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The major difference between legally required benefits and discretionary benefits is that legally required benefits or mandatory benefits are required to be provided to employees by law, whereas discretionary benefits are voluntary benefits that employers may choose to provide to their employees.
Employee benefits refer to the compensation or perks that are provided to employees on top of their base wage and salaries. Basically, any type of indirect pay that is offered to an employee by the employer, either mandatory or voluntary, is considered an employee benefit. There are two major categories of employee benefits: mandatory benefits and discretionary benefits.
Mandatory benefits, also called Statutory benefits, are entitlements that are made obligatory on the employers to provide for their employees by law. Common examples include benefits like paid sick leave, paid annual leave, health insurance, worker's compensation insurance, etc. On the other hand, discretionary benefits are the type of benefits that are required by law to be provided to employees by their employer. These are optional or voluntary benefits that the employer can choose to provide. This umbrella term includes myriad benefit types, such as supplementary dental and vision insurance, wellness programs (like gym membership), child care stipends or daycare, etc.
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