This article has been written by Suhasani Kamble, pursuing Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) and has been edited by Oishika Banerji (Team Lawsikho).
This article has been published by Sneha Mahawar.
Table of Contents
Introduction
Every country has its own way of providing various types of benefits and privileges to employees to keep them employed. These benefits give them trust and faith in the company where they are working. These benefits and entitlement increase the stability of people in the company and increase the assurance and credibility of the growth of the company. In the United Kingdom (UK), the concept of employee benefit is made mandatory by the government, and benefits are provided as per compliance with labor law. The labor law in the UK makes sure that the employer and employee are protected by law. It is necessary to note that full-time employees and contract-based workers both are eligible for the entitlement and benefits by law. Traditionally full-time workers have to sign up employment agreements with the company and contract-based employees are signed up for a period of time as per the requirement of the companies. This article deals with employee benefits and entitlements in the UK.
Employee benefits and minimum wages
Minimum wages are probably divided by age group in the UK. For the national living wage, the eligible age is 23 and above and for national minimum wage, the age is at least school-leaving age. Minimum wages in the UK are legally not framed well, so employers use employee benefits as a tool for attracting more talent for their companies. Employee benefits are over and above the regular wages provided to the employee. There are various other perks of services also provided in the company.
Mandatory benefits in the UK
The most common and essential benefits in the UK, mandatory to be in compliance with the law are pension, paid sick leaves, holiday allowance, and maternity & paternity leave.
Pensions and other retirement schemes
Young employees do not think of saving for the future so the UK government made pensions compulsory in the country. Here the employer has to auto-enroll the eligible employees into the pension scheme.
The pension scheme provides employees with an allowance for survival after retirement. The employer and employee both add some amount of money to the pension account whether it is added on the basis of type of workplace or voluntarily enrolled in the scheme. The value of the pension amount varies from employee to employee.
Nowadays, mostly it is a defined contribution in which both have to add a certain amount of money on a daily basis. Another one is a defined benefit less popular in the private sector in which the pension amount depends upon a calculated formula. Here the average salary overtime, final salary, or period of work with the company may be included for calculation.
As per law, UK employers are obligated to add a minimum amount of 3% of the salary of the worker for the pension plan and employees have to add a minimum of 5% of their salary for the same. These contributions can be increased but not reduced in employment contracts.
Paid sick leaves
Paid sick leaves are provided to the employee on a statutory basis. In most circumstances employees can allow holidays into sick leaves for a week thereafter he/she has to show a medical certificate or note of sickness by a doctor. A worker on long-term sick leave cannot be forced to work and the employer has to pay up to 28 weeks of leave if he/she continues to be ill for a long time. If an employee quits the job in the middle of a year due to continuous sickness the employer has to pay the pending/unused leaves of the employee till the day of leaving.
Holiday allowances
20 paid leaves and 8 public holidays are given and paid by the employer to the employee annually, who works for 5 days a week which is equivalent to 5.6 weeks of a holiday. The part-time employee or workers having irregular working hours also avails of these benefits proportionately. Some employers offer more paid leaves to attract more talent or keep the employee stay with them for a long time. These holidays are sometimes convertible for long-term sick leaves and paid by the employer.
Maternity & paternity leave
Maternity leave
When a woman is pregnant she is eligible for maternity leave and in the UK, it is divided into two parts, namely, ordinary and additional leave. The ordinary maternity leave is for 26 weeks and additional 26 weeks leave is added as required, which comes to a total of 52 weeks of leave. The mother could take these leaves prior to 11 weeks of delivery due date and 2 weeks after the child is born. Essentially the employer has to pay 90% of the mother’s average wages for the first six weeks of the leave and later on for the next 33 weeks less than 90% of the average pay is given. Mothers are still entitled to take leave for the remaining 13 weeks but are not paid for the same. The mother who wishes to return to the job or leave it shall have to provide a notice to the employer for joining or leaving the same.
Paternity leave
Paternity leave is available by the father of the biological child or legally adopted child or surrogate child in the UK. Partners of a pregnant employee can avail these benefits irrespective of their gender. Comparatively paternity leave is lesser than maternity leave which is up to 2 weeks only. During the child’s first year of birth, paternity leave can be used by the employee. They have also assured employment rights to reimburse their leaves by a guaranteed rise in pay, coming back to jobs, and pending holidays. Some prefer to avail of shared parental leave which lowers the load of responsibility of both and choose to share leave after the child is born. This can be extended up to 50 weeks with 37 paid weeks. Parents can use it during the first year of the baby.
Other benefits to the UK employees
There are many other additional benefits that are not mandatory by law but some employers offer to the employees like some health & medical insurance, dental or eyes check-up facilities, wellness sessions, virtual GP, and other bonuses & incentives or perks like season ticket loans, carpool or company car, biking to office, gym and canteen in office. As the UK has various public health care systems, such as National Health Services (NHS), private health care assistance is not mandatory. Here the employee can avail of various facilities like free medical check-ups, emergency appointments, ambulance facilities, heavy treatments, and so on. The employer provides additional health benefits and also group health facilities so that the employees would not face any difficulties for health issues and do not avail much of health benefits.
Conclusion
Even after so many facilities of employee benefits in the UK still there are various ambiguities that the employee has to face during his/her employment. The employer mandatorily has to enroll the employees into the pension plans and sometimes has to add more money to attract more talent which is not affordable to them. Health benefits and perks were less expensive for the employer than the paid leaves so there is competition related to the same in the industry. The NHS is a publicly funded facility of health for the residents of the UK collected by the taxpayers. Due to some loopholes in the NHS, like the patient’s waiting time is higher than the health services so for fast services the employees avail private health care assistant as it is very much required by them. The statutory sick pay is beneficial for the employees but not for the contractual workers and employers do provide them with the same as required. In the UK, a number of various other benefits and perks are provided by the employer in the industries which are increasing day by day. Likewise, there is a competition going on in the market of employment benefits for which there has to be proper provision in the law of UK which could be more beneficial to both employees as well as the employer. The UK government has to make changes in the employment law and labor law to bring a balance in the industry as well as the availability of benefits to everyone residing in the UK.
References
- https://remote.com/blog/united-kingdom-employee-benefits.
- https://www.asinta.com/countries/employee-benefits-in-the-uk/.
- https://www.pacificprime.co.uk/blog/most-common-employee-benefits-in-the-uk/.
- https://www.usemultiplier.com/united-kingdom/employee-benefits-and-compensatio.
- https://www.drewberryinsurance.co.uk/employee-benefits/guides/best-employee-benefits-you-can-offer
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