Confinement housing appears to be at the forefront of concern about farm animal welfare. Although many factors may affect the welfare of commercial laying hens housed in cage and non-cage systems, welfare issues in confinement systems often involve behavioural restrictions, while many welfare issues in more extensive systems involve health and hygiene. Hens require an absolute amount of three-dimensional space in order to be able to perform basic body movements. They may prefer to distance themselves from other birds, but their strength of motivation to do so has not been thoroughly investigated, and preferred inter-individual distances may vary with activity. The relationships between the effects of space and group size on behaviour are not well understood, particularly in large groups where birds may cluster together around resources and at different times of day. There are common risks to hen welfare posed by both cage and non-cage systems such as overcrowding. However, some welfare issues present a greater risk in one system compared to another. When considering space and social environment, the comparison of cage and non-cage systems must take into account the threats to welfare that are specific to each system. Furthermore, this review highlights the importance of the design of the housing system rather than just the housing system per se.