What are employee discount schemes and why your business needs one?

24 min to read

19 May 2026

Employee discount schemes address a pressing workplace issue: 80% of employees admit financial stress affects their productivity and work-life balance . Your workforce can save up to £1,679 each year through cashback and discount programmes . You're offering more than just a perk. Staff discount schemes enable employees to stretch their salaries further and boost engagement, which can lead to 21% greater profitability . This piece explores what employee discounts are, how they work, the types available and why implementing one could be your most economical retention strategy yet.

What is an employee discount scheme?

An employee discount scheme is a structured programme that gives your staff access to reduced prices on goods and services [1]. These savings are negotiated at scale, meaning employees benefit from rates they couldn't access as individuals [2]. The core purpose is straightforward: help employees save on purchases they're already making, from weekly supermarket shops to major expenses like electronics or travel [2].

What sets these programmes apart is their breadth. Discounts cover supermarkets, high street retailers, travel, leisure, dining, insurance and utilities [2]. Popular categories include clothing stores, chain restaurants, furniture shops, large online retailers such as Amazon, gyms and fitness brands, food delivery services and electronics stores [1]. The variety ensures employees with different demographics and spending habits can find relevant savings.

Employee discount schemes are part of your broader benefits package. Research shows 75% of employees say they're more likely to stay in their jobs because of their benefits package [1]. More than that, 69% of employees say a better benefits package would make them choose one company over another [1]. Factor in that 61% of employees agree they have a healthier lifestyle because of their company's wellbeing programme [1], and the effect becomes clear.

Traditional employee discounts vs platform-based schemes

Traditional employee discounts operate differently than modern platform-based schemes. Companies would negotiate directly with individual retailers to secure exclusive discounts for their staff in the past. You might approach local businesses or national chains separately and create bespoke arrangements. Retail corporations, to name just one example, offer their employees a percentage reduction on shopping bills, whilst companies like AirBnB provide quarterly stipends for employees to spend travelling [3].

Platform-based schemes changed this model entirely. Employers now partner with third-party providers who handle everything from sourcing deals to maintaining the platform [2]. These providers have already negotiated with thousands of top retailers [2], meaning you simply give your employees access rather than negotiating each discount yourself. The setup can be completed in as little as three days [2], contrasting with the time-intensive nature of traditional arrangements.

The advantages of platform-based schemes extend beyond convenience. Providers update available discounts continuously, adding new offers and removing expired deals, ensuring employees always have fresh options [2]. This requires minimal effort from you to maintain the scheme. Employees access everything through a secure portal or mobile app, allowing them to browse and redeem offers either online or in-store [2].

How employee discount schemes work in practise

Employees receive access through a dedicated benefits platform via desktop or mobile when you implement a platform-based scheme [2]. The redemption process is designed for speed. Employees should be able to browse and activate a discount in under a minute [2]. Uptake drops by a lot if they cannot find an offer quickly, or the redemption process is cumbersome [2].

The mechanics vary depending on the discount type. Employees might access their employee discounts while in-store on their mobile or at home shopping on their desktop or tablet [4]. They find the retailer they're looking for, enter their purchase amount and receive a discount code in their inbox instantly [4]. Other methods include cashback offers where employees pay the full amount first and the discount percentage returns to their platform account for later bank transfer [5], or reloadable prepaid cards for specific retailers.

Access to regular savings on everyday spending makes a material difference to household budgets, especially when salaries haven't kept pace with the rising cost of living [2]. The best platforms deliver a frictionless, mobile-first experience as a baseline expectation [2]. Schemes that integrate with other benefits, payslips and HR tools reinforce the full value of your employment package rather than sitting in isolation [2].

The scheme's popularity depends on the variety and choice of discounts you offer [4]. The wider the choice, the more areas employees can save, and therefore the more they'll benefit. Savings on regular expenses like the weekly shop add up throughout the year, and employee discounts can usually be used on top of sale prices, making the savings even greater [4].

Types of employee discounts available

Your workforce encounters employee discount schemes in several distinct formats, each designed to suit different spending habits and priorities. You can select a scheme that delivers genuine value across your entire team when you understand these types.

Vouchers and gift cards

Digital and physical vouchers represent one of the most popular discount formats. Staff can purchase vouchers at discounted rates for specific retailers and receive savings of up to 10% on the upfront cost [6]. Some platforms offer savings reaching up to 15% on gift cards from over 100 brands [6].

The mechanics are straightforward. An employee deposits £45 into the platform and receives £60 worth of vouchers or gift cards for a particular retailer. This method proves especially effective for bigger purchases or gifts. Digital vouchers arrive by email within minutes of purchase. Physical gift cards are dispatched within four working days [6].

Vouchers allow employees to secure a discount on the voucher's value upfront, which they can then use across multiple occasions. This differs from cashback, which provides returns on individual purchases. Staff can browse different values such as £25, £50, or £100 to use at supermarkets like Tesco or Morrisons [7]. These vouchers work both in-store and online depending on the card selected [6].

Discount codes

Discount codes enable employees to secure immediate reductions when shopping online. Certain retailers provide specific codes that your workers enter on the retailer's website during checkout [7]. The discount applies at the point of payment.

These codes arrive via email the moment an employee requests them, which makes them highly convenient for use with other store offers. Retailers often use discount codes to promote specific product bundles or services they want to highlight. A beauty retailer might offer £5 off when purchasing a trio of skincare products [7].

You can negotiate custom discount codes featuring your company name. This makes them easier for employees to remember and adds to brand visibility [7]. The range spans supermarkets including Morrisons, Tesco and M&S, travel options with AirBnB and Hotels.com, and fashion retailers like Adidas and Asos [8].

Cashback offers

Cashback operates differently from traditional discounts. Employees pay the full price when shopping with participating retailers and then receive a percentage of their spend back into their platform account. They might receive 7% cashback on purchases from Marks & Spencer [7].

The cashback is credited to their account within the discount platform after completing their purchase, which happens after 30 days [2]. From there, it transfers to their bank account. Cashback creates tangible value because employees see their accumulated earnings grow over time [9]. The savings are smaller compared to vouchers.

The average cardholder earns £216 of extra income per year through cashback [2], with potential earnings reaching up to £900 a year [2]. This extra income can be treated as subsidiary savings that accrues without direct input. Employees continue shopping as normal and save money at the same time [9].

Cashback proves especially effective for large items like furniture, vehicles, or appliances and everyday essentials [7]. Getting 10% off at the till provides a benefit, but employees don't see that 10% saving. With cashback, employees view how much money they've earned over time and use this money for something substantial [9].

Reloadable prepaid cards

Reloadable cards function like shopping cards where staff add monetary value to a physical card for use at specific retailers. Employees receive cashback on the amount added to the card, which returns to the discount platform for later use [7].

To cite an instance, if the current discount for Sainsbury's is 4.5%, the employee pays £95.50 to top up their card by £100. The full £100 can then be spent in-store [10]. Each time the employee tops up the card through their account, they receive the current discount applied for that retailer [10].

Cards topped up before 11am on weekdays have funds ready to spend in-store the next day [10]. Employees can top up through their account, use top-up by text, or set up automatic top-ups weekly, monthly, or on specific dates [10]. Reloadable cards allow employees to save up to 15% on everyday shopping at over 70 high street and online retailers [6].

Staff can hold up to four reloadable cards for one retailer, which is useful if each family member needs a card [10]. This flexibility means a household can manage multiple cards under one account and secure discounts on regular supermarket spending.

Key benefits of staff discount schemes for employees

Staff discount schemes deliver benefits that go way beyond simple cost savings. Your employees gain access to structured discount programmes and experience improvements in financial and mental wellbeing that influence their quality of life both inside and outside work.

Stretching salaries further

Your workforce can secure discounts as much as 20% at certain retailers, with occasional special offers and freebies [7]. A household spending £600 monthly on food could save up to £336 a year, and that's just for groceries [11]. The average employee could save £1,000 per year by paying for purchases via discounts or cashback [12].

These regular savings accumulate over time. Food price inflation above 15% means employees struggle with rising weekly shop costs [12]. Employees could save at least £250 a year by using a discounts and cashback platform for their supermarket shopping, which helps reduce rising costs [12]. The ONS estimates the average family spends £3,312 on food shopping each year. An average saving of £400 using employee discount platforms over the course of the year represents a substantial amount [6].

Discounts on larger, one-off items such as holidays or technology offer potential for massive savings [7]. Paying with an employee discount platform can also help employees save up to 2p per litre on fuel [12]. That's more money your employees keep by reducing the cost of everyday essentials or a special trip [8].

Improving financial wellbeing

Financial stress carries workplace consequences. 57% of HR leaders report they observe the effects of poor financial wellbeing in their workforce, whilst 66% say employees are more stressed [6]. Any financial support you can offer to help employees care for their mental and physical wellbeing is appreciated by your workforce [13].

Employee discount schemes help employees' pay packets go further and increase their financial wellbeing [7]. They prove effective when they offer discounts for products and services that employees already buy [6]. Support for reduced financial stress through discount programmes helps employees make their income stretch much further each month [9].

Employees can make savings on high street purchases when you reduce the price of everyday necessities and occasional luxuries. This gives them flexibility to spend a little more or save extra cash and relieves financial pressures [6]. Shopping discounts are a convenient benefit that can have a positive effect on financial wellbeing for employees stressed about their finances [6]. The money saved provides a buffer that allows employees to feel more comfortable [6].

Supporting mental and physical health

Employee discount schemes extend into wellness territories that make genuine differences to employee health. Physical wellbeing support helps employees stay healthy with free online workout classes, day and night access to online GPs, prescription deliveries, and discounted gym memberships [7]. Employees enjoy up to 25% off at over 3,600 renowned fitness centres throughout the United Kingdom [13].

The emotional wellbeing component provides employees with confidential emotional support. This includes unlimited access to a free 24/7 confidential helpline, free access to a qualified therapist, and an online health hub full of resources [7]. Poor mental health costs employers between £33 billion and £42 billion a year [13]. Support programmes include four free sessions with a qualified therapist accredited by the British Association for Counselling and Psychotherapy [13].

Relaxation and mental wellness apps help families manage stressors at work and home, improving their wellbeing [8]. Your team members who travel for work put pressure on those at home, making detailed wellness support valuable [8].

Access to everyday and luxury savings

Employee discount schemes provide financial savings on a broad range of everyday and luxury items [9]. The platform's discounts and cashback options allow employees to save on everything from daily essentials like groceries and fuel to larger purchases such as holidays and electronics [9].

Savings apply to routine expenses that can't be avoided, making the benefit practical [6]. The cost of rest and relaxation represents an ever-increasing budget line item, as family-friendly holidays get expensive [8]. Your employee discount programme can aid plenty of family fun at a discount rate [8].

Your benefits enhance wellbeing and speak to the heart of employee needs by lowering the cost of wellness perks for the family [8]. Affordable wellness initiatives that incorporate adults and kids in fitness and health improve their wellbeing whilst lowering programme costs [8].

Why your business needs an employee discount scheme

Recruiting and retaining skilled workers presents ongoing challenges in sectors of all types. An attractive salary no longer meets candidate expectations, especially when 80% of employees prefer better benefits over an increased salary [2]. This move just needs organisations to reconsider their total compensation strategy and recognise employee discount schemes as a strategic tool rather than a simple perk.

Attracting top talent in competitive markets

Competition for quality candidates intensifies year on year. Over a quarter of employers fail to measure their benefits offerings against competitors and miss a vital chance to distinguish themselves [14]. Meanwhile, 78% of employees say they're more likely to apply for a role that offers a strong benefits package, even if the salary is lower than elsewhere [14].

Staff discount schemes signal to potential candidates that you're looking out for employee welfare and creating a comfortable and supportive workplace [2]. This effort sets your organisation apart from the competition and builds a desire to work for you. More, 38% of employees say the benefits scheme outlined was significant to them when accepting a job offer, rising to 51% for employees aged 16 to 24 [15]. You create an attractive proposition when you offer discounts across big brands including Tesco, Asda, Halfords and Boots [2].

Prospective employees research companies and seek evidence that you prioritise and invest in your workforce [14]. A well-communicated employee discount scheme improves your reputation as an employer. It demonstrates commitment to supporting financial wellbeing and work-life balance beyond the simple salary [10].

Boosting employee retention rates

Retention proves more budget-friendly than constant recruitment. Studies reveal that 75% of staff are likely to remain at their current job because of the benefits provided [2]. Companies with strong benefits programmes see a 25% decrease in voluntary turnover [8]. This translates into reduced recruitment costs and preserved institutional knowledge.

Employee discount schemes allow you to show workers that you're interested in their life outside of work, not just how hard they work [2]. This recognition improves satisfaction and encourages engagement while building a positive organisational culture. 69% of employees say they'd be more loyal to a company that offers discounts and perks [8].

Increasing engagement and productivity

Financial stressors distract employees and reduce their effectiveness. Research shows 82% of employees working full-time have financial stressors, and 37% spend two to three hours each week worrying about or dealing with finances [16]. One in four employees finds that money worries affect their ability to work [2].

You help employees focus on their roles rather than financial pressures when you provide financial support through discount schemes. Highly engaged teams are 21% more productive than those with low engagement rates [8], and businesses with a highly engaged workforce benefit from 21% greater profitability [7]. Therefore, reducing financial stress through discount programmes creates tangible productivity gains and improves absenteeism [2].

Budget-friendly alternative to pay rises

Budget constraints often prevent organisations from offering substantial pay increases. Employee discount schemes cost lower than many other perks [11] and make them available even during tight financial periods. Providing an employee benefit costs less than increasing pay [6].

Pay rises increase Income Tax and National Insurance for both employer and employee, while many employee benefits are provided at no cost to the employee [6]. A company-wide pay rise can add millions to your wage bill, especially when you consider recent wage and NIC increases [7]. Balanced against this, employee discount schemes improve your offering without the same financial burden. Employees save up to £1,679 through these programmes, and the perceived value rivals that of a salary increase [7].

How to choose the right employee discount scheme

Selecting the right employee discount scheme requires thinking over several factors that determine whether your investment delivers genuine value. Rush this decision and you risk a programme that fails to involve your workforce or justify its costs.

Understanding your workforce needs

Identify what your employees value before you commit to any scheme. Run surveys or gather feedback to understand their spending patterns and priorities [8]. Younger employees might want retail and entertainment discounts, while others may favour savings on groceries or travel [8]. Gyms, cinemas, restaurants and supermarkets are examples of everyday deals that employees can use often [12].

Anonymous polling or lunch and learn sessions help you find top spending categories and retailers [12]. Do you have many parents who'd appreciate bigger discounts on groceries and days out? Or jetsetters who'd prefer to save on their holidays? [8]. Know this from the outset and you make informed decisions while boosting engagement.

Setting a realistic budget

Aon recommends spending between 0.25% and 3% of your HR budget [17]. Keep the budget small and your programme stays effective and sustainable. You can expect to spend around £5 per employee each month [18]. Prices may rise to £10 per employee per month for more discounts and extra features [18].

Agree a budget from the outset and you narrow your search straight away [8]. Whether you choose a flexible platform that gives you freedom to tailor your benefit based on budget and requirements [18], or a wider range of discounts that appeals to more staff [19], the decision should match projected employee uptake and potential retention improvements.

Evaluating discount categories and retailers

A scheme that covers a narrow range of retailers or categories will have limited appeal across a varied workforce [9]. Effective schemes span supermarkets, travel, entertainment, health and lifestyle to ensure they work for different life stages and household types [9]. The range of retailers gives employees opportunities to save money on everyday shopping and more, from main UK supermarkets and high street shops to cinemas, restaurants and online stores [20].

Ask providers about top retailers, average percentage savings available, and how much an average person could save using the platform each year [20]. Quality matters as much as quantity when you evaluate discount levels.

Assessing platform ease of use

Uptake drops if employees cannot find an offer fast or the redemption process is cumbersome [9]. A frictionless, mobile-first experience is now a baseline expectation [9]. Employees should be able to browse and activate a discount in under a minute [9]. App-based providers see up to 2x the engagement of those without an app [12].

Simple layout and navigation, quick checkout processes, mobile optimisation, personalisation features and valuable communications boost the user experience [20]. Integration with wider benefits matters a lot. Schemes available through the same platform employees use for leave requests, payslips and reward recognition increase engagement across the board [9].

Checking scalability and flexibility

Scalability ensures that as your business expands, the benefit can accommodate more employees without compromising quality or value [8]. Look for providers that offer straightforward onboarding processes, minimal day-to-day management and robust customer support [8]. Can the platform be white labelled to match your branding? Does it offer just discounts or can you add other employee benefits? [8]. Flexibility to add or remove employees and modify features as your benefits budget changes proves vital for sustainability over time [18].

Setting up an employee discount scheme for your business

Implementation doesn't require months of planning, but you do need a structured approach. A clear process will give your staff discount schemes the engagement and retention benefits you're targeting.

Defining your goals and priorities

Reflect on what workplace solution you're solving before you invest in a scheme. You can offer employee discounts for no particular reason, but it probably won't work [13]. Ask yourself specific questions: Does your workplace lack employee benefits? Have employees been asking for raises or bringing up financial concerns? Are recruiting efforts struggling? Have employees been going above and beyond lately and deserve recognition? [13]. You can move forward with confidence once you've determined the specific benefit an employee discount scheme would bring to your business [13].

Selecting the right provider

You'll need to convince your leadership team or board that employee discounts would be beneficial [13]. Present relevant data about the power of staff discount schemes and run your ideas by senior colleagues one-on-one beforehand to get support [13]. Research different providers after you get approval. Talk to different sales teams, weigh pros and cons, and think about your options rather than choosing the first option or whoever offers the best discount [13]. Think about whether you'll need benefit harmonisation to integrate the scheme with existing employee benefits [13].

Launching the scheme to employees

Create a communication strategy that introduces the scheme. Plan how you'll announce it, when you'll provide updates, and how to keep usage high after the buzz dies down [13]. Most providers will handle the setup legwork and require just a list of employees who need access [14].

Maintaining momentum and gathering feedback

Assign someone to track and monitor usage through the platform's metrics and reporting features [13]. Keep your original goals in mind and measure whether the scheme helps achieve them [13]. Ask employees to get feedback and use this to refine the scheme [21].

What to look for in a discount scheme provider

Choosing a provider goes beyond comparing pricing structures. The provider's infrastructure, support capabilities, and commitment to continued participation determine whether your employee discount schemes deliver sustained value or become another forgotten benefit.

Range of retailers and discount levels

Verify that discounts offered are better than deals the general public can access [9]. Ask providers how much money an average person could save annually using the platform, what the top retailers are, and what the average percentage saving is [20]. Effective schemes span supermarkets and travel to health and lifestyle. This ensures relevance for different life stages and household types [9]. Quality retailers matter more than sheer numbers. Providers with targeted but strong lists of in-demand retailers can negotiate better rates for your employees.

Integration with existing benefits platforms

A scheme sitting in isolation, separate from other benefits, payslips and HR tools, misses the chance to reinforce the full value of your employment package [9]. Schemes that are part of the same platform employees use for leave requests, payslips, and reward recognition increase overall participation [9]. Any successful benefits platform must allow for API setup so existing systems such as payroll can be integrated [11]. Employees can send requests directly to suppliers or payroll from the platform [11].

Ongoing support and account management

Look for providers offering simple onboarding processes, minimal day-to-day management and reliable customer support [8]. Independent companies focus on their core product and provide unbiased advice without upselling on diversified businesses [11]. Support teams that are there at any time, day or night, ensure employees can use their retail discounts whenever needed [22].

Marketing and communications assistance

Communications help employees make the most of discounts and save the most money [20]. Some providers offer webinars so employees can get live platform demos and ask questions [20]. Access to co-branded marketing materials helps spread awareness about the benefit and boost participation [23].

Common questions about employee discount schemes

Questions about tax treatment, savings potential, and costs arise frequently when businesses think about implementing staff discount schemes. Here's what you need to know.

Are there any tax implications?

Employee discount schemes qualify as non-taxable benefits in kind [14]. They can be deemed a 'Trivial Benefit', meaning you can provide each employee with a gift or benefit up to £50 tax-free without P11D reporting [14]. But the benefit cannot be cash or a cash voucher, and it must not be a reward for work performance or sit within employment contract terms [14]. Directors face a £300 annual limit on total trivial benefits [14].

How much can employees save?

Savings vary by spending habits and retailer choice. Employees can save thousands annually. Discounts include supermarkets at 7%, restaurants and food delivery at 12%, and fashion at 15% [14]. The average UK family spending £157 weekly on food could save £336 on groceries alone [14].

What if employees don't use the scheme?

Low uptake suggests you might need a different employee benefit [14]. Paying for a product nobody uses has no value.

Can small businesses afford discount schemes?

Yes, they can. Employee discount schemes represent an economical benefit, with minimum costs around £5 per employee monthly for a decent scheme [14].

Conclusion

Employee discount schemes deliver measurable returns without the financial burden of across-the-board salary increases. Your workforce saves on everyday expenses and you benefit from improved retention and engagement. These programmes represent one of the most economical benefits you can implement.

The setup process is simple, especially when you have platform-based providers who handle negotiations and maintenance. Employees access thousands of discounts within days and save on everything from groceries to holidays. The investment pays for itself through reduced turnover alone.

Choose a provider offering relevant retailers, uninterrupted integration and resilient support. Your employees will appreciate the real difference to their household budgets, and you'll strengthen your position as an employer of choice.

FAQs

What exactly is an employee discount scheme?

An employee discount scheme is a structured programme that provides staff with access to reduced prices on a wide range of goods and services. These savings are negotiated at scale through partnerships with retailers, covering categories such as supermarkets, travel, leisure, dining, electronics, and utilities. Employees access these discounts through a secure platform or mobile app, allowing them to save on both everyday essentials and larger purchases.

How do employee discount schemes help improve financial wellbeing?

Employee discount schemes help workers stretch their salaries further by providing savings on purchases they're already making. With the average employee potentially saving up to £1,679 annually through cashback and discount programmes, these schemes reduce financial stress and help household budgets go further. This is particularly valuable during times of rising living costs, as employees can save on regular expenses like groceries, fuel, and everyday shopping without changing their spending habits.

What types of discounts are typically available to employees?

Employee discount schemes offer several formats including vouchers and gift cards (with savings up to 15% on upfront costs), discount codes for instant reductions at checkout, cashback offers where a percentage of spending is returned to employees' accounts, and reloadable prepaid cards for specific retailers. This variety ensures employees can choose the discount method that best suits their shopping preferences and spending patterns.

How does an employee discount scheme work in practise?

Employees access the scheme through a dedicated benefits platform via desktop or mobile device. They can browse available offers, select their preferred retailer, and redeem discounts either by receiving instant discount codes via email, purchasing discounted vouchers, earning cashback on purchases, or topping up reloadable cards. The entire process is designed to be completed in under a minute, making it convenient for employees to use whilst shopping online or in-store.

Are employee discount schemes affordable for small businesses?

Yes, employee discount schemes are cost-effective benefits that small businesses can afford. Typically costing around £5 per employee per month for a decent scheme, they represent a much more affordable alternative to salary increases whilst still providing significant value to staff. These schemes cost considerably less than many other employee perks and don't carry the same tax implications as pay rises, making them an accessible option for businesses of all sizes.

References