Labour Compliance

Advantages and Disadvantages of Employee Benefit Plans

Employee Benefit Plans

With growing inflation, every company needs a hardworking, loyal employee for the company. So, the Company provides some significant employee benefit plans to the employee before accepting any job role or position. Earlier, employer benefit plans only include bonuses, saving schemes, insurance, etc. However, in changing times, the company is not only focused on financial well-being rather, but helps employees to be more focused on their healthcare, job satisfaction, and work-life balance. 

Employee Benefit Plans: Meaning

Employee benefits plans are types of compensation employers provide their employees in addition to a salary. Certain State laws also require employers to offer benefits such as:

  • Provide family and medical emergency leave
  • Insurance Benefit Scheme
  • Also, provide a disability insurance scheme
  • Worker’s benefit compensation
  • Get a day off for civic duties, such as voting duty

The Companies may choose whether to provide any other common benefits such as paid vacation, health insurance, life insurance, and retirement plans. 

Employee Benefit Plans: Importance

Employee benefits plan certainly improve the quality of life of the employee and also increase the value of the working environment. 

Employee Benefit Plans: Advantages

Advantages of employee benefits plan include:

1. Health Insurance

A health insurance benefits package shows that a company cares about its employees. The Affordable Care Act requires companies with more than 50 employees to provide health insurance to 95% of full-time employees or pay a significant fee to the IRS. The company provides health savings account plans to reduce an employee’s medical expenses.

2. Paid Leave

  • Benefits such as paid time off can make employees feel valued and maintain a work-life balance. This can lead to employees who are happy to be in their job, loyal to the company, and motivated to do good work. Companies generally give employees paid holidays such as Labor Day[1], Independence Day, Republic Day, Christmas, and New Year’s. They might also give employees a set number of days to use for religious holidays or a certain number of personal hours per year.
  • Some companies also offer paid vacation or unlimited vacation time. Employees may gain weeks of vacation time the longer they work for a company.
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3. Medical and Family Leave

Companies are required by law to give employees up to 12 paid weeks off for the birth of a child or a serious medical condition. These requirements vary by the State Laws.

4. Flexible Work Hours

Some Companies also provide flexible work hours rather than fixing 9 AM to 5 PM, which maintains a work-life balance. These types of benefits can help the employee to reduce mental stress and fatigue and prevent burnout.

5. Remote Work

During the period Covid-outbreak, companies give facilities for their employee to work from home or the office and telecommute. On any the employee is allowed to take certain days of the week or month or as a full-time option. 

6. Life Insurance Benefit

Life insurance benefits scheme provides the employer to support an employee’s family in the event of that person’s death.

7. Disability Insurance Benefit

If an employee develops an illness or a disability during the period of employment that affects their ability to work, the company continues to pay a portion of that employee’s salary

8. Bonus

The employee benefits scheme might include pay raises or bonuses based on good performance or goals achieved.

9. Wellness Programs

Companies initiatives to keep employees healthy and educate them about physical well-being. Such benefits can improve focus and productivity so that the employee can better focus on their tasks and career advancement.

10. Retirement Benefit

The retirement benefits such as employee pension plans allow employees to put a pre-tax percentage of their earnings toward their retirement savings. Such benefits can help employees for a well-organized and reliable way to save money and plan their financial futures for themselves and their families.

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Employee Benefit Plans: Disadvantages

The disadvantages of employee benefit plans are as follows

Problem with legal compliance

In an organization, the employers and employees may disagree over non-compliance with certain legally binding policies governing employee benefits.

Breach of Company Policies

In a Company, if an employee breaches any specific policies and fails to pay retentions to attract legal fees, which need to be paid up to escape trouble with the law. However, that, in itself, becomes a problem for some organizations and their employees.·       

Expensive Health Benefit Plans

In some organizations, the employees think the health benefit plans are too expensive due to the fact that ultimatley day, their employer may deduct more money than they’re paid as a health benefit.

Benefit-Cost Varies

In bigger companies, while they are duty-bound to pay a portion of their employee’s benefits, However, the smaller companies can not afford to spend more on employee benefits. When there’s a need for establishing additional departments in an organization for ensuring efficient management, it will lead to increased employee-benefit-related expenses.

Varies on bonuses

In companies, some employee bonuses can become disadvantageous as they can induce employee rivalry rather than encourage employee teamwork. 


The employee benefit plans inculcate several schemes for the employee to work in a healthy environment. For that, most companies offer health insurance to retirement policies. Benefit such as paid leave, flexible work hours, and wellness programs so that the employee can improve focus and productivity. Another important aspect for the employees is to maintain the work-life balance between their career and personal life. The health benefit scheme is important for employees to afford regular wellness exams and medical treatment. Retirement benefits can help provide employees a reliable way to save money. Such employee benefits are usually essential for workplace morale and provide stability in the organization. 

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