An Employee’s Comprehensive Guide to Employment Benefits
December 26, 2022
It’s a big world out there, which makes the prospect of job hunting, let alone getting a job, more daunting. Despite these challenges, being accepted to a position that aligns with your morals, career goals, education, and interests is a significant milestone for any aspiring professional.Earning a living opens you to a host of incentives, such as receiving a regular salary. Other employment benefits are offered but vary depending on the industry and discretion of the company.If you’re a fresh graduate or just starting in your respective industry, knowing the benefits of work should give you an advantage when negotiating your employment terms and conditions.
What are Employee Benefits?
Employee benefits are compensation granted to workers in addition to their base wages or salaries. Offering competitive benefits is crucial for employers to get the most talented professionals. Moreover, an attractive set of benefits is one of the critical areas the labor force considers when job hunting. Usually, you find the list of benefits in online job listings. They are also in the contract signed during recruitment. The benefits are openly available in the job description to attract and encourage candidates to apply. Some companies also add more benefits to ensure employees remain happy and productive with the company, resulting in low turnover.
What are the Different Types of Employee Benefits?
It can be said that a job receives higher demand or prestige the more benefits a company offers for it. Employers are not mandated to follow a strict list of benefits and only do so at their company’s discretion. So long as they abide by their respective state policies, they can freely give the perks of their choosing. Workers should understand the common types of benefits often seen in job descriptions.
In addition to salary, one benefit frequently found in job descriptions is financial benefits, typically based on how well you perform in your position. An example of a financial benefit is the performance bonus, an additional reward for employees who achieve goals or exceed expectations. Not all companies grant performance bonuses, but those that offer them do it to improve employee motivation, productivity, and drive to excel. It also encourages employees to diligently hit their targets, contributing to the company’s long-term growth.Another one is equity compensation or the provision of company equity. This benefit is the employees’ share of the profits earned, but some companies may use it to thank employees for their dedicated services and loyalty.Equity compensation can take the form of shares, stocks, and other investment opportunities based on work performance and results.
Many employers offer medical benefits to perform at their best and support their employees’ health and healthcare needs. This shows that the company invests in its staff’s well-being. Typical medical benefits in job descriptions include hospitalization coverage and yearly physical check-ups. Eye and dental care are important to your overall health; having conditions related to either can lead to a drop in overall performance.Some companies also offer life insurance policies as part of their medical benefits package or even additional policies like group term life insurance, accidental death and dismemberment, and business travel accident policies.
When an employee falls ill or has an accident that prevents them from working effectively, they may be eligible for disability insurance benefits if offered by the company. Disability insurance or disability benefits protect the employee from losing income due to a disability hindering them from fulfilling their tasks.There are two types of disability insurance: long-term and short-term. Short-term disability insurance pays employees a percentage of their gross monthly income if they cannot work due to illness or injury. This insurance typically lasts for three to six months up to a year or two.Conversely, the long-term disability benefit, while covering the same purpose as its short-term equivalent, offers a longer coverage period of between two to 10 years. There are two more types of long-term disability policies:
Any-Occupation Disability Insurance – The employee receives benefits if they cannot perform any job due to illness or injury.
Own-Occupation Disability Insurance – The employee receives benefits if they cannot work at their regular occupation but can properly function at another job.
One of the more common benefits companies give is overtime pay, defined as money earned for working more than the usual number of hours in a week.Depending on the industry, the company you work for, and the terms and conditions agreed upon, overtime pay policies differ. Some employers may require overtime, while others see it as an option during busy seasons.
Time Off in Lieu
This type of overtime compensates its workers with future time-off days when they have worked beyond their contracted hours, such as when an employee works during a public holiday.
As the name suggests, voluntary overtime refers to overtime work employees can accept or decline with no penalties or repercussions. However, those who choose to take this are rewarded with overtime pay.
This type of overtime is required by the company and is typically included in the employee’s contract.
Paid Time Off
The paid time off benefits appears in most job listings, as employees are entitled to have days off while still getting paid. Not only does pay time off encompasses sick leaves, but it also encourages employees to take them for their well-being and work-life balance. Companies and employers usually offer three types of paid leaves: sick leave, vacation leave, and maternity or paternity leave.An employee can file for sick leave if they cannot come to work due to an illness, though this is not exclusive to just being sick. Employees are free to avail of this leave if someone in their family is ill or needs medical treatment. Meanwhile, vacation leaves are for absences due to personal reasons unrelated to work and not because of illnesses. This includes recreation, travel, or other related activities that can benefit the employee’s mental and physical well-being.Maternity leave is also within the category of paid time off. It should be to no one’s surprise that new mothers must take time off from any strenuous activity or stressful environments to recuperate, rest, and be with their newborn. Meanwhile, fathers also have the choice to file for paternity leave.
Unlike the monetary benefits typically given by employers, fringe benefits are non-cash payments meant to attract, retain, or reward employees. Some examples include health insurance packages, a company-issued phone or laptop, and free meals.Fringe benefits can also include tuition reduction, assistance, and child care for the employee’s family. Moreover, companies that acknowledge their employees’ struggle to get to work can offer transport allowances or access to company-owned vehicles.A Wi-Fi allowance and a company phone can be provided to improve comms, especially when working remotely.
Health and Wellness Benefits
Similar to fringe benefits, some companies offer perks to improve employee well-being. This can be company initiatives or activities for self-improvement. At an individual level, this can take the form of free or discounted gym memberships, which can be used anytime throughout the employee’s stay with the company. For company-wide projects and initiatives, firms can create wellness programs, like organized workplace activities, to improve employees’mental and physical health. These may include yoga sessions, sports fests, friendly or departmental competitions, etc.The goal is to boost employee spirits while lowering health risks. Firms can expect better productivity, engagement, teamwork, and corporate morale by investing in their employees.
Mental Health Benefits
With mental health becoming a more prevalent topic and the pandemic changing what we defined as normal, mental health support in the workplace has never been more important. For an employee to be a well-functioning part of an organization, they must have adequate mental health support. External factors such as poor leadership and management, performance pressure, and low employee confidence can severely impact how well a person can do their job.Mental health awareness in the workplace has only been given more attention recently; thus, limited benefit packages are offered.Health plans, which cover physical, mental, and emotional health, can be helpful for employees. Employees struggling mentally or emotionally can book appointments or consult with mental health experts to address their issues. With the pandemic still ongoing, companies are becoming more lenient with employees working from home. Not only can employees do their necessary tasks in the comfort of their homes, but not having to go to the office significantly reduces commute and work-related stress.This also gives them more time to be present during family affairs and maintain a better sense of work-life balance.
Pension and Retirement Benefits
A pension plan is a sum of money routinely contributed by an employer for the benefit of its employee that is set aside and made available upon the employee’s retirement. Pension plans have two types:
Defined benefit – It is a set monthly amount paid for life.
Defined contribution plan – Employers create an investment account that earns passive interest throughout the employee’s working career, upon which the total amount can be retrieved upon retirement.
Companies can set up retirement benefits so employees can easily transition and start saving money early. The employer can fully sponsor the fund, or the employee can pay the contribution—or perhaps a combination of the two.A retirement or pension plan from the employer allows employees to save up for their retirement and helps relieve the pressures of setting it up themselves. Retirement plans are an attractive addition to any benefits package, making employment more attractive to prospective job seekers.
But Before You Sign…
Every company that signs in an employee will have a contract with its own set of benefits or compensation for services rendered. While their value is separate from the base salary, the inclusions significantly impact the decision-making process. Preparing to take on a new job is stressful, so you must know what you are entitled to as part of the workforce. If you think your rights are being trampled on, book an appointment with Shegerian & Associates now. Learn more about your employee rights and ensure your work experience is as ethical, legal, and stress-free as possible.