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News & Insights | 20th January 2026
Employee Benefits
8 Min Read
The days when employee benefits were simply a part of the box-ticking exercise to onboard a new member of staff are long behind us. We’ve moved from companies saying, ‘this is what you get’ to prospective employees saying, ‘this is what I want’. In today’s competitive labour market, this means employee benefits have become a frontline tool for attracting, motivating and retaining great people. So against this backdrop of rising employee expectations, what are the key challenges for HR managers, what trends are reshaping the benefits landscape, and what opportunities will 2026 present in getting ahead of the competition?
Employees today want more from their benefits – more choice, more relevance, more support. But with inflation, tighter budgets and rising private medical costs, HR teams are being asked to deliver more value with fewer resources.
Flexible or “cafeteria-style” benefits are growing in popularity because they allow people to select what genuinely matters to them without forcing employers to dramatically increase spend.
It’s no different to a thoughtful Christmas gift, something that the recipient actually wants and appreciates, rather than something that goes straight into the ‘regifting’ drawer and never sees the light of day again.
Voluntary benefits (funded by the employee but accessed at a discounted rate provided by the employer) can add additional breadth to a benefits programme without stretching budgets further.
Whatever the mix, the real challenge is delivering choice and cost control – a balancing act most HR teams know all too well.
Countless surveys show the same pattern: employees use only a fraction of the benefits available to them – often because they don’t know what they have, why it matters, or how to access it.
This isn’t a benefits problem; it’s a communications problem.
Employees won’t read long policy documents or hunt around intranets for details. They need clear, concise messaging delivered where and when it’s relevant: mobile-friendly portals, short explainer videos, and timely nudges at key life stages. Engagement requires simplicity, repetition, and good storytelling – not more paperwork.
From HMRC guidance on salary sacrifice to ongoing changes around pensions taxation, the rules governing benefits are constantly evolving. Even well-designed schemes can fall into tax traps without ongoing oversight.
This means HR teams must build compliance into benefits design from day one and stay close to expert advisers. Agility matters as policy changes don’t always come with much warning.
While the challenges are real, HR leaders also have a huge opportunity. Three trends are driving meaningful, positive change across the sector.
A single benefits package no longer fits a multigenerational workforce. Younger employees may prefer wellbeing and lifestyle benefits; mid-career professionals often prioritise family support; older workers may value healthcare or retirement planning.
Flexible benefits platforms let people choose what suits them best — from fertility treatment and mental health support to PMI, gym memberships or extra pension contributions. The more tailored a programme feels, the more appreciated (and used) it becomes.
Wellbeing is no longer a free fruit bowl and annual mindfulness webinar. It has become a strategic pillar of people management, spanning mental, physical, financial and social health.
Employers are expanding EAPs, offering menopause and fertility support, introducing financial wellbeing sessions and investing in preventative, resilience-focused interventions. This shift isn’t just good for employees – organisations benefit from lower absenteeism, improved morale and stronger retention rates.
Employees increasingly expect getting to their benefits to be as seamless and intuitive as any modern digital service. That means mobile apps, personalised dashboards and on-demand access.
For HR, technology brings the additional advantage of data. Uptake trends, behaviour insights and measurable links between benefits and retention can all help HR teams demonstrate ROI and adapt their programmes with confidence.
With these challenges and trends in mind challenges, 2026 presents HR teams with the chance to rethink how benefits are designed, communicated and delivered.
Key opportunities include:
Move beyond a benefit-by-benefit approach and ask instead: How does this programme support the entire employee life stage? A strategic refresh can uncover underused benefits, duplication, or gaps in what you offer that matter more to people now than they did five years ago.
Even at a modest scale new benefit technologies can help HR make smarter decisions about spend, engagement and programme design.
With budgets tight and the cost-of-living crisis still a reality, helping employees with financial resilience should remain or become a priority. Seminars, clinics and budgeting tools can make a meaningful difference.
This offers the dual benefit of cost control for employers and genuine choice for employees – a win-win that helps future-proof reward strategies.
Proactive compliance and budget reviews and collaboration with legal and benefits specialists ensure you stay ahead of HMRC or pensions updates.
Even the best-designed benefits programme fails without good communication. HR teams that invest in clarity, creativity and consistency will see dramatically better employee engagement.
Employee benefits now sit at the intersection of reward, wellbeing, culture and performance. The HR teams that thrive in 2026 will be those that treat benefits not as a set of policies but as a strategic tool — one that reflects the world their employees live in today.
Get the strategy right, embrace the trends, and tackle the challenges head-on, and benefits become more than perks. They become a powerful competitive advantage.
