EMPLOYEE BENEFITS AND SERVICES (B&S)

Tangible compensation other than wages and incentives given to employees by the requirement of legislations or on the employers free will to accomplish some purposes.

FOCUS OF EMPLOYEE BENEFITS

Health and Accident Protection

Future Income Security

EMPLOYEE SERVICES

Those compensation components that contribute to the welfare of the employees enabling them to enjoy a better lifestyle or meeting their social or personal obligations while minimizing their costs

GENERAL CLASSIFICATION OF B&S

MANDATORY BENEFITS AND SERVICES

Those benefits or services which are legally required or those that an employer has agreed to provide to the employees as stipulated in a collective agreement
Examples: EPF, Socso

VOLUNTARY BENEFITS AND SERVICES

Those benefits or services which are not legally required, but being provided to the employees on the employers own free will
Examples: Housing loans, child care

FINANCIAL BENEFITS AND SERVICES

Those benefits or services which allow employees or their dependence to enjoy some financial gains
Examples: Pension, gratuity

NON-FINANCIAL BENEFITS AND SERVICES

Those benefits or services that do not give any financial gains to the employees or their dependence, but may improve their physical and emotional well being
Examples: Safety gears, cafeteria

DIRECT BENEFITS AND SERVICES

Those benefits that allow employees or their dependence to receive some outright payments
Examples: Termination benefits, EPF

INDIRECT BENEFITS AND SERVICES

Those benefits or services which do not provide outright payments to employees , but allow them to enjoy financial gains in the form of saving
Examples: Medical benefits, companys accommodation

CLASSIFICATION OF BENEFITS
Disability income continuation Loss-of-job income continuation Deferred income Spouse or family income continuation Health and accident protection Perquisites

PURPOSES OF BENEFIT 1. To facilitate employees to perform their job tasks 2. To ease employees financial burden 3. To provide security

4. To serve as status symbols

5. To reduce tax effects

PURPOSES OF BENEFIT (CONT.) 6. To recognize employee loyalty 7. To provide flexibility in the compensation program 8. To improve employees quality of life

9. To fulfill social obligation

10.To provide convenience to employees

BENEFITS AND SERVICES ADMINISTRATION

Planning and Design

Communication

EMPLOYEE B&S DESIGN AND PLANNING ISSUES

1 2

The extent and magnitude of voluntary benefits and services The extent of flexibility of the benefits and services programs Third party administration of the benefits programs

3
4 5

Employee contributions to the programs (employer ability to pay)

Monitoring and auditing benefits and services programs

BENEFITS AND SERVICES COSTING

Why do it?
1. To determine the effectiveness of the programs
2. To control the cost of the programs 3. To gather inputs for benefits and services communication 4. To prepare for collective negotiation

COSTING METHODS
1. Annual cost of benefits and services for all employees 2. Cost per employee per year 3. Percentage of payroll 4. Cost per employee per hour 5. Cost per department

FLEXIBLE COMPENSATION

A plan that permits an employee to select benefits and services within certain limits (amount and types)

Also known as cafeteria plans

ADVANTAGES OF CAFETERIA PLANS

1. Plans are tailored to individual needs

2. Employees more aware of benefits and services and their cost

3. Benefits and services may be re-priced from year to year 4. More efficient use of benefits 5. Favorable tax treatment

DISADVANTAGES OF CAFETERIA PLANS

1. Employees may choose inappropriate benefits
2. May be more expensive to administer

3. Record keeping becomes more complex

4. May lead adverse selection

EMPLOYEE BENEFITS AND SERVICES COMMNUNICATION

To whom to communicate ?
Affected group of employees
Potential employees

EMPLOYEE BENEFITS AND SERVICES COMMNUNICATION

What to communicate ?
Especially attractive benefits and services

Benefits and services costs

Eligibility and procedures

EMPLOYEE BENEFITS AND SERVICES COMMNUNICATION

Why communicate ?
To gain higher employee appreciation To improve employee understanding of benefits and the

To promote organizations image

EMPLOYEE BENEFITS AND SERVICES COMMNUNICATION

When to communicate ?
Approaching collective bargaining New benefits and services being introduced There is a sign of dissatisfaction An employee has just been hired

EMPLOYEE BENEFITS AND SERVICES COMMNUNICATION

How to communicate ?
Employees newsletter Benefits and services manuals Circulars Intranet

Monthly and annual income statements

Advertisement and publicity