Why Employee Benefits Matter: Attracting and Retaining Top Talent in the UK

In today’s competitive job market, attracting and retaining top talent has become increasingly complex. While salary remains a key consideration, it is no longer the sole factor candidates weigh when evaluating opportunities. Employee benefits have evolved from optional extras to essential components of a compelling employment offer. Companies that fail to meet expectations risk losing out on the best candidates and struggling with retention. Understanding the strategic importance of benefits is crucial for businesses that want to thrive in an evolving talent landscape.

Attracting Top Talent: The Value of Employee Benefits

For many UK job-seekers, a strong benefits package is just as important as base pay. In fact, 78% are more likely to apply for a job that includes appealing benefits, even if the salary is slightly lower. This is especially true among younger generations: 65% of Millennial and Gen Z candidates cite benefits as a major factor when evaluating job offers. These employees are seeking more than just financial reward; they value flexibility, mental wellbeing support and a sense of purpose.

In industries facing talent shortages—such as tech and finance —benefits can be the deciding factor between a candidate choosing one employer over another. A compelling package not only helps organisations stand out, but also supports diversity by appealing to a wider range of candidate needs and lifestyles.

Boosting Retention and Reducing Turnover

Employee benefits are not only about recruitment; they play a vital role in keeping staff engaged and loyal. According to recent research, 70% of employees are more likely to remain with an employer that offers well-structured benefits and eight in ten would consider switching jobs for a better package.

For 38% of employees, benefits were the deciding factor in accepting a job offer—a figure that rises to 51% for younger workers aged 16 to 24. Given that the cost of replacing an employee in the UK can exceed £30,000, investing in attractive and relevant benefits is not just good practice, it’s financially prudent.

The Evolving Nature of Employee Benefits

Today’s employees expect benefits that go beyond traditional offerings like pensions and annual leave. Instead, they seek support tailored to their individual values and circumstances. This includes:

• Flexible or hybrid working options
• Mental health and wellbeing support
• Opportunities for learning and career development
• Support for family and caring responsibilities

Flexibility and personalisation are key. Employees want benefits that adapt to different life stages—whether that means enhanced parental leave for new parents or professional development for those seeking career progression. In addition, mental health support is now seen as a core component of a modern benefits offering with evidence showing it can lower turnover by up to 30%.

Key Employee Benefits Driving Attraction and Retention

Certain types of benefits are proving especially powerful in today’s workforce:

• Flexible/Remote Working: Increases job satisfaction and work-life balance. Around 80% of UK employees prefer flexible options.
• Enhanced Pension Contributions: Provide long-term financial security and are valued by employees across age groups.
• Health, Dental & Wellbeing Cover: Helps reduce absenteeism and boost productivity. Companies offering wellbeing support see significantly lower turnover.
• Recognition & Reward Schemes: Foster motivation and morale. Regular acknowledgement—whether peer-based or from leadership—builds a sense of belonging.
• Professional Development: Opportunities for growth and upskilling improve retention and align employee goals with organisational success.
• Family Support: Benefits such as childcare vouchers, enhanced parental leave and eldercare support are increasingly important to a diverse workforce.
• Bonus/Profit Sharing: Financial rewards tied to company performance can incentivise contribution and promote transparency.

Trends Shaping Employee Benefits in 2025

The nature of benefits is shifting rapidly. In 2025 and beyond, we can expect:

• Flexible Working as Standard: Remote and hybrid models, compressed hours, and job sharing are now expected rather than exceptional.
• Personalised, Holistic Packages: Benefits that support physical, mental, and financial wellbeing will continue to rise in importance.
• Salary Sacrifice Schemes: More employers will turn to tax-efficient options such as electric vehicle leasing or additional leave to manage rising costs while offering competitive perks.
• Values-Driven Offerings: Socially responsible and inclusive benefits, such as volunteering days or sustainability-focused schemes, will appeal to purpose-driven candidates.

Why Getting Employee Benefits Right Is Essential

A strong benefits package sends a clear message: that the employer values its people. Benefits play a central role in shaping organisational identity and culture. They reflect a company’s commitment to inclusion, wellbeing, and personal growth—all of which are central to employee engagement.

From a business perspective, well-designed benefits programmes are linked to improved performance, reduced absenteeism, and higher productivity. When employees feel supported, they are more likely to remain loyal, motivated, and committed to the organisation’s goals.

In the UK, employee benefits are far more than an administrative requirement or a cost to manage—they are a strategic tool for building high-performing, loyal, and diverse teams. As employee expectations continue to evolve, employers must keep pace by offering inclusive, flexible, and meaningful benefits. In doing so, they not only enhance recruitment and retention but strengthen their organisational culture and long-term success.