Discretionary benefits: an explanation and main trends for 2025

While a good salary and a decent amount of annual leave are attractive to prospective employees, it’s the extras that might sway them to join your company. As the job market becomes more competitive, these discretionary benefits can help attract and retain top talent. These perks, which used to be seen as nice to have but not essential, are becoming a strategic way in which to enhance employee satisfaction and stand out as the employer of choice.

Discretionary benefits include things like paid time off, a company car, private healthcare, and wellness programmes that can prevent employee burnout. As employees seek a better work / life balance, these benefits gain momentum, so let’s dig a little deeper to find out what they are and the key trends that are shaping their evolution.

Discretionary benefits are additional services or perks that the employer can choose to provide, in order to attract and retain talent, enhance staff morale, increase the satisfaction of the workforce, and protect the company’s brand. Employers are not legally obliged to provide them.

Normally, a business would select a range of discretionary benefits that align with workforce needs and their organisational goals. That way, the business gains a competitive advantage while fostering a more engaging and supportive environment at work. 

In the UK, the most common examples of discretionary benefits are:

• Health insurance – allows for quick and easy access to private healthcare treatment and services.
• Life insurance – while this might not benefit the employee, it will help their next of kin, as it’s normally a lump sum payment shelled out in the event of an employee’s death.
• Company car – if your employee is required to do a lot of travelling to and from sites and the office, a great discretionary benefit to offer is a company car, plus petrol costs, which are normally calculated by the mile.
• Flexible working – this can incorporate working from home, working part time, or offering flexi-hours.
• Bonus scheme – usually an annual benefit, a bonus can be performance-related or connected to an accomplishment where the employee went above and beyond their normal realm of job duties.

To reiterate the point, discretionary benefits are not legally required to be offered by employers as part of a job package, unlike statutory entitlements. These are benefits that employees are legally entitled to, including paid annual leave, sick pay, maternity or paternity leave, and a pension plan for all UK employees who are over 22 and earn in excess of £10,000 a year. Employers must provide these in order to comply with government guidelines. 

Discretionary benefits and fringe benefits are very similar, but not quite the same. While discretionary benefits are voluntary, going beyond what is legally required, fringe benefits cover a wide range of perks that can either be discretionary or mandatory. Common fringe benefits include healthcare, use of a company car, pension plans, childcare support, and gym memberships.

To sum it up, all discretionary benefits are fringe benefits, but not all fringe benefits are discretionary. 

Below is a list of the main trends regarding discretionary benefits in 2025:

With mental health issues on the rise in the UK, employers are increasingly prioritising this by providing healthcare benefits that include mental health support. By addressing work-related issues, such as stress, companies are able to foster healthier and more resilient teams while demonstrating their commitment to employee wellness. 

Private medical insurance covers the cost of treatment at a private practice, allowing for quick and easy access to private healthcare treatment and services, instead of having to go on a long waiting list for treatment with the NHS. It also has benefits for both the employer and the employee, as the employee doesn’t have to wait for treatment and thus can be back at work quicker than without this discretionary benefit. Dental care and specialist eye care can also be offered as part of a package, or separately. 

As the workplace evolves, the traditional job of working 9-5 is out the window. Being more flexible as an employer has been a top priority since the pandemic, when working remotely became commonplace. UK employees can ask for flexible working if they’ve worked for the same employer for 26 continuous weeks. While an employer doesn’t have to say yes, they do have to consider it thoroughly, and give a valid reason if the request is refused. 

While some UK companies are encouraging staff back to the office, others are offering a flexible alternative, with working from home days once or twice a week. This adaptability improves work / life balance and helps companies to tap into a more geographically diverse talent pool.

One thing to note is upcoming legislative changes, particularly with the Employment Rights Bill, which will ensure flexibility is more accessible for UK workers.

According to the latest survey from the Reward & Employee Benefits Association (REBA) on the future of employee benefits, employees in the 21^st century expect “greater flexibility, personalisation, and holistic support. With a diverse workforce spanning different generations and financial priorities, a one-size-fits-all approach is outdated.” That means offerings that can be customised, such as healthcare packages that can either include your standard healthcare coverage or diversify with services such as fertility treatments and wellbeing tools.

These can be things like salary sacrifice schemes, assistance with student loans, and financial literacy programmes, which provide immediate support, along with the mandatory pension contribution. Forward-thinking employers are even introducing salary advance schemes and debt counselling to provide even more immediate relief.

It’s well known that many employees don’t make full use of their benefits, so the trend in 2025 is to use push notifications, AI-driven insights, and check-ins to educate employees, encouraging them to make use of their discretionary benefits before it’s too late.

Discretionary benefits are so much more than the odd perk – they are strategic tools used for building a thriving work environment while attracting the best employees. By customising these benefits to employee requirements, organisations can boost morale, foster loyalty, and gain a competitive edge within the job market.

Trends such as offering mental health support, flexible working hours, and private healthcare illustrate the priorities of employees and employers. To stay ahead of the game, companies need to evaluate what they offer, align these with employee expectations, and embrace innovative ways in which to enhance the employee experience.

If your organisation is considering outplacement services as a discretionary benefit, contact us at the earliest opportunity to find out more. 

Elizabeth Openshaw

Elizabeth is a diligent, articulate, and versatile Blogger and CV Consultant with over 13 years of experience in the job search sector, including extensive expertise in outplacement services and CV reviews, supporting job seekers and all of those involved in the recruitment process. With a personable and self-assured outlook, Elizabeth consistently produces work to a high standard and hits deadlines 100% of the time. Showcases excellent organisational and time management skills, proven by 17 years as a Journalist on numerous national publications including as Features Editor on a monthly glossy magazine and as a regular contributor to Men’s Health, Slimming World and Candis. As Director of her own company, OpenDoor CV Expertise Ltd, Elizabeth displays a high level of professionalism, demonstrated by the positive recommendations and testimonials from many previous clients. Additionally, she is an active member of both the British Association of CV Writers (BACVW) and the Institute of Employability Professionals (IEP), supporting people to gain work, progress in work, and retain work.