Employee Benefits

Employee Benefits

Employee Benefits Jonathan Poland

Employee benefits are additional forms of compensation offered to employees as part of their overall remuneration package. These benefits can include things like health insurance, retirement plans, paid time off, and professional development opportunities. In some cases, employee benefits may be taxed differently than wages, depending on the specific benefit and the tax jurisdiction.

Employee benefits are often used as a way to attract and retain top talent, as they can provide additional incentives for employees to stay with a company. Many employee benefits improve over time, such as retirement plans that vest after a certain number of years of service. By offering attractive benefits, companies can encourage employees to stay with the organization and can improve employee satisfaction and retention. The following are illustrative examples of benefits.

Profit Sharing

Profit sharing such as the granting of stock. These may be structured to vest over time such that employee loyalty and performance are rewarded.

Health Insurance

In a nation without a free public healthcare system, health insurance is a critical employee need. Where healthcare is provided by the government, employee health insurance may cover prescription drugs, vision care, hospital extras such as a private room, medical equipment and paramedical services.

Dental Insurance

Preventive, diagnostic and corrective dental treatments.

Life Insurance

Insurance on the life of the employee. Often a flat amount and/or multiple of the employee’s base salary. Some employers also offer dependent life insurance.

Disability Income Protection

Insurance that covers the employee’s income if they are ill or injured such that they can’t work. This often has two components: a short term plan that covers all or most of an employee’s base salary for a limited period of time and a long term plan that may cover a percentage of salary until retirement age.

Long Term Care

Covers long term costs of care if the employee becomes ill or is injured.

Pension

A plan that is structured to make regular payments to an employee after retirement. This may be a fixed sum that is paid to the employee by the employer in retirement or an investment plan that is contributed to by the employer and directed by the employee. In other cases, a pension is a guaranteed life annuity paid for by an employer and offered by an insurance company. Pension plans are a type of deferred compensation that typically has tax advantages for the employee.

Retirement Benefits

Beyond a pension, some firms offer other benefits to retirees such as health insurance.

Daycare

Programs to help employees find a suitable daycare for their children, particularly in areas where daycare centers have waiting lists. Some employers fully or partially pay for daycare. Large firms may offer daycare centers at their office locations. This can greatly simplify the employee’s commute and allow the employee to be close to their children during the day.

Parental Leave

Paid maternity, paternity and adoption leave. In many nations, maternity and paternity leave are mandated and benefits involve exceeding minimum payment levels or time periods.

Dependent Care

A flexible program that provides benefits for a wide variety of dependent care needs for children and adult dependents. This may cover a variety of child care and activities for children. It may also be used for expenses related to caring for sick or disabled dependents.

Education

Covering expenses related to education such as tuition, housing, travel and training costs.

Housing

Employer-provided and employer funded housing. This may include secondary costs such as utilities. Housing benefits are common when the employee is asked to work in a remote location or is on a secondment in a foreign country.

Time-Off

Paid vacation days, sick days, bereavement leave and days to take care of a family member with a serious health condition. This may be structured as individual policies for each type of leave. Alternatively, employees may be given a pool of days to use for any type of leave. Some firms do not regulate how many days an employee takes off as long as they continue to meet their objectives.

Commuting Allowance

Paying for the employee’s commute. Common in areas where employees usually commute by public transit. For example, it is common for Japanese companies to pay for an employee’s commute as most workers take the train. This may be done to encourage employees to use the most environmentally friendly, safe and low-risk commuting method available.

Transportation

Other transportation benefits such as a company vehicle or bicycles.

Travel

Travel benefits such as a network of company owned vacation properties that can be booked by employees for a low fee.

Relocation Assistance

Paying the relocation expenses of new employees.

Events

Access to events such as a sports event sponsored by a firm.

Entertainment

Entertainment such as passes to movies and theme parks. Doing something that benefit’s an employee’s family tends to be received well.

Memberships

Memberships such as professional memberships, social clubs and sports clubs. This may be necessary to a role such as a sales person who is expected to meet and entertain prospective customers.

Business Expenses

The ability to expense business related meals and entertainment is often viewed as a perk.

Wellness

Programs that encourage an employee to stay healthy such as a gym membership or access to specialists such as a nutritionist.

Food & Beverages

Food and beverages such as a coffee, tea and water service. Firms in an isolated location may offer a cafeteria that is free or subsidized by the company.

Employee Assistance Programs

Services that help employees with personal and work related problems. This is typically confidential and may include counseling for marital, family, financial, emotional and addiction issues.

Legal Assistance Plans

Access to experienced attorneys for personal legal matters such as estate planning, real estate matters and family law.

Products & Services

It is very common to provide employees with discounted or free access to your products and services. This may serve a business purpose such as a retail salesperson who is required to wear your brand. Alternatively, this may be offered as a perk. These are often unique benefits that may be difficult for other employers to match. For example, a bank that offers discounted mortgages to employees.

Working Conditions

Employees commonly view generous working conditions such as flexible work hours to be a benefit.

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