Employees’ Benefits Every HR Practitioner Should Know
Employee benefits refer to indirect pay extended to your workforce over and above the salary or wages entitled to them. The benefits can be health insurance, medical insurance, or disability insurance. Whereas two similar jobs can offer the same wage, they can differ significantly in terms of benefits thus, making one job a better financial appeal.
Some employee benefits are mandatory in particular countries. For instance, a medical cover is a compulsory requirement for every employer in many countries worldwide.
Understanding Fringe benefits
Most employers offer competitive salaries as an incentive to hire the best employees. To attract and retain the best talent in their firm, they may extend other benefits to make the vacant position more appealing. Benefits are viewed as compensation from the employer and may not necessarily attract tax.
Fringe benefits may also reduce staff turn-over that can slow down a firm’s activities. These benefits are a valuable retention tool for all employers.
Fringe benefits are non-taxable, but some incentives, such as bonuses, are taxable because they‘re considered monthly income. Some retirement contributions are non-taxable unless an employee chooses to withdraw from the scheme.
Payroll taxes are not considered fringe benefits because the employer withholds the deductions to pay the government. The tax imposed on your paycheck is calculated against the amount on your salary or wage.
Major Types of Employee Benefits
There are four significant employee benefits regarded as traditional, namely;
- Life insurance
- Medical insurance
- Long term disability insurance
- Retirement benefits and plans
Some of the common benefits include:
- Benefits for the employees’ health
- Lifestyle maintenance benefit
- Benefits for financial security
- Benefits at workplace
Most employees have their medical insurance covered by their employer. Some provide partial monthly premiums, while others offer full coverage relieving the employee of the entire responsibility. Employer-covered health insurance is the most common way of taking care of one’s workforce. It remains one of the most preferred ways for employees to be covered for self and immediate family health coverage.
Retirement plan contributions
Retirement benefits remain one of the most considerate ways an employer can take care of his workforce. Some companies offer full contributions while others require a particular percentage contributed by the staff.
An employer needs to hire an auditor to do a limited scope audit on an employee’s financial statements before retirement. These contributions are potent tools for long-term saving schemes because they provide an employee’s compensation over and above their monthly salaries.
Group-term life insurance
Life insurance can be very costly. The younger a client is, the lesser the premium one pays. So, as an employee advances in years, they pay more of whole life insurance.
An employer can shift this responsibility from the employees and opt to take group-term life insurance because it is much more affordable. This is because the insurer’s risk is spread across many individuals.
Most employers offer group-term life insurance for free. Term life covers an employee up to a particular age; an employee may decide to add a few more bucks every month to extend the coverage term.
Above your monthly paycheck, an employer may provide other financial incentives for various reasons, such as exemplary performance. Most firms offer end-of-year tokens while others sign bonuses for newly hired staff.
Bonus is usually awarded for employees who surpass given performance targets. Therefore, it remains a motivation throughout the year or monthly quota. At times, an employer may have individual packages or a wholesome token for every employee.
Other Fringe Benefits
- Education Assistance
An employee who pursues an education advancement course such as a degree program has their fee reimbursed at the end of their program. This is an incentive for employees to continue honing their skills in their field of specialization.
- Meals plans
Employers recognize that employees use a substantial amount to cater for their meals and beverages. It is also costly in terms of time. As such, an organization may provide meals within the workplace at a subsidized price or to no cost on the employees.
For big-sized companies and corporations with ample space, access to the gym and general fitness center is a common benefit to employees. Small-sized companies also provide fitness center membership at a discounted fee.
Paid time off
Every worker needs some downtime to rest and pursue other personal issues in their lives. During such breaks, an employer allows them time away from work but pays them an allowance above their monthly dues. Such paid-time-off may include maternity and paternity leave, childcare, family emergencies, and funerals.