Employee Benefits

Benefits
Types of Employee Benefits
Supplemental Pay
Insurance Benefits
Retirement Benefits
Employee Services
2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved.
131
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).
132
Pay For Time Not Worked
Unemployment Insurance
Vacations and Holidays
Sick Leave
Supplementa l Pay Benefits
Parental Leave
Severance Pay
Supplemental Unemployment Benefits
133
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.
2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. 134
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
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.
136

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.
137

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.
138
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.
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
1310

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.
1311

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.
1312
Trends in Health Care Cost Controls

Cost-Control Trends
Communication, Involvement, and Empowerment
Premiums and Co-Pays
Prevention Programs
Health Savings Accounts
Claim Audits
1313
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
1314
Other Benefits Issues

Life Insurance
Types
Group life insurance Accidental death and dismemberment
Personnel policies
Benefits-paid schedule Supplemental benefits Financing
1315
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
1316
Retirement Benefits (contd)

Policy Issues In Pension Planning
Membership Requirements
Benefit Formula
Plan Funding
Vesting
1317
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
1318
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
1319
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

Employee Benefits

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Benefits

Types of Employee Benefits

2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved.