Employee benefits are payments employers make to staff that are beyond the scope of wages or a non-financial compensation provided to an employee as part of the employment contract.
These benefits are provided by organisations in addition to salary to create a competitive package for the potential employee.
Employers of labour provide a comprehensive employee benefits package to attract and retain employees. In addition, an employee benefits’ package is a standard and expected part of an employee’s total compensation.
However, there are some types of employee benefits that are mandated by law, including minimum wage, overtime, leave under the Family Medical Leave Act, unemployment, and workers compensation and disability.
The purpose of employee benefits is to increase the economic security of staff members, and in doing so, improve worker retention across organisations.
The remuneration and other employment benefits such as medicals, life insurance, annual leave, maternity or paternity leave and sick leave are restrictive covenants and confidentiality obligations provisions of organisations to their employees.
List Of Employee Benefits
As competition for finding and keeping talented employees grows, it is imperative that small business owners and leading multi-national companies offer the most important benefits.
Here are the major types of employee benefits many employers offer:
- Employee Compensation
- Medical/Health Insurance
- maternity/ Paternity Leave
- Annual/Paid Leave
- Disability Insurance
- Retirement/Pension Plan
- Life Insurance
- Social Security
1. Retirement/Pension Plans
Employers often contribute a small percent of employee wages to a retirement plan of the employee’s choice. Typically, employers match employee contributions up to 3 percent.
Retirement plans are basically savings accounts that allow employees to save money tax free until they retire. Pension plans are slightly different because a pension plan is a fund that makes regular payments to the employee indefinitely after they retire.
Most employers have stopped offering private pension plans because of the increasing cost of the plan. Therefore, pension programs are more commonly found in government organisations
2. Medical/Health Insurance
Health Insurance is the foundation of any comprehensive employee benefits package that employees want and need. This is because medical/health insurance covers the costs of physician and surgeon fees, hospital rooms, and prescription drugs. Coverage can sometimes include the employee’s family (dependents) example of this is the Nigerian Health Insurance Scheme (NHIS).
Employers usually pay all or part of the premium for employee medical insurance. Often employees pay a percentage of the monthly cost. The cost of insurance through an employer. Health insurance is the preferred employee benefit of the majority of people who work.
3. Disability Insurance
Disability insurance pays a portion of an employee’s income if they can’t work for an extended period because of an illness or injury. There are two types of disability insurance you can offer: short-term and long-term.
Short-term disability insurance ensures that an employee will still receive a percentage of income if they cannot work due to sickness or a disabling injury. This benefits provides an important protection for employees who cannot work on a short-term basis.
While long time disability insurance is an insurance policy that protects an employee from loss of income in the event that he or she is unable to work due to illness, injury, or accident for a long period of time.
4. Employee Compensation
Compensation is payment to an employee in return for their contribution to the organization. The most common forms of compensation are wages, salaries and tips. Compensation is usually provided as base pay or variable pay. Base pay is based on employee role in the organization and the market for the expertise required to conduct that role.
Variable pay is based on the performance of the person in that role, for example, for how well that person achieved his or her goals for the year. Incentive plans and bonus plans are a form of variable pay. (Some people might consider bonuses as a benefit, rather than a form of compensation.)
5. Life Insurance
A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death.
Benefits are paid all at once to the beneficiaries of the policy which is usually the spouse or children. You can get life insurance through an employer if they sponsor a group plan. Company-sponsored life insurance plans are standard for almost all full-time workers in medium and large firms across the country.
6. Annual/Paid Leave
Annual leave is paid time off work granted by employers to employees to be used for whatever the employee wishes. Depending on the employer’s policies, differing number of days may be offered, and the employee may be required to give a certain amount of advance notice ahead of the leave.
Most times, paid leave falls between 12 to 21 days for government employees and some private organizations and it is one of the most valued of all employee benefits which is often spent with family and friends. Paid leave is an entitlement to every employee of all organization.
7. Maternity/Paternity Leave
Maternity leave is the period of time when a mother stops working because she is about to have or just put to bed. While most commonly hear the term “maternity leave,” sometimes, it is also called parental leave.
Parental leave, or family leave, is an employee benefit available in almost all countries.The term “parental leave” may include maternity, paternity benefit. However, every employee is entitled to maternity leave and maternity pay after childbirth.
Although parental leave is increasingly granted to mothers, many organisations also grant fathers fully paid paternity leave for some days.