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The amount or the benefits an employee can get from the organization as a
result of his potential work and performance or due to some disability is known
as Employee Benefits. Employee benefits is one of the most important aspect of
Payroll system in most of the developing countries as it does not only help
employees and their family to live above average level but also increase their
work performances and the loyalty of employees towards the organization. And
this is the reason how these benefits can judge the satisfaction level of an
employee towards his job and organization which in turn increase the
performance of your business.
Employee Benefits also known as perks and fringe benefits in British English are
some of the accommodation or compensation in wages or salaries of employees
in addition to the actual amount of salary which they are receiving. It is not
regarded as Salary exchange or Salary packaging where an employee asks the
employer to give some benefit in exchange of his salary which is in cash. In
employee benefit program, the employee has been given something extra else
than his normal wage amounting and the benefit can be in cash or non cash
form. Some of the Examples of these benefits include: rental or ownership of
houses, health insurance including dental and vision also, flexible working hours,
vacations, official trips, social security, bonuses, profit sharing either in cash or
shares form, educational and other medical expenses for the family.
The first and foremost important aim of this program is to make the living
standards of its employee better and to provide them with a sort of Economic
Security so that their work performance can be increased and organization can
get benefit of it. As such, it is one component of reward management.
Another term known as Perks is also used in employee benefit program. This
term refers to the benefits granted to senior employees or those whose
performances have reached optimal level. Some of the examples of common
perks granted to employees are take-home vehicles, work from home, flexible
working hours, official stays, social events, sports activities during work time etc
and it is often seen that when multiple choices exist, the first choice of employee
is to make the work hours flexible and of scheduling trips for vacations.
Now, we will discuss the three main types of Employee Benefits which are
Retirement Benefit
Retirement benefits often known as Pension refer to the sum of money that is to
be paid regularly to employee who has retired from job. There are several types
of Pensions including benefit and contribution plans. The Retirement plans can be
designed either organizations, employees, Insurance companies, state
government or any legal institution i.e. labor unions, trade unions or employee
associations.
It is often regarded as a program designed by employer to satisfy his employee
after his retirement to live his life happily and satisfied. There are several types
of Pension. The one created by employer is known as an occupational or
employer pension. Government, Labor unions and other legal institutions can
also design and back these programs financially. Some of the pensions are also
the sum of the money from the Monthly salary of Employee for several years.
Medical benefits:
Medical benefits is a type of employee benefits in which an employee has been
given the insurance of Health and medical expenses to some extent or full extent
depending upon the norms of organization. In this type of program, the company
either pays all sorts of expenses related to health or buys the health insurance
program for its employee. It has also seen in many cases that the organization
buys health insurance program for its employee on the basis of certain
agreement but this is rarely seen in the corporate world as most of the
companies prefer health benefits program generated by their own Human
Resource department.
Generally, it is an employee welfare benefit program designed by either an
Employer or by an employee association i.e. Unions aiming to provide health
care for candidates and their family members through insurance coverage or
reimbursement.
There are numerous advantages of Employee benefits program. First and
foremost advantage is healthy employees which in turn put excessive efforts to
generate high revenue for the Organization. Second most important benefit is
the job satisfaction which employees get after these benefits programs. When
they are assured that they dont have to pay out of their pocket for any disability
or for any medical expense, then their loyalty towards the organization increases
and it reaches to utmost zenith when they are provided with retirement
insurance plan. Third benefit is the positive thinking of an employee who thinks
that their employer cares about them.
These all advantages together hold such strong position that now many
organizations situated in different countries are adopting these Employees
Benefits program in order to boost the performance of their employee which in
turn can create huge profits for the organization. Apart from boosted
performance, satisfied employee creates new opportunities for the organization
and brings creative and innovative ideas in his work.
However, despite of all these advantages, there are some disadvantages of
Employee Benefits program. For example, in some countries, there benefits are
taxed at individual level which eliminate the benefits of these programs and even
increase the burden on the shoulders of employees. Therefore, in such situations
these programs can prove to be counter-productive if there is no financial
advantage to the individual from the benefit.
Caxton. G. Institution for Health Care Research and Policy, Georgetown University, on behalf of
the Henry J. Kaiser Family Foundation.