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Benefits

Types of Employee Benefits

Supplemental Pay

Insurance Benefits

Retirement Benefits

Employee Services

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Employee Benefits in India


Integral part of the compensation package. Determined by labor legislations, location, and tax

laws. Generally, benefits include loans, housing, and transport. Other activities include celebrations, health programs, various allowances, family involvement, flexi timings. Fringe benefit tax (FBT).

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Pay For Time Not Worked

Unemployment Insurance

Vacations and Holidays

Sick Leave

Supplementa l Pay Benefits

Parental Leave

Severance Pay

Supplemental Unemployment Benefits

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Pay for Time Not Worked


Unemployment Insurance
Provides for benefits if a person is unable to work

through no fault of his or her own.


Is an employer payroll tax that is determined by an

employers rate of personnel terminations.


Tax is collected and administered by the state.

Vacations and Holidays


Number of paid vacation days varies by employer. Number of holidays varies by employer. Premium pay for work on holidays.
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TABLE 132

An Unemployment Insurance Cost-Control To-Do Checklist

CauseDo You: 1. Keep documented history of lateness, absence, and warning notices 2. Warn chronically late employees before discharging them 3. Have policy that three days absence without calling in is reason for automatic discharge 4. Request doctors note on return to work after absence 5. Make written approval for personal leave mandatory 6. Stipulate date for return to work from leave 7. Obtain a signed resignation statement 8. Mail job abandonment letter if employee fails to return on time 9. Require new employees to stipulate in writing their availability to work overtime, night shifts, etc. 10. Set probationary periods to evaluate new employees 11. Conduct follow-up interviews one to two months after hire 12. Document all instances of poor performance, recording when and how employees did not meet job requirements 13. Require supervisors to document the steps taken to remedy the situation 14. Require supervisors to document employees refusal of advice and direction 15. Make sure all policies and rules of conduct are understood by all employees 16. Require all employees to sign a statement acknowledging acceptance of firms policies and rules 17. File the protest against a former employees unemployment claim on time (usually within 10 days) 18. Use proper terminology on claim form and attach documented evidence regarding separation 19. Attend hearings and appeal unwarranted claims 20. Check every claim against the individuals personnel file 21. Routinely conduct exit interviews to produce information for protesting unemployment claims 22. Hold periodic workshops with supervisors to review procedures and support effort to reduce turnover costs 23. Identify turnover problems as they occur by a. location b. department c. classification of employee
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Pay for Time Not Worked (contd)


Sick Leave
Provides pay to an employee when he or she is out of

work because of illness.


Costs for misuse of sick leave Pooled paid leave plans

Parental Leave
The Family Medical Leave Act of 1993 (FMLA)

Up to 12 weeks of unpaid leave within a one-year period. Employees must take unused paid leave first. Employees on leave retain their health benefits. Employees have right to return to job or equivalent position.

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136

Pay for Time Not Worked (contd)


Severance Pay
A one-time payment when terminating an employee. Reasons for granting severance pay:

Acts as a humanitarian gesture and good public relations. Mirrors employees two week quit notice. Avoids litigation from disgruntled former employees. Meets Worker Adjustment and Retraining Notification (plant closing) Act requirements. Reassures employees who stay on after the employer downsizes its workforce of employers good intentions.

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137

Pay for Time Not Worked (contd)


Supplemental Unemployment Benefits (SUB)
Payments that supplement the laid-off or furloughed

employees unemployment compensation.

The employer makes contributions to a reserve fund from which SUB payments are made to employees for the time the employee is out of work due to layoffs, reduced workweeks, or relocations. SUB payments are considered previously earned compensation for unemployment calculation purposes.

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Insurance Benefits
Workers Compensation
Provides income and medical benefits to work-related

accident victims or their dependents, regardless of fault.


Death or disability: a cash benefit based on earnings per week of employment. Specific loss injuries: statutory list of losses.

Controlling workers compensation costs


Screen out accident-prone workers. Make the workplace safer. Thoroughly investigate accident claims. Use case management to return injured employees to work as soon as possible.

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Insurance Benefits (contd)


Hospitalization, Health, and Disability Insurance
Provide for loss of income protection and group-rate

coverage of basic and major medical expenses for offthe-job accidents and illnesses.
Accidental death and dismemberment Disability insurance

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Insurance Benefits (contd)


Health Maintenance Organization (HMO)
A medical organization consisting of specialists

operating out of a health care center.


Provides routine medical services to employees

who pay a nominal fee.


Receives a fixed annual contract fee per employee

from the employer (or employer and employee), regardless of whether it provides that person with service.

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Insurance Benefits (contd)


Preferred Provider Organizations (PPOs)
Groups of health care providers that contract to

provide services at reduced fees.


Employees can select from a list of preferred

individual health providers.


Providers agree to discount services and to submit

to utilization controls.
Employees using non-PPO-listed providers may

pay all costs or only costs above the reduced fee structure for services.

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Trends in Health Care Cost Controls


Cost-Control Trends

Communication, Involvement, and Empowerment

Premiums and Co-Pays

Prevention Programs

Health Savings Accounts

Claim Audits

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Other Cost-Control Options


Automating health care plan administration Defined contribution health care plans

Controlling Health Care Costs

Outsourcing health care plan administration Eliminating retiree health care coverage Benefits purchasing alliances

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Other Benefits Issues


Life Insurance
Types
Group life insurance Accidental death and dismemberment

Personnel policies
Benefits-paid schedule Supplemental benefits Financing

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Retirement Benefits
Social Security (Federal Old Age and Survivors Insurance)
A federal payroll tax (7.65%) paid by both the

employee and the employer on the employees wages


Retirement benefits at the age of 62 Survivors or death benefits paid to the employees dependents Disability payments to disabled employees and their dependents

The Medicare program

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Retirement Benefits (contd)


Policy Issues In Pension Planning

Membership Requirements

Benefit Formula

Plan Funding

Vesting

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Personal Services
Credit Unions
Separate businesses established with the employers

assistance to help employees with their borrowing and saving needs.

Employee Assistance Programs (EAPs)


Provide counseling and advisory services:

Personal legal and financial services Child and elder care referrals Adoption assistance Mental health counseling Life event planning
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Family-Friendly Benefits
Subsidized child care Sick child benefits Elder care Time off Subsidized employee transportation Food services Educational subsidies Fitness and medical facilities Flexible work scheduling
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FIGURE 137 Sample Survey of Employee Needs

Source: Michelle Buckley, Checkup for Health Benefit Offerings, Compensation and Benefits Review, September/October 2000, p. 43. Reprinted by permission of Sage Publications, Inc. 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. 1320

Flexible Benefits Programs


Cafeteria (Flexible Benefits) Approach
Each employee is given a limited benefits fund budget

to spend on preferred benefits. Types of plans


Flexible spending accounts Core plus option plans

Flexible Work Arrangements


Flextime schedules Compressed workweek schedules Job sharing Work sharing Telecommuting
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