8 Must-Have Employee Benefits for UK Startups (+ How to Manage)

Ever wondered why some startups always seem to attract the most talented employees? 

The secret sauce might just be their employee benefit package. 

What benefits should you offer as a startup? 

Let’s explore what's mandatory, what's popular, and why offering a competitive benefits package could be your ticket to startup success in the UK.

Further Reading

• If you plan to transition into a small business, check out the Employee Benefits UK Small Businesses offer. 

• Looking to hire a global team for your startup? Offer these Global Employee Benefits to attract top-notch talent.

8 Employee Benefits Startups Should Offer in The UK

Startups in the UK are legally required to offer some benefits like Statutory Sick Pay and occupational pension schemes.

Beyond these legal requirements, popular benefits such as private health insurance, flexible work arrangements, and financial incentives can significantly enhance employee retention.

1. Mandatory Employee Benefits in the UK

Mandatory benefits are the non-negotiables every UK employer must provide:

A. Statutory Sick Pay

If your employees are sick and unable to work, they are entitled to Statutory Sick Pay (SSP). 

In 2024-25, SSP is £116.75 per week for up to 28 weeks.

B. National Insurance Contributions

In the UK, National Insurance Contributions (NICs) are mandatory payments from employers and employees to fulfil legal obligations. 

These contributions help employees access state benefits such as the UK State Pension, unemployment benefits, and maternity pay.

For employees, NICs are deducted from their earnings, while employers contribute based on the employee's salary.

C. Pension Contributions

As a UK employer, you must auto-enrol eligible staff into an occupational pension scheme and make contributions to an employee’s pension.  

Employees and employers contribute a minimum of 8% of earnings, with at least 3% coming from the employer.

Learn how to calculate pension contributions in our Pensionable Earnings in the UK guide.

Want to set up a compliant workplace pension scheme for your startup? Use Kota. 

Kota is a modern employee benefits platform for effortless pension management. 

It lets you:

• Set up auto-enrolment-compliant pension schemes in minutes.

• Offer affordable pension plans to your team through our partnership with Smart Pension — one of the UK’s leading providers.

• Choose your contribution amount, starting from a minimum expected 3% match and going up to a competitive 8%.

Sign up for a free demo to see Kota in action.

Check out other mandatory benefits in our guide on the 20+ Employee Benefits UK Employers Should Offer.

2. Popular Company-Paid Employee Benefits

In addition to the mandatory benefits, consider adding the following benefits to your employee’s compensation package.

These benefits boost employee satisfaction and loyalty by prioritizing employee well-being and happiness.

A. Health and Wellbeing Benefits

Health benefits like private health insurance and wellness programs can reduce absenteeism and increase productivity.

• Private Health Insurance: While the NHS provides essential healthcare services, private health insurance (PHI) offers quicker access to treatments and specialist care, ensuring your team stays healthy and can return to work sooner. 

• Gym Membership and Wellness Programs: Encourages a healthy lifestyle, reducing absenteeism.

• Mental Health Support and Burnout Prevention: Includes wellness benefits like counseling services and stress management programs.

• Employee Assistance Program: An Employee Assistance Program can offer counseling and referral services to help employees manage personal and work-related issues.

Did you know that 56.4% of Ravio customers—a compensation benchmarking platform—offer private health insurance in the UK?

Kota lets you offer affordable health insurance plans from Vitality, a trusted provider in the UK.

With Kota, you can:

• Instantly enroll and manage health, dental, and vision benefits for employees through one app.

• Provide ​​your employees the option to choose the coverage that fits their budget and keep benefits if they leave.

• Integrate and manage your team’s existing benefits, like gym memberships.

If you have employees in Ireland, ensure you offer these essential Irish Employee Benefits.

Find out 11 important Irish Startup Employee Benefits that can boost your team's productivity and morale.

B. Flexible Working Arrangements

Convenient working options, such as remote work and other flexible work arrangements, can help employees maintain a healthy work-life balance. 

This ensures they stay productive and motivated while navigating the fast-paced nature of a startup.

How can you set up flexible working arrangements?

Some things you can do are:

• Implement a clear policy outlining expectations from remote employees, including communication protocols, availability hours, and performance metrics.

• Provide necessary tools like laptops, software, and secure access to company systems.

• Establish core hours when all employees must be available, combined with flexible start and end times. This allows your startup employees to manage personal commitments while ensuring collaboration during crucial hours.

C. Insurance Benefits

Protect your employees' financial well-being with these insurance offerings.

• Life Assurance: Provides financial security for employees' families in the event of untimely death. This policy, often referred to as death-in-service insurance, pays a tax-free lump sum to the nominated beneficiaries, usually a multiple of the employee’s annual compensation.  

• Disability Insurance: It’s an income protection for long-term disabilities, covering up to 70% of the employee’s compensation. It can also include additional rehabilitation and support services to help employees return to work.

• Income Protection: Provides financial support during severe health conditions.

  • Group income protection offers a portion of salary during long-term absences after short-term sick pay ends.

  • Disability Insurance is an income protection for long-term disabilities, covering up to 70% of the employee’s compensation. It can also include additional rehabilitation and support services to help employees return to work.

  • Critical illness cover offers a tax-free lump sum for severe illnesses like cancer or heart disease, aiding employees with financial commitments during recovery.

D. In-Office Employee Perks and Other Incentives

This includes perks like:

• Free meals, office snacks, and and recreation areas

• Social events, team-building activities, paid time off, and childcare support

E. Other Financial Benefits

In addition to traditional benefits like pensions and health insurance, modern startups offer various perks to stay competitive, such as:

• Vouchers: Providing vouchers for popular UK retailers like Tesco, Sainsbury's, or Amazon can be a significant perk, offering employees discounts on everyday purchases.

• Bonuses: Monetary compensation to reward and motivate employees, like year-end performance bonuses.

• Commuter Benefits: Subsidised public transport costs to reduce employees' travel expenses.

• Share Schemes: Offering employees a stake in the company through options like EMI, encouraging long-term commitment.

Why Should a Startup Offer a Competitive Employee Benefits Package?

Employees often value benefits that enhance work-life balance and overall job satisfaction. 

A generous benefits package can significantly boost employee loyalty by showing that your startup values and supports its team.

Let’s take a closer look at these benefits:

• Attract and Retain Skilled Talent: In a startup, having a compelling benefits package can be the deciding factor for prospective employees considering multiple offers. An attractive package can tip the scales in your favour, helping you secure top talent in a competitive market.

• Enhance Company Culture and Employee Satisfaction: A robust benefits package fosters a positive and supportive workplace. Employees who feel valued and supported are more likely to contribute positively to the company culture.

• Boost Productivity and Reduce Turnover: Satisfied employees are more productive and less likely to leave. Investing in employee well-being reduces absenteeism and enhances overall performance, leading to better business outcomes.

• Improve Employee Morale and Engagement: Benefits enhance overall morale and engagement within the team. Engaged employees are more committed to their roles and more likely to go the extra mile, driving innovation and growth.

Offer Cost-Effective Benefits to Your UK Startup Team with Kota

Kota is a cutting-edge global employee benefits platform that simplifies benefits management for startups. 

We partner with trusted providers in the UK, like Vitality and Smart Pension, to offer budget-friendly core benefits like:

• Business health insurance 

• Retirement Plans

All this without the hassle of dealing with an insurance broker or complex paperwork!

Here are more reasons you’ll love Kota:

• Digital Benefits Hub: Streamlines benefits administration, syncing with your HRIS and payroll systems. You can manage your plans and billings directly from the Kota app.

• Flexible Benefits Plans: Customisable packages, flexible contribution levels, and co-payment structures.

• Enhanced Visibility: Reporting and analytics tools for tracking benefit spending and ROI.

• Local Benchmarking: Analyse benefits benchmark to gain a competitive edge.

• Bring Your Own Benefits: Add existing benefits to Kota’s platform for seamless management.

Join Kota to make benefits effortless and affordable for your startup team.  

5 FAQs Related to Employee Benefits for Startups

Let’s answer some common questions about startup employee benefits. 

1. How to Choose the Best Health Insurance Plan for Your Team?

Startups should consider private health insurance plans that offer comprehensive coverage for employees. Here are some actionable steps:

• Assess Employee Needs: Survey employees to identify healthcare needs and preferences.

• Group Health Plans: Opt for group plans for collective coverage at lower premiums, ensuring better benefits and cost efficiency.

• Wellness Programs: Choose plans that include wellness programs, offering preventive care, fitness memberships, and mental health support.

• Flexible Options: Select insurance that allows adding new employees and adjusting coverage as your startup grows.

• Digital Tools: Ensure the insurer supports digital tools for easy access to healthcare services and claims management.

2. What Low-Cost and Free Benefits Can Startups Offer?

Private health insurance and other healthcare benefits are some of the most sought-after job perks.

So, offering affordable health coverage through Kota can make your benefits package stand out.

Additionally, you can offer other low-cost and free benefits such as:

• Flexible working hours

• Professional development and upskilling opportunities

• Wellness programs

• Paid time off

• Employee recognition schemes

• Social events that foster team bonding without high expenses

3. What Is Key Person Insurance? Should You Include It in Your Benefits Package?

Key Person Insurance is a policy that protects startups if a crucial team member, like a startup founder, can’t work due to illness or death. It provides a payout to help the business stay afloat.

An early stage startup might need this because a key person missing in action can disrupt everything. 

While it's not part of an employee's benefits package, it's essential for the company's stability. 

4. What Are Some Top Employee Benefits Startups in the UK?

• Kota: Provides a comprehensive employee benefits platform, including health insurance (with additional coverage for employee mental well-being) and pensions, to help startups manage benefits effortlessly.

• Wellhub (formerly Gympass): Offers flexible and affordable gym memberships and wellness programs to improve employees' physical and mental health.

• Skuad: Focuses on global HR solutions, providing payroll, compliance, and employee benefit management for remote teams.

• Remote: An HR platform that helps companies hire, manage, and pay their entire team, enabling them to compete more effectively in the modern global economy.

5. Can I Contribute More Than the Auto-Enrol Requirement to My Employee's Pension Pot?

You can choose to go beyond the minimum requirement to help your employees save more for retirement.

Other options to contribute more to an employee’s retirement funds include:

• Contributing to personal pension schemes (e.g., SIPPs)

• Setting up more generous workplace pensions

• Offering salary sacrifice arrangements

These are tax-efficient and can exceed auto-enrolment minimums. There's no cap, but very high contributions may attract HMRC scrutiny.