This master thesis is about employee benefits and its effects on employee engagement. Nowadays, in this new era, benefits are becoming a crucial part of human resource management and can affect important decisions related to employee satisfaction as well as the choice of becoming an employee in a certain company. Employers started to offer a wide range of benefits in order to attract, retain and satisfy employees’ individual needs. Therefore, high competition on the market is also one of the factors why benefits started to develop and why are they so popular today. Material incentives in the form of wages and benefits, as well as various intangible rewards, are among the main resources at employers' disposal for promoting engagement. More engaged employees perform better, which can contribute to the competitive advantage for the whole company. Employee benefits are considered as indirect material compensation offered by employers. Most commonly benefits are classified into three groups: health benefits, leisure time, and employee services. This thesis will be based on primary research about employee benefits and their impact on engagement. Data about employee engagement was collected with the Utrecht engagement scale which consists of three parts- vigor, dedication, and absorption. The use of benefits was explored as satisfaction with benefits and benefits’ availability. Research results show which benefits are the most available, the level of employee satisfaction with benefits, and how different aspects of benefits affect employee engagement. Results of the research showed that respondents are well aware of benefits, but choosing between higher salary or additional benefits, higher salary won. Although it is difficult to measure engagement, results of the survey showed that engagement is affected by benefits in many aspects.