The Employee discount scheme in the UK is generating quite the buzz in the market and for all the right reasons. 78 percent of employees agree that the benefits package, including discount schemes, helps them accept or reject a job.

With inflation at an ever-so-high rate and with the soaring cost of living in the UK, companies and employers are trying to help keep their employees happy and motivated by engaging them in various ways. One of the most successful of them is using discount schemes.

What is an employee discount scheme?

An employee discount scheme is a method of providing rewards and perks in the form of coupons, gift vouchers and more so that the employees spend less than they have to on day-to-day purchases or for bigger unavoidable spending for their home and their family.

It was seen in a study that 73 percent of employees were willing to retain their jobs where employee discount schemes were effectively used.

Many employee discount platforms today offer effective rewards and reward-based discount systems to employees, using which employees can gather vouchers and points that can be redeemed when they shop for products or services.

Popular employee discount examples

Employees can benefit from savings beyond just grocery shopping. They can avail discounts on vacations, gym subscriptions, dining out, and wellness offerings, among others. Below, we've highlighted a few top examples of the available discount scheme benefits.

Top 9 employee discount schemes for employees in the UK

Here are the top 9 employee discount schemes for employees in the UK.

1. Retailer specific discount programs

Retail discount programs are the most common type of discount program companies offer. They can help reduce the cost of regular, day-to-day spending made by employees and, therefore, help cut down on the cost of living. The most common forms of retailer discount programs are:

• Supermarkets: Supermarkets in the UK, such as M&S, Tesco, and Sainsbury, are some of the most common ones that offer retail discounts of 5 to 6 per cent on total billing value when provided as a program to employees in a company.
• Clothing and fashion brands: Many UK-based clothing brands are part of employee discount programs and offer an average of 9 to 10 percent discount on total spending. Common brands that can be found are Debenhams and Asos.
• Electronics and technology stores: Another popular retail store where employees can use retailer discount schemes at electronic stores for approximately 20 percent savings on expenses. Popular stores such as Samsung and Lenovo products can be bought using these discount programs.

Offering retail-specific discount coupons is a great option for employees as they help save money when employees shop with these coupons. However, the only drawback is that they are not widespread and can be limiting regarding options. Also, the discount percentages are on the lower end.

2. Employee benefits platforms

Employee benefits platforms are plentiful in the UK, and almost 27 percent of the top companies plan to invest further using one or the other perks and benefits platforms to provide discount schemes, e-vouchers, digital rewards and many more services to employees who use these platforms.

Using these platforms, employers can motivate employees to perform better and redeem discount coupons or vouchers that can be used for many different kinds of products and services ranging from retail to hotel or travel services, food and dining to movies and entertainment options, etc.

Some of the popular employee benefits platforms in the UK are:

• Xoxoday Empuls
• Perkbox
• Reward gateway
• Edenred

3. Travel and leisure discounts

Travel has become a luxury with the rising cost of airfare and fuel prices. Hotels and sightseeing have also become proportionately more expensive with the cost of travel. But by using discount schemes that specifically tie up with travel and leisure companies, employees can enjoy discounts on airplane fares, hotel fares, package deals and more.

Popular discount schemes under travel and leisure are:

• Airline discounts: Enjoy up to 10 percent of domestic and international bookings
• Hotel and accommodation deals: With some of the best hotel and Airbnb stays
• Theme parks and attractions: Disney and many more attractions can be availed.

4. Financial services and insurance discounts

Many people find discount schemes beneficial on some of the most essential services that cannot be avoided, like paying credit card bills and insurance payments for life, medical or home and car. These discount schemes help reduce the payment by availing special rates using discount coupons.

Some of the popular schemes available are:

• Banking services: Discount on card payments and other banking services
• Investment and financial planning: Special offers on investment portfolios including the purchase of financial products
• Health insurance products: special offers and discounted prices for health insurance products
• Car insurance: Exclusive prices for car insurance rates at a discounted value.

5. Dining and food discount

Food services, takeaway services, bars, and restaurant discounts are very popular, especially among younger employees. These discount schemes can be redeemed at listed bars, restaurants and food joints for dine-in and takeaway services.

They are very useful in cutting down on the cost of living for employees who work longer hours and multiple shifts. It was noted in 2022 that post covid, 65 percent of employees were willing to return to work if free meals were provided.

Meal vouchers and takeaway discounts are provided by companies to help promote a culture of work-life balance. In a fast-paced corporate life where employees seldom get time to work up a full meal at home, these programs are beneficial and help save money.

6. Health and wellness programs

The covid era has proved to everyone in the world that despite the money and the luxuries in life, health is not to be taken lightly. Companies try to promote a healthy lifestyle, especially for the employees who have desk jobs and are stuck with their laptops all day.

55 percent of employees agree that health and wellness programs are important when accepting a new job. Some of the popular forms of health and wellness programs include:

• Gym memberships and fitness classes: Programs that link employees with top chains such as Anytime Fitness and Sports Direct and provide savings upto 25 percent.
• Wellness and mindfulness apps: Subscription apps and services that help promote online health classes, yoga, aerobics and nutrition services with exclusive offers.

Employee assistance programs (EAPs) are also becoming increasingly popular amongst companies in the UK. Health is no longer limited only to physical attributes but also includes emotional and mental well-being.

Discount schemes can make it more accessible and easier for employees to avail of these services. 88 percent of companies are now providing these benefits to employees. Some of the popular programs are:

• Mental health support
• Counselling services

7. Education and training discounts

Upskilling and continuous learning support is highly valued amongst employees who are in technical and professional jobs.

Employees who are given an opportunity to continually work on their skills and learn continually on the job can mutually benefit the employee and the employer with better productivity and, eventually, better revenue.

44 percent employers are planning to invest more in training and learning opportunities for their employees. Some of the popular methods that can be incorporated under discount schemes are:

• Discounts on educational courses and certifications: Providing training to develop certain skills and upskill themselves through direct classes or online courses and certifications.
• Employer-sponsored training programs: Employers often sponsor technical programs that help impart specialized knowledge and on-the-job training for highly sought-after skills in the market.
• Encouraging continuous learning and professional development: Integration of continuous learning and development in the day-to-day curriculum to improve the skills and talents of the employees regularly.

8. Home and lifestyle discounts

Many companies offer home and lifestyle discounts for their employees when they shop in-store or online, such as home furnishing, home equipment, garden and other lifestyle products and services such as beauty, wellness and health treatments.  

Some of the popular discount schemes for home and lifestyle discounts are:

• Discounts on home improvement and furnishings: Home improvement, renovation, equipment and furnishing products and services can be availed on discount from popular platforms such as B&Q.
• Lifestyle services such as spa treatments and beauty salons: Coupons and discounts for health and wellness-related services such as hair appointments, spa treatments, salon services etc, can also be availed using discount schemes.

9. Employee feedback and satisfaction

One of the most important tools to improve employee well-being and engagement is through rewards, perks, benefits and discount scheme platforms that bundle all these services to help employees combat rising prices, inflation and cost of living.

Gathering feedback from employees and utilizing their suggestions to employ the best techniques is necessary to ensure employees are making the most of the platform.

Employers can use websites, online forms, anonymous feedback forms or apps to gather feedback from employees and use this data to come up with the best ways to provide discount schemes or any other form of employee rewards and benefits.

Using this data can also help in continually working towards employee welfare and benefit, which helps keep them motivated and engaged and helps to retain trained and valuable human resources with the company.

How does an employee discount scheme work in UK?

In the UK, an employee discount scheme is a popular benefit many employers offer to help their staff save money on various products and services. Here's how these schemes typically work:

• Partnership agreements: Employers negotiate deals with external companies to provide discounts for their employees. These can range from savings on shopping, travel, dining out, gym memberships, entertainment, insurance, and much more.
• In-house discounts: Some businesses, especially those in retail or service industries, offer their products or services at a reduced rate to their own employees.
• Platform access: Employees may be given access to a digital platform or website where they can browse available discounts and redeem offers.
• Vouchers & codes: To avail of the discount, employees might be provided vouchers or unique codes that can be used online or in-store.
• Tax implications: Most employee discounts that are available to employees in general (not just directors or higher-paid staff) and are not excessive are not taxable as a benefit-in-kind. However, if the discount exceeds certain thresholds, there might be tax implications. Refer to the latest HMRC guidelines or consult a tax advisor for specifics.
• Usage limitations: There might be limitations on how often or to what extent certain discounts can be used, so employees should always check the terms and conditions associated with each offer.
• Regular updates: Discount offers can change regularly, with new deals being added and old ones expiring. It's a good idea for employees to regularly check the platform or stay updated with company communications to make the most of available offers.

Employee discount schemes are an effective way for employers to boost morale, increase retention, and offer a tangible benefit to their staff without necessarily increasing salaries. It's a win-win situation as employees get to save money, and partnering companies get more customers.

Are employee discount schemes taxable?

Employee discount schemes can sometimes be taxable, depending on the tax laws and regulations of the country in which you reside or work.

In the UK, for instance:

• Minor benefits: Certain small benefits (often referred to as 'trivial benefits') that meet specific criteria might not be taxable. For example, a trivial benefit costs £50 or less.
• Goods at a discount or free of charge: If employers provide goods to employees at a discount or free of charge and those goods are also sold to the public, then the discounts might not be taxable. However, there are certain conditions and limits.
• Other discounts: For discounts on services or products not sold by the employer, the value of the benefit (the discount) might be considered taxable.
  

Always consult with a local tax professional or refer to the latest guidelines from the relevant tax authority (like HMRC in the UK) to understand the specific tax implications of any employee benefit, including discount schemes.

Conclusion

Employee discount schemes in the UK listed above are only some of the top companies' most popular methods. More innovative and creative methods can be adopted based on the company size and the specific employee requirements.

This helps maintain a positive working environment, provides a good employee experience and motivates employees to perform better. With higher employee satisfaction and motivation, employers can achieve better productivity and better overall revenue. They can also hope to retain important and valuable human resources in a competitive world.

Using an employee rewards platform that can provide discount schemes and other employee rewards and recognition is a sure-shot method to increase employee satisfaction. It helps to instil stronger brand values within employees.