough money to gift 20 employees with a £50 voucher from funds already allocated to payroll.
Therefore, a company with 200 employees would only need a 5% uptake in the annual purchase leave scheme (based on the figures above) to gift their entire workforce without facing additional expenses.
We've created several articles on cost-neutral employee benefits. Click on the links below to discover how to embed them into your strategy.
- Is an Annual Leave Purchase scheme the key to balancing budgets and life?
- Everything You Need to Know About EV Salary Sacrifice Schemes
- SmartPay… the cost-neutral employee benefit you need in 2024
Employee Benefits and the Strength of Your EVP
In the simplest terms, an EVP is what an employer offers an employee. It encompasses tangible employee benefits like perks and salary and emotional factors like culture and values. A strong EVP will speed up the recruitment process and create an engaged workforce that goes the extra mile, giving you an edge over your competitors while boosting productivity and profitability.
Talent retention
76% say that the right support makes them feel more loyal towards their employer, and 71% consider their current benefits when thinking about staying with a business.
Talent acquisition
A 2023 report by HR Review found that 72% of employers had to offer a higher salary than anticipated to secure talent. Increasing payroll expenditure isn’t a sustainable approach to securing new talent, but this is where employee benefits help - especially if your business can communicate the monetary value.
Additionally, 74% of employees claim that an organisation’s employee benefits package is important when considering a job offer (Internal research, Mountain of Lost Benefits).
Read our blog, 'You're Ready to Boost Employee Engagement & Become an Employer of Choice,' to put theory into practice.
Future-proof your business with employee benefits
We’ve already touched on the concept of there being up to four generations working together, but guess what? Gen Z is just around the corner.
As Laura Coccaro, Chief People Officer, iCIMS says...
This class isn't confusing fun perks for benefits. Instead, they're looking for employers to help champion their quality of life holistically - including [employee] benefits for financial, physical and mental wellness. While previous generations grew accustomed to office ping pong tables, this generation is craving offerings that represent an investment into their personal lives outside of work.
The financial, physical, and mental wellbeing employee benefits covered in this article tick the boxes for Generation Z – the workforce of tomorrow - improving their quality of life in the workplace and beyond.
Financial education
In addition to the financial wellbeing benefits listed, Gen Z may also need financial education, with some being new to managing budgets.
As well as allowing employees to access wage withdrawals ahead of payday, track their earnings as they work, and build up savings directly from their pay, our Financial Wellbeing App allows employees to chat with qualified financial coaches, check their financial health score, and more!
Why choose Pluxee UK as your employee benefits partner?
We measure our success by yours!
To date, we work with over 5,000 customers to support employees and consumers with their financial, mental, and physical wellbeing.
In a 2022 survey, 84% of our clients said we are providing relevant solutions to support the wellbeing and engagement of their employees, 90% said they trust Pluxee UK to listen and support their needs, and 84% said we bring solutions that contribute towards their employees’ wellbeing and engagement.
We have ambitious environmental targets and are committed to reducing our carbon footprint with eco-friendly employee benefits. Discover why this matters to your business and ours...Sustainability at the heart of everything… eco-friendly employee benefits.
Sources: iCIMS Class of 2023 Report, YouGov Report, YouGov Article, HR Review.
Notes:* Retailer discounts vary.
FAQs
Are employee benefits taxable?
Some employee benefits are taxable such as private healthcare and others classed as a Benefit in Kind (BiK).
What are the best employee benefits?
The answer to this question will differ depending on your employees’ wants and needs. The best employee benefits are those that make a difference to your employees’ lives, delivering an ROI for your business.
Are employee benefits contractual?
Some benefits, like annual bonuses, may be written into your contract, but it’s unlikely that fringe benefits or voluntary benefits are, since employers may change providers or their offering as the business evolves.
Are employee benefits pre-tax?
Your repayments for a Green Car and Cycle to Work salary sacrifice scheme are calcualted pre-tax. What employee benefits are not taxabale?An employee discounts scheme, cashback card, Employee Assistance Programme are among the employee benefits that are not taxabale.
