The Benefits picture today:
Indirect financial and non financial payments employees receive for continuing their employment with the company.
What are your Benefits? Is the first thing many applicants ask? Benefits – indirect financial and non financial payments employees receive for continuing their employment with the company are an important part of just about everyone’s compensation. They include things like health and life insurance, pensions, time off with family and child care assistance
Most full time employees in the United States receive benefits. Virtually all employers — 99% — offer some health insurance coverage. About 62% of Americans receive job based health insurance. Benefits account for about one third of wages and salaries (or about 30% of total payrolls) with legally required benefits (Social Security for instance) the most expensive single benefit cost; health insurance usually ranks second. As figure summarizes annual health care costs rose steadily till 2002, but the rate of increase had moderated lately. By one estimate the cost of medical coverage recently was about $314 per month for employee only coverage $627 per month for employees plus one dependent coverage and $888 per month for family coverage. Figure summarizes the breakdown of benefits as a percentage of wages and salaries.
Employees understand the value of health benefits. One study concluded that employees whose firms provided such benefits accepted wages about 20% lower than what they would have received working at firms without them. But another found that only 43% of surveyed employees were satisfied with their health plans overall performance. Less than half trust their employers to design health plans that provide the coverage they need.
Some benefits are required by federal or state law, while others are discretionary. However we’ll see that even the discretionary benefits are often regulated by federal law. Of course employers also must adhere to the laws of the states in which they do business.
Some Required and Discretionary Benefits
Benefits required by central or state law
1) Provident Fund, Gratuity, Health Insurance, family Pension.
2) Workers’ compensation for accidents workplace injury.
3) Maternity leave, transport and security for night shifts.
4) Regular leave and leave travel allowance / concession.
Discretionary Benefits provided by employer
1) Life and health insurance for family and dependents
2) Housing, subsidy on housing loans subsidy, conveyance allowance, telephone and entertainment allowance, recreational benefits like health clubs and hobby classes education allowances for self and family soft loans for asset building.
3) Different types of leaves like study leave extraordinary leave.
4) Executive perquisites like chauffer driven car, petrol allowance and family holidays.
Employee benefits in India
Employee benefits or perquisites are now an integral part of compensation packages offered by companies these days. The type and extent of perquisites given by Indian organizations are determined by the relevant laws, location specific practices or requirements and tax laws. Providing welfare benefits like child care in the form of a crèche for children health facilities for workmen or social security benefits Like PF and gratuity have been set by law. Many Indian companies use benefits like loans housing transportation and schooling as factors to make employment attractive.
For instance Accenture in India offers a wide range of employee benefits to suit employee needs, business requirements and local laws. The company focuses on health and the well being of employees. It has created a gym at the office so that employees are save the trouble of driving down to a private gym. Facilities for indoor sports like table tennis and carom and hi-tech gaming facilities are available within the company. The company is among the growing number of organizations that encourages flexi-timings and work from home facilities. Employees and their families are invited for celebrations and the company also has days for bringing family members to the office.
In addition the introduction of the fringe benefit tax (FBT) with effect from 2005-2006 has altered the manner in which firms gave benefits to employees. Many Indian firms were liberal when it can to giving out benefits to employees (in many cases top manager) who enhanced the well being and lifestyle of the employee. Most payments were made in such a way that they were tax free. After FBT was introduced the benefits or perquisites in addition to the salary were taxed.