All the financial returns that are not paid directly to the employee are referred as employee benefits. The decisions of employers about the social costs of retirements & health care are considered employee benefits in all over the world.
Decision of employee benefits is also taken by the department of the Human Resource Management. Below are some different ways of employee benefits that are commonly practicing in all over the world for this purpose.
Ways to Give Employee Benefits
Benefits as Indirect Financial Compensation
Mostly organizations prefer to provide certain financial related benefits to their employees like insurance & other welfare programs including safety, health, and security etc. In fact all these employee benefits contain the financial returns that are not paid to employee directly.
Some employee benefits are given to employee through the decisions of top management while some of them are obliged to pay in the light of certain laws. Following are some possible ways of the employee benefits, which are supported by different laws.
- Social Security
These benefits are related to the retirement of an employee such as survivor’s benefits, Medicare & disability Insurance etc.
- Unemployment Compensation
If an employee is laid off by an organization then he has the legal right to receive unemployment compensation for next 26 weeks. There are certain guidelines that direct the system of unemployment compensation but it is the responsibility of state to provide such compensations with may be different from one state to another.
- Worker Compensation
The expenses that arise from the job related illness or accidents are covered financially by the worker compensation program of employee benefits.
Family & Medical Leave Act (FMLA)
The family & medical leave act is imposed to all the government employers as whatever number of employees they retain & also to the private employer who keeps the number of employees 50 or above. This act imposes unpaid leave of about 12 work weeks per year, because of the health related conditions of the employee, his newborn child, any other ill child, spouse or his parents.
Certain organizations provide specific employee benefits voluntarily. Following is the detail of these benefits.
Payment for Time not worked
The organization identifies that there are certain benefits that employees need like
- Payment of holidays not worked
- Paid sick leave
- Paid vacations
- Military rescue duty like national guard
- Bereavement time or voting time etc
Employee’s indirect financial compensation includes the health related benefits like health vision care, dental etc. Following is the detail of some of important areas.
- Health Care
The indirect financial compensation includes the most expensive & fast growing cost which is the health care of employees. There are many factors that leads towards these conditions like
- Aging population
- Increasing demand for medical care
- Expensive medical technology
- Lack of price controls
- Inefficient administrative processes
There are many other options that employers use in the area of health care of their employees. For this purpose one option is in the form of Health Maintenance Organizations (HMOs) that offers all the services for a fixed fee. Point-of-Service (POS) is another option that allows the members to choose a provider from within specified network or in case of benefits of lower level; the members may also look outside the network. Another option consists of more flexibly managed care system called Preferred Provider Organizations (PPOs). Usually members are given the incentives to use the services within the network, because the outside network providers result into a higher cost.
It is like a reimbursement method in which physicians of primary care negotiate with the employers for a rate for the entire working life of employees. In fact in this method the doctors are hired for the cost of per patient rather than per service.
- Defined Contribution Health Care System
The employees are provided with certain amount of money on annual basis which should be used in purchasing of certain health care coverage.
- Utilization Review
It is the process that scrutinizes hospitalization, surgery, medical diagnosis and other medical care & treatment specified by doctors.
The Health Insurance portability & Accountability Act
This act was passed in the year 1996 in America in which people who move from one job to another or who are self employed etc, are provided protection in the area of health care.
- Dental & Vision Care
Dental & vision care is also provided by the employers to its employees.
Security Benefits includes the following benefits.
- Retirement Plans
Private Retirement Plans are specified for provision of income to employees who have served the organization for a specified time period or who have reached a certain age limit. In case of Defined Benefit Plans, the employers of the organization agree to give specified income to employees which are either a percentage of earnings or fixed dollar amount. There is also a Defined Contribution Plan in which the employer contributes certain amount to the employee savings or retirement funds. Besides these plans there are also some other specific retirement plans like 401 (k) Plan, Employee Stock Ownership Plan etc.
- Disability Protection
Usually the compensation given to employees protects them from job related illness or accidents but there are certain organizations that provided additional protection to their employees which are more comprehensive in nature.
- Life Insurance
In the event of the death of an employee, life insurance is a benefit that is given to the family members of the dead employees but there is fix premium that should be paid in an annual basis.
- Employees Services
There are certain benefits named employees services that are offered by the organization. These benefits are as follow.
- Relocation Benefits
- Child Care
- Educational Assistance
- Financial Services
- Unique Benefits etc.