Paid sick leave has emerged as the UK’s most valued workplace benefit, ranking above inflation-matching pay rises and flexible working, according to new research.
The Ciphr survey of 2,000 UK employees found that more than two-thirds (68%) believe company sick pay is the most important employee benefit employers can offer, placing it ahead of annual pay rises that match or exceed inflation (60%) and flexible working hours (58%).
The findings reflect growing concern among workers about financial security, wellbeing and work-life balance as the cost of living continues to pressure households across the UK. The research also highlights a widening gap between what employees value most and what many employers currently provide.
PAID SICK LEAVE TOP WORKPLACE BENEFIT
According to the study, the top 10 workplace benefits and incentives valued by UK employees in 2026 are:
- Paid sick leave (68%)
- Annual pay rises matching or exceeding inflation (60%)
- Flexible working hours (58%)
- Pension contribution matching (54%)
- Extra holiday allowance (50%)
- Upskilling opportunities (48%)
- Employee discount schemes (46%)
- Paid overtime (42%)
- Hybrid working (41%)
- Personalised employee development (37%)
The findings suggest that workers increasingly value benefits that support long-term financial stability, health and wellbeing over traditional workplace perks. Paid sick leave was also the highest-ranked benefit in a similar survey conducted by Ciphr four years ago, when 67% of employees named it their top priority, indicating that employee expectations around workplace support have remained consistently high.
EMPLOYEES SEEKING SECURITY
The research points to a workforce increasingly focused on stability and protection during periods of economic uncertainty. While salary remains important, employees are prioritising benefits that reduce stress, improve flexibility and help manage rising living costs.
Inflation-linked pay rises remain a significant issue for many workers, with 60% saying they value annual salary increases that keep pace with inflation. However, only 38% of employers surveyed said they currently offer inflation-matching pay rises.
There is also a notable gap between employee demand and employer provision when it comes to paid sick leave and extra holiday allowance. While 68% of employees rate paid sick leave as highly important, only 56% of employers currently provide company or contractual sick pay. Similarly, 50% of employees value additional holiday allowance, but only 38% of organisations offer it.
FLEXIBLE WORKING CRITICAL TO RETENTION
Flexible working remains one of the most sought-after workplace benefits across all age groups. The survey found that flexible working hours are particularly important among employees aged 35 to 44, many of whom are balancing careers with childcare or caring responsibilities.
Younger employees and workers under 45 were also more likely to value upskilling opportunities (57%) and workplace flexibility (64%) over pension contribution matching (50%). In contrast, workers aged over 45 placed greater emphasis on pension contribution matching (58%), reflecting growing concerns around retirement planning and long-term financial security.
The research highlights how employee priorities evolve across different life stages, making personalised and flexible benefits packages increasingly important for employers.
GAPS REMAIN DESPITE MORE BENEFITS
Separate research from Ciphr, involving 300 HR decision-makers, found that many UK organisations are expanding benefits offerings to improve recruitment, retention and employee engagement. More than half of employers surveyed said they now provide:
- Upskilling opportunities (62%)
- Flexible working hours (59%)
- Employee discount schemes (59%)
- Hybrid working (57%)
- Paid sick leave (56%)
- Personalised employee development (52%)
- Pension contribution matching (52%)
However, significant disparities remain between employee expectations and employer offerings, particularly around pay and financial protection.
SICK PAY PROVISIONS
“With employer National Insurance contributions rising and wage bills under sustained pressure, it’s understandable that companies are scrutinising every line of their reward and benefits spend,” said Karen Lough, Director of People at Ciphr. “But this research highlights a real risk in employers cutting back or standing still. Employees have clear priorities – paid sick leave, pay rises that keep pace with inflation, pension matching and flexible working – and in several areas there are significant gaps between what they expect and what employers tell us they currently provide.”
Lough warned that insufficient sick pay provision could negatively affect both productivity and long-term workforce health. “Take paid sick leave for example – the top-ranking benefit chosen by employees. Only half (56%) of employers offer company or contractual sick pay,” explained Lough. “This creates a situation where many employees may force themselves to work when they may not be well enough to do so, because they can’t afford to live on Statutory Sick Pay (SSP). While the latest SSP reforms are welcome and will make sick pay more accessible to lower earners and part-time earners, “the changes won’t fully bridge the gap for employees without company sick pay.”
She added that businesses ignoring employee expectations could face increased recruitment costs, absenteeism and lower engagement: “A strong, clearly communicated benefits package builds trust, helps reduce absenteeism, burnout and attrition, and strengthens your employer brand. Getting it wrong, or simply doing nothing, carries its own cost – one that tends to show up quickly in increased recruitment spend and lower engagement and performance scores.”
RISING DEMAND FOR PERSONALISED BENEFITS
The research also found that employees increasingly want benefits tailored to their stage of life and personal circumstances. Some workers prioritise paid study leave (34%), private health insurance (37%) or salary sacrifice pension schemes (31%), while others value four-day work weeks (28%), remote working options (26%) or discounted gym memberships (26%).
Phil Curtis, Managing Director of FlexGenius, said employers can no longer rely on a “one-size-fits-all” approach. “It is becoming ever-more important for employers to respond to the changing needs of employees as they progress through their working lives,” noted Curtis. “A workforce that spans different generations, life stages and working patterns no longer responds to a single, fixed benefits package. Employees want to feel fairly rewarded for the value they bring to an organisation, and offering relevant, personalised benefits is an essential part of that.”
GUIDANCE FOR EMPLOYERS
HR experts say businesses should take a more strategic and data-led approach when reviewing employee benefits strategies in 2026, particularly as competition for skilled workers intensifies and employee expectations continue to evolve.
Experts recommend that employers move beyond simply offering benefits and instead focus on whether employees understand, value and actively use the support available to them.
Review sick pay policies
With paid sick leave now ranked as the most important employee benefit by UK workers, organisations should review whether their current sick pay provision remains competitive. Many businesses still rely solely on Statutory Sick Pay (SSP), despite growing evidence that inadequate sick pay can contribute to presenteeism, burnout and long-term absence, as reported.
Employers should assess:
- Whether company sick pay is financially sustainable
- How their policy compares with competitors
- The impact of sick pay on retention and productivity
- Whether employees fully understand their entitlements
Benchmark benefits against industry standards
The research highlights a widening gap between employee expectations and employer offerings, particularly around inflation-matching pay rises, paid leave and flexibility. Employers should regularly benchmark their reward packages against sector competitors to identify gaps that may affect recruitment and retention.
Areas to benchmark include:
- Paid sick leave
- Pension contributions
- Flexible and hybrid working
- Holiday entitlement
- Career development opportunities
- Mental health and wellbeing support
Improve communication around existing benefits
One of the biggest challenges for HR teams is that many employees are unaware of the benefits already available to them.
Experts recommend conducting regular internal communications campaigns and simplifying benefits information so employees can clearly understand what support exists and how to access it. This could include:
- Quarterly benefits awareness campaigns
- Personalised benefits dashboards
- Benefits onboarding for new hires
- Regular reminders around wellbeing and healthcare support
Offer more flexible and personalised benefits
A workforce spanning multiple generations and life stages increasingly expects benefits tailored to individual needs. Rather than relying on one-size-fits-all packages, organisations are being encouraged to provide employees with greater choice over benefits linked to:
- Health and wellbeing
- Financial planning
- Family and caring responsibilities
- Remote and hybrid working
- Career development and learning
Flexible benefits platforms and salary sacrifice schemes are becoming increasingly popular as businesses seek to improve employee engagement while managing costs. In fact, offering health and wellbeing support is a great way to attract and retain staff, even the younger generations, as reported.
Use employee feedback and workforce data
HR leaders are also being advised to use workforce analytics and employee feedback more effectively when shaping reward strategies. This includes analysing:
- Benefits uptake data
- Employee engagement surveys
- Exit interview feedback
- Absence and turnover trends
- Recruitment challenges
OFFERING CHOICE OF EMPLOYEE BENEFITS
Ciphr’s Karen Lough said employers that actively listen to their workforce are more likely to build resilient and high-performing teams. “Giving your people greater autonomy to choose the benefits they genuinely want helps make them feel valued and more motivated. But it’s important to be led by the data – use feedback from existing employees, and recent leavers, to understand what you’re doing right and what needs to improve.”
As economic uncertainty continues and employees place greater emphasis on wellbeing, flexibility and financial protection, workplace benefits are increasingly becoming a core business strategy rather than simply an HR function.
Businesses that fail to adapt risk higher recruitment costs, lower productivity and increased staff turnover. But organisations that invest in meaningful, well-communicated and flexible employee support may be better positioned to improve engagement, strengthen employer branding and build long-term workforce resilience.
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