Employee Benefits and Services (Discussion)

Introduction

Management is concerned with attracting and keeping employees, whose performance

meets at least minimum levels of acceptability and at keeping absenteeism and turnover to
tolerable levels.

The provision of benefits and services can be and are important in maintaining the
employees and reducing the turnover and absenteeism low.

The purpose of such benefits is to retain people in the organization and stimulate them
to greater effort and higher performance. They foster loyalty and act as a security base for the
employee.

Concept and Nature of Benefits

Employee benefits and services are any benefits that the employee receives in
addition to direct remuneration. Fringes embrace a broad range of benefits and services that
employees receive as part of their total package. It is based on critical job factors and
performance. Benefits and services however are indirect compensation because they are
usually extended as a condition of employment and are not directly related to performance.

Benefits and compensation provided to the employees usually depend on the

conditions of employment and other factors like security, safety, health, welfare and
recreation of employees.

These benefit programs must be managed carefully to enhance recruitment and to

boost the morale of the employees.

Why Organizations Provide Benefits

Employee demand:
To meet rising prices and increased cost of living employees demand various types of
benefits

Trade union demands:

The growth and strength of trade unions has substantial influence on the benefits and
services a company offers

Employer’s preferences:
Employers prefer to give benefits to employees as it enhances employee’s morale and
works as an effective motivational tool provided it is within the accepted norms and
limits

Factors influencing the decision to set up a particular employee benefit and service
program

 Cost
  Ability to pay
 Needs of the employees
 Bargaining strength of the trade union
 Tax consideration
 Social responsibility
 The reaction of employees

Administration of benefits and services

 Organizations have seldom established objectives, systematic plans and standards to

determine the variability of the program
 Lack of employee participation
 Managers take little interest in benefits program and trade unions are almost hostile to
schemes
 Employees have little awareness about such programs
 These problems can be avoided if following steps are taken:

 To establish benefit objectives

Generally, this process does not result in a list of specific benefits

offered but rather provides an overview of the organization's objectives of
offering benefits that reflect both the employer and employee needs. The
organization's business and/or HR strategy will help guide the development of
the benefits objectives, as these objectives should help achieve the overall
strategic goals. Factors such as employer size, location, industry and collective
bargaining agreements should be considered in the development of the
benefits objectives. Some employers choose to have general benefits
objectives, whereas others incorporate the objectives in their total
compensation philosophy. The benefits objectives are not static and should be
evaluated and revised to reflect the current employer strategy and employee
needs.

Equally important is determining the budget available for spending on

benefits, as most employers have cost constraints in offering benefits to
employees. If a current benefits plan exists, organizations should analyze
current benefits costs and projected costs and create a budget spreadsheet
outlining annual benefits costs. The rising cost of offering benefits such as
health insurance will greatly affect the benefits an employer may offer.

If there is no current benefits program, the employer may need to

obtain quotes for a few key benefits to estimate a benefits budget.

 To assess environmental factors and competitiveness

A needs assessment should be conducted to determine the best benefits

selection and design based on the needs and wants of the employees. The
needs assessment may include an employer's perception of employee benefits
needs, competitor's benefits practices, and tax laws and regulations. But a
more recent trend is to take a market research approach to employee benefits
planning. Common market research techniques include employee inquiries in
 the form of personal interviews, simplified questionnaires or sophisticated
research methods. Although employee feedback will most likely result in
higher employee motivation and satisfaction with the benefits package, this is
true only to the extent that the employer is committed to using the feedback in
benefits selection and design.

 To formulate a Benefits Plan Program

This step is complex and may take many factors into consideration:
Can changes be made to the current plan design to induce cost savings? Can
benefits that are underused or not valued by employees be eliminated? What
are the administrative costs for the benefits? What cost-containment features
can be put in place? Will employees have to contribute, and how much? Are
there resources to administer in-house, or will a third-party administrator and
broker be necessary for certain plans? These are among the evaluations an
employer will make in determining whether to add, change or eliminate
benefits offerings.

 To communicate benefit information

Employee understanding of the benefits is critical to employee buy-in.

Without buy-in, the employer's efforts, no matter how perfectly designed to
meet employees' needs, may be futile. If employee input was obtained and
used in the benefits design process, employers should be sure to share this
with employees and let them know how their feedback influenced the benefits
program's design. The positive impact on recruiting, retention and employee
morale may be lost without effective communication plans. Although the
employer is obligated to provide communications to comply with laws
regarding disclosure of various benefits plans, such as a summary plan
description, communications should go beyond the legal requirements. Good
benefits communication objectives should include:

• Creating awareness and appreciation of the new or existing benefits

and improving employee financial security.
• Providing a high level of understanding of the benefits offered.
• Encouraging wise use of benefits.

 To control benefit costs and evaluation

Periodically reviewing the benefits plan program is another important

step in the benefits management process. The benefits program must be
assessed on a regular basis to determine if it is meeting the organization's
objectives and employees' needs. Changes in the business climate, the
economy, the regulatory environment and workforce demographics all create
dynamics that affect benefits offerings. Employers should consider developing
goals and measurements to assess the benefits programs and make adjustments
as necessary. Employers may also consider using external trends and
benchmarking data to evaluate the effectiveness of the benefits plan or
 conduct employee surveys or a full-fledge needs assessment on a recurring
basis.

Types of Employee Benefits

• Insurance benefits
• Health benefits (and services)
• Security benefits
• Time-off benefits
• Work scheduling benefits
• Retirement benefits
• Disability benefits

Mandatory Government Benefits and Contributions

Covered by the Philippine Labor Code

1. Social Security System (SSS) Contributions

2. Contribution to National Health Insurance Program (NHIP)
3. Contribution to Home Development and Mutual Fund (HDMF/Pag-IBIG)
4. The 13th Month Pay
5. Service Incentive Leave
6. Meal and Rest periods

Compensability of Illness or Injury

Under Employee’s Compensation Program (ECP)

1. Occupational Diseases
2. Work-related Injuries

Benefits under Employee’s Compensation Program (ECP)

1. Loss of Income Benefit
2. Medical Services
3. Carer’s Allowance
4. Rehabilitation Services/KaGabay Program
5. Death Benefits
6. Funeral Benefits

Philippines Benefits Summary

Under the Philippine Labor Code (Presidential Decree No. 442)
Terms and Conditions of Employment

1. Minimum Wage
2. Night Shift Differential
3. Overtime pay
4. Rest Days
5. Holidays
6. Leaves
7. 13th Month pay
8. Retirement Benefits
9. Separation Pay
 10. Service Charges
11. Disability Benefits
12. Mid-year Bonus ( 14th month pay )

Compensation of small value, or “De Minimis benefits”, are excluded from the
computation of the gross income. De Minimis Benefits include:
• Monetized unused vacation leave credits for private employees not exceeding
10 days
• Monetized unused vacation and sick leave credits for government officials and
employees;
• Medical allowance for dependents of P750 per semester or P125 per month;
• Rice subsidy of P1,500 or one sack of rice monthly;
• Uniform allowance of P5,000;
• Medical assistance not exceeding P10,000 annually;
• Laundry allowance not exceeding P300 per month or P3,600 per year;
• Employees achievement awards not exceeding P10,000;
• Gifts given during Christmas and major anniversary celebrations not
exceeding PhP5,000 per employee per annum;
• Daily meal allowance for overtime work and night shift not exceeding 25%of
basic minimum wage; and Collective bargaining agreements (CBA) and
productivity incentives

Common Types of Employee Services

 Flexible Work Schedules

 Wellness Program
 Child Care Services
 Product/Service Discounts

Best Practice

According to Jobstreet, San Miguel Corporation is among the top companies to work
for. Looking into the Human Resources on SMC’s website, it states that SMC’s strong social
responsibility commitment contributes to better employee retention, resulting in a
considerable reduction in turnover and training costs. Employees normally remain working
with the Corporation because of their feeling that SMC cares. Employee programs that help
reduce absenteeism actually save the Corporation money as they encourage increased
productivity. On the home front, programs that address employee welfare instill a sense of
pride in the people for being part of the San Miguel Group.

Employee Relations includes:

a. Sports and Recreation – The program aims to nurture camaraderie and unity among
the employees through various sports activities, such as basketball, bowling, aerobics,
street dancing, gym workout sessions, volleyball, etc. The Corporation tries to meet
the employees’ varied sports preferences. There are also interest clubs being formed
for enthusiasts of golf, running, taekwondo, etc.

b. Summer Outing – The Corporation provides a yearly venue for employees and
management of each division to interact with one another’s families in an informal
environment marked by fun and games.
 c. Songfest – This is an annual nationwide search for employees who have exceptional
talent for singing, a common trait among Filipinos.

d. Employee Service Awards – The annual recognition program honors employees for
their years of service to the Corporation.

e. The monthly event allows employees to purchase various San Miguel products at
discounted prices. The venue is the Head Office Complex, and employees from other
SMC units and offices come to take advantage of the reasonable offers.

f. Christmas Tiangge – Employees are given the opportunity to develop their

entrepreneurial spirit by selling various products during the two-day event. It is held
regularly at the Head Office Complex in November before the onset of the Christmas
season to allow employees and their families and friends to purchase their Christmas
presents early.
g. Health and Safety – The Corporation ensures that its employees work in a healthy and
safe environment. The health of every employee is a main concern. SMC has an in-
house clinic at the Head Office Complex to take care of employees’ medical needs.
Each facility also has its own clinic. It is mandatory for employees to undergo an
annual medical examination.

In case of emergency situations, such as SARS and dengue, a task force is created to
respond to the immediate concern to protect the health of the employees.

Benefits Program

a. Employee Protection – Employees are entitled to sick leave benefits that will provide
financial security even if they have lost the ability to earn in times of sickness or
injury.

b. Time Off With Pay – Employees are also entitled to leave benefits that will allow for
the continuity of their wage earnings even if they are on vacation or have to attend to
emergency matters requiring their presence.

c. Health Care – The Corporation provides a comprehensive medical program for

employees and their dependents to protect them against the financial burden that
comes with illness or injury.

d. Flexible Loan Facilities – The Corporation offers an interest free loan facility that is
tailored to address the various financial needs of the employees. Its flexibility lies in
the loan purpose, amount, and guidelines.

e. Educational Program – This helps meet the financial requirements of employees who
desire to pursue further studies. It includes loan facilities for the educational needs of
employees’ dependents.

f. Rice and Clothing Allowances – The Corporation provides a monthly sack of rice to
each rank-and-file employee. Employees also receive a clothing allowance for their
proper work attire.
 g. Insurance and Death Benefits – Financial assistance is extended to the bereaved
family to help defray expenses incurred as a result of the demise of the employee or
an immediate family member of an employee.

h. Retirement Benefits – The Corporation provides a noncontributory fund to assist the

employee in preparing for a comfortable life even after retirement.

Employee Benefits Information

System (EBIS) – The Corporation uses a computerized system to facilitate on-line processing
of employee benefits, such as statutory benefits, company loans, and separation benefi ts.
This system also monitors the medical expenses and benefits that employees avail of.

Training and Development

Development has a two-pronged objective: to achieve corporate goals, and to realize

individual employee career objectives. These objectives can be synchronized to propel both
the organization and the individual to reach the highest level.

SMC upholds the principle of total development covering business/management

skills, technical/functional skills, task and people orientation, values and attitudes. Corporate
Human Resources is responsible for continuous learning in the Corporation. Managers have
the major accountability for creating ongoing learning opportunities in their respective work
units. Employees are also accountable for their own learning and initiative to learn.

SMC Training Infrastructure – Corporate Management Training is under Corporate Human

Resources. Functional Schools are placed under the responsiblity of the respective
functions/departments concerned. Core Technology Schools focus on SMC’s core
technology. Synergy of all the Schools takes place through the SMC Training Council where
all the Schools are represented. Corporate Training and Development assists the Functional
Schools in curriculum and module design. Experts on the subject matters come from the
respective functions.

Developmental Approaches – These cover formal education and on-the-job learning.

Customized internal or external training programs demonstrate formal education on
management/business, technical/functional skills, people management, and personal
effectiveness. On-the-job learning comes through job transfers/cross-postings, special
assignments, coaching/mentoring, memberships in professional organizations, and self-
development.

Glimpse on the Employee Benefits and Services provided by

the Commission on Audit to Its employees

Aside from the salary compensation received by employees of the Commission on Audit,
which is based on the Salary Standardization Law, the benefits and services provided to COA
employees includes, but not limited to, the following:
 1. Government Service Insurance System (GSIS)
Contributions
2. Contribution to National Health Insurance Program (NHIP)
3. Contribution to Home Development and Mutual Fund
(HDMF/Pag-IBIG)
4. 13th Month Pay
5. Medical and Dental Services
6. Overtime pay
7. Holidays
8. Leaves
9. Retirement Benefits
10. Mid-year Bonus ( 14th month pay )
11. “De Minimis benefits”
• Monetized unused vacation and sick leave credits for government officials and
employees;
• Rice subsidy;
• Uniform allowance of P6,000;
• Medical assistance not exceeding P10,000 annually;
• Employees achievement awards not exceeding P10,000;
• Gifts given during Christmas and major anniversary celebrations not
exceeding PhP5,000 per employee per annum;
• Productivity incentives

Common Types of Employee Services

 Flexible Work Schedules

 Wellness Program
 Child Care Services

Prepared and submitted by:

ANTHONY G. CASTILLIO JR.

DANA MARRIS M. CASTILLO
MBBA- Human Resource Management