Employee Benefits vs Employee Perks: What’s the Difference?

Benefits and perks might sound like the same thing, but they serve two different functions for your employees. In this guide, we'll walk through the difference between the two and how they stack up again each other, so you can build the best possible package for your team.

Benefits 101

Feb 01, 2024 ⋅ 9 min read

As an employer looking to boost your employee’s morale, incentivise loyalty, and attract the best talent, you already know the importance of creating the best benefits package possible. But what about the ‘perks’?

Same thing, right? 

Not quite.

In day-to-day language, the terms ‘employee benefits’ and ‘employee perks’ are often used interchangeably, but they refer to different things. Understanding the difference between them is key to building the best benefits package for the best talent–so let’s dive right in!

What are employee benefits?

Employee benefits are considered additional compensation outside of primary salary.

The benefits that a business provides vary from business to business, depending on industry or country of operation. The most common employee benefits fall under:

  • Health benefits
  • Workplace benefits
  • Financial benefits
  • Lifestyle benefits
  • Salary sacrifice schemes
  • Flexible benefits

​Most businesses today offer employee benefits, and they are a great way to recruit new talent. A study by EBRI found that 78% of employees agree that benefits influence their decision to accept a job. 

Of course, employee benefits aren't just used for recruitment — they also help keep your team motivated, productive, and happy! To learn more about the advantages of offering a comprehensive benefits package, read more about why employee benefits are important.

What are employee perks?

Employee perks, on the other hand, are designed to boost morale and incentivise loyalty by offering workers something they might not get elsewhere. Think: gym memberships, spa vouchers, paid language courses, etc. 

Similarly to benefits, there is no ‘one-size-fits-all’ to perks. From retail discounts to free meals in the office, there are endless perks you can offer.

Offering employee perks is a great way for businesses to improve their recruitment and retention efforts. There are loads of different perks that can be tailored to be suitable for every type of employee. 

Here are a few examples of employee perks:

  • Team lunches
  • Gym memberships ​
  • Retail discounts 

Employee benefits vs. employee perks: what’s the difference?

One of the main differences between the two is that providing certain benefits, also known as ‘statutory benefits’, is legally required, whereas providing perks is optional. 

There are four mandatory employee benefits in the UK:

  • Sick and holiday pay
  • Healthcare
  • Pension
  • Maternity/paternity pay

But the difference between benefits and perks goes deeper than that.

For example, private medical insurance, while not mandatory to provide, is an expected benefit in today’s employee benefits packages that helps ease the financial burden of private healthcare. Retail discounts, on the other hand, are great to have and contribute to the overall culture of your company, but don’t go as far in improving your employees’ lives.

While both benefits and perks are important for maintaining a healthy work culture, employee perks are far less substantial than benefits.

Look at it this way: most of your employees would much rather have a great pension match scheme than a free yoga membership. So as an employer, it’s a good idea to focus first on making sure your core benefits offerings are up to snuff before relying on flashy perks to attract talent.

If you’re worried that your benefits package contains more perks than benefits, use our benefits benchmarking tool to see how your benefits package compares to your competition.

Final thoughts: why employers should focus on benefits over perks

While perks have their place in enhancing your employee’s work life, you need to make sure to not overlook the importance of your core benefits offerings. A strong benefits package signals that a business cares about the long-term welfare of its employees–not just free coffee in the office.

By steering the focus toward benefits, you allow your business to build a long-term relationship with your employees. 

Want to create the best benefits package for your team? Book a demo with one of our expert benefits consultants to learn how you can start your journey towards offering a fully comprehensive package for the people who power your business.

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