What benefits and compensations should a company provide to its employees apart from salaries that can help keep them satisfied and content with their jobs? Read on to find out more…
What are Employee Benefits?
Employee benefits and perks are the non-salary compensations that are provided to the employees by their respective companies. Employee benefits and compensations vary from company to company. They are provided in addition to the salary for the purpose of creating a competitive spirit amongst the employees and to motivate them to perform better. A company that provides good benefits and compensations also increases the chances for it to attract highly-qualified prospective candidates. So what constitutes a solid employee-benefits package, and how do you set up various benefits plans? This blog provides an overview of the basics of designing a package.
Which benefits are mandated by law to be provided to employees?
Every company has its own set of employee benefits and compensation packages but there are certain benefits that have been made mandatory by the law to be provided to every employee of the organization. Employers should confirm with their states with respect to the ones applicable in particular states/territories.
It is important for every employer to provide the minimum wage, as set by the central governments of the particular country. In India, the Minimum Wages act, 1948 decides the minimum wage for employees, required for their daily sustenance. Currently, it is set at Rs. 176 ($3) in India and is expected to change towards the end of 2020. In the United States, the Fair Labor Standards Act sets the current federal minimum wage at $7.25 an hour.
Family and Medical Leave
This requires employers to provide Maternity, Fraternity and Adoption leaves but isn’t required to be a paid leave. However, some employers might think of making it a paid leave as per the company policies. Most of these leaves are provided in the US, while in India, the prevalence of Fraternity and adoption leaves are comparatively less as compared to other western countries. This is one of the common employee benefits and perks.
Overtime benefits vary from country to country and from state to region. While most multinational companies have provisions for overtime pay to their employees, a number of Indian companies still have not incorporated the aspect on a significant scale. It is important for companies to provide proper pay to their employees for every extra hour/day worked, in addition to the basic salary. This is one of the common employee benefits and perks.
It is necessary that employees provide compensation to their employees that were performing extraordinarily and had to be laid off due to a layoff for a specified period of time. The amount of unemployment pay varies by state and job title. Employees who resigned or were fired for their misconduct are typically not eligible for unemployment benefits.
Disability and Workers compensation
The purpose of both workers’ compensation and disability is to make sure that an injured or sick employee continues to get paid (usually a portion of their normal pay) until they are well enough to return to work. Every business has its own workers’ compensation and disability requirements for employers. While some businesses are exempt from providing workers’ compensation, most payroll employees are eligible if they are injured on the job.
Types of Employee Benefits
In addition to the benefits mentioned above that are mandated by law, there are some other benefits that are provided by employers to keep their employees content and satisfied. Depending on the company, these benefits may include health insurance (required to be offered by larger companies), dental insurance, vision care, life insurance, legal insurance, paid vacation leave, personal leave, sick leave, child care, fitness, retirement benefits, and planning services, college debt relief, pet insurance, and other optional benefits offered to employees and their families. These types of employee benefits are offered at the discretion of the employer or are covered under a labor agreement, so they will vary from company to company.
Some of the benefits and perks are mentioned below:
Most health insurance plans provided by employers provide coverage for visits to primary care physicians and specialists, hospitalization, and emergency care. Alternative medical care, wellness, prescription, vision, and dental care coverage will vary by the plan and employer. Employers are required to provide healthcare to employees who work at least 30 hours per week. Some (though not many) part-time workers are covered by employer plans.
Retirement Benefits and Pension Plans
A strong retirement benefit can help you recruit employees and reduce turnover. Yet these programs are somewhat rare at private companies. This includes employer and employee provident funds, which are contributed by both the parties and serve as pension funds for the employees after retirement. However, the instances of retirement benefits have been constantly decreasing since the last decade.
Employers can at times provide their employees with paid leaves for holidays, once every 1–2 years. Although not mandatory by law, it increases the incentive for employees to give their best performance and helps enhance retention. Many employers make sure that their employees get time off for holidays (paid and unpaid) or provide overtime pay for those willing to work on a holiday. This is one of the common employee benefits and perks.
Some employers increase wages for everyone a certain amount each year to keep up with inflation. There are also different types of incentive pay that allow employees a chance to earn more on a merit system. A common type of incentive pay is commission. Inside sales or customer service employers frequently try to motivate employees to upsell customers for a commission.
Sabbatical programs, whether paid or unpaid, are fairly rare but some companies swear by them. Typically, employees who have been with a company for a certain period of time (say, five years) are allowed to take study leave, time off to travel, live in another city, or pursue a passion. A sabbatical might be an automatic period of time (say, three months) or it might be a one time opportunity for an employee to take three additional weeks of vacation on top of the three weeks he or she is awarded under a company’s standard study leave.
Under a flexible work arrangement, an employee can choose to work atypical business hours so long as they complete assignments in a timely manner. These arrangements take many forms including working a 4-day week, telecommuting, and job-sharing. Flextime is considered a smart benefit particularly if you are trying to tap certain segments of the workforce such as older workers or new mothers.
Because of the growing student debt crisis, some employers are granting debt repayment assistance. There are no current laws requiring employers to do this, but it is a great perk for employees struggling to make ends meet as they begin their professional careers. Employers can provide their employees with necessary classes and certifications as needed, which can help the company itself.
Relocation assistance is a highly sought after benefit for candidates who are experienced and settled in a location and routine. Employees who are established are not as willing to move to take a new job or remain with a company that has decided to move its headquarters or offices to a new location. You might consider adding relocation assistance to attract talent or move your existing talent pool around. This is one of the common employee benefits and perks.
In addition to the perks mentioned above, some employers can also provide other forms of perks such as Giving every Friday an off, providing access to any library, providing access to Kindle, etc. This highly depends upon the employer and varies greatly from company to company, but if provided, can prove to be a good form of change.
Keeping the employees happy and satisfied is one of the core things that can improve employee relations and engagement amongst them, leading to a healthy working environment and better organizational results.
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