Labour Compliance

Employee Benefit Complete guide: Types, Costs, and Tips

The employees have options for their employees, and many enterprises offer plenty of employee benefit in the competitive market. Employment is not just a one-way street of employees searching for work; companies also need employees to function. So, it’s increasingly important for employers to ensure their employees have a healthy environment. So it leads to a more productive workforce, a higher employee retention rate, and more significant financial gains for the Company.

Types

Regarding the standard employee benefits, a small and big enterprise can offer their worker. The four types of benefits are included in a benefit scheme. Some are mandatory requirements, and some are expected as perks. Such as medical, retirement, and flexible hours, paid leaves, as they are the most important and can provide the most help for employees. The benefit certainly needs to be more comprehensive, but it is also not a list of just requirements, and some employers may be able to provide all of them, while others will provide some.

Medical benefit

When an employee joins periodically or full-time, the benefits come along with wages, salaries, and social contributions. That is, particularly, a contribution made by the employer to an insurance company to pay for the medical treatment of its employees. Medical benefits such as health insurance, dental insurance, life insurance, and disability insurance. The benefit will make the enterprise value your work and their well-being.

Pension and retirement benefits

The Company provides post-employment benefits such as gratuity, pension, and other retirement benefits^[1]. The benefit aims to take care of your workforce even after retirement. Retirement plans such as a 401(k) can help advise on the best ways to implement the retirement scheme. Usually, a pension covers a fixed amount of funds to the employee after retirement and at regular payment intervals. Gratuity is a certain amount of money to be paid to the employees at the end of the employment period. The payment of gratuity applies to every organisation that employs ten or more people. Similarly, in the case of insurance, where any employee earns under Rs. 21,000, the employee shall have to contribute 1.75% of their payable wages. 

Provident Fund

The Employee provident fund Act establishes a scheme for creating pension funds; it applies to every organisation that employs 20 or more people. Employees must contribute 12% of their wages and dearness allowances from their basic salary.

Time off

 Paid leave policies often involve a few days of time off where you still get paid if an employee is sick or has any untoward incident. The benefit encourages employees to rest and avoid infecting their colleagues. These paid days are often in addition to other paid time off opportunities, like paid holidays or extended leaves.

Flexible work hours

Flexible work hours are typically an extra perk given by some employers to employees who can work productively with hours different from a typical workday. Employers may offer flexible work hours after passing a brief training period to prove your skills and ability to work independently. An employer may provide shorter shifts or more lenient schedules that benefit the employee to maintain the work-life balance. During the severe outbreak of Covid, many enterprises provide remote job access that saves an employee’s job and maintains the work-life balance.

How much do benefits cost a company?

According to a report by Mercer Marsh Benefits (MMB) in the year 2022, the cost related to employer-sponsored medical benefits programs in India will increase by 15% in 2022; this will be the highest anticipated increase in the Asia region since the onset of the Covid-19 pandemic.

The benefits scheme costs money, and the employer must contribute a percentage of each employee’s salary to the Employees Provident Fund, Pension Scheme, and Insurance Scheme. But, it is noted that the cost should not be reduced too much; not every benefit has to create heavy financial burdens for the companies. The Company may take a simple approach by introducing cost-effective benefits and perks, such as:

• Remote work/flexible hours
• Reimbursement for travel, internet access, and other related expenses
• Company-sponsored discounts
• Free parking spaces
• Wellness Programs (e.g. Meditation, Yoga)
• Housing and relocation benefits for new employees

Tips for Employee benefits management

Employee benefits significantly impact the administration, especially when a regulatory body like ACA, HIPPA, COBRA, and FMLA is involved. But there are ways to manage benefit plans more effectively to save time and reduce the possibility of mistakes. Here are five things to consider:

Communicate With the Team

When an employer attempts to improve the employee benefits package, the employer should first consult with the employees’ team. After that, we need to discuss with the team what the employee wants and conduct a group meeting so the employee gets the freedom to learn about their benefits, especially about the health care plan, Insurance, Provident Fund, retirement benefit, and other workplace perks.

Aim and Budget

The Employee benefit plans should reflect the Company’s overall budget and set goals for both the employer and employee needs. In every organisation’s business, the employers choose a general benefits plan, wherein other employers include the objectives in their total compensation principles. The benefits plan is not static and should be evaluated and revised to reflect the current employer strategy and employee needs.

Focus on Work-life balance.

The employer must discuss maintaining the work-life balance and understanding its importance so that anyone will get motivated to take the necessary steps to achieve the set goal by the employer. A balance between work and personal life helps improve employee productivity, morale, health, and mental condition. An imbalance in any front will make life complicated and pose complex challenges regarding work stability.

Creating a Positive work environment

A positive working environment is an atmosphere that a workplace promotes that affects the employer’s and employee’s overall growth, attitude, and mindset. Companies can achieve this by maintaining a healthy company culture, which may result in encouraging employee growth, promoting communication, and helping employees feel comfortable and safe in the workplace.

Effectively implement the benefit plans.

The organisation needs to implement an employee benefits plan to determine the cost of providing, the categorisation of benefits, and assess it against the benefits budget.

Implementing an employee benefits plan is a complex process, and various factors need to be taken care of, which are as follows:

a) Alterations in the current plan design may induce cost savings.

b) Employees must value such Benefits.

c) Evaluating the administrative costs for the benefits

d) Evaluating that is the cost-cutting features

e) How much the employee’s cost will have to contribute

Conclusion

The comprehensive benefit plans can improve the business standard, demonstrating to the existing employee that the Organization values them and enticing other prospective employees to join the Company. The main objective for the Company is to create a reasonable budget for the Organization. It also benefits both the employer and the employee. In every Company, there is a benefits administrator department handling benefits management.

Also Read: Advantages and Disadvantages of Employee Benefit Plans