COMPENSATION All form of pay or rewards going to employees and arising from their employment.DIRECT FINANCIAL PAYMENTSINDIRECT PAYMENTS
BENEFITES Indirect financial and nonfinancial payments employees receive for continuing their employment with the company.
Benefits Discretionary on Part Benefits Required by Federal of Employer or Most State Law Social Security Disability, Health, and Life Unemployment Insurance Insurance Workers’ Compensation Pensions Paid Time off for Vacation, Holidays, Sick Leave, Personal Leave, Jury Duty, etc. Leaves under family Medical Employee Assistance and leave Act Counseling
SUPPLEMENTAL PAY BENEFITS Benefits for time not worked such as unemployment insurance, vacation and holiday pay , sick pay. Supplemental pay benefits is also called “PAY FOR TIME NOT WORKED”- This is one of an employer’s most costly benefits , because of the large amount of time off that many employees receive.
SUPPLEMENTAL UNEMPLOYMENTBENEFITS Provide for a “guaranteed annual income” in certain industries where employers must shut down to change machinery or due to reduced work . These benefits are paid by the company and supplement unemployment benefits. As the name implies ,these supplement the employee’s unemployment the employee’ s unemployment compensation, and help the person maintain his or her standard of living for the time he or she is out of work.
UNEMPLOYMENT INSURANCE Provides benefits if a person is unable to work through some fault other than his or her own. The benefits derive from a tax on employers that can range from 0.1% to 5% of taxable payroll in most states. An employer’s unemployment tax rate reflects its rate of personnel terminations.
VACATIONS AND HOLIDAYS The number of paid employee vacation days varies considerably from employer to employer. In the United States, the average is about 10 days per year. A typical U.S. company policy might call for:1. One week after 6 months to 1 year of service;2. Two weeks after 1 to 5 year of service;3. Three weeks after 5 to 10 year of service;4. Four weeks after 15 to 25 year of service; and5. Five weeks after 25 year of service.
SICK LEAVE Provides pay to an employee when he or she is out of work because of illness. Most sick leave polices grant full pay for a specified number of sick days – usually up to 12 days per year . The sick days usually accumulate at the rate of, say , one day per month service .
SEVERANCE PAY A one – time payment some employers provides when terminating an employee. Severance pay makes sense on several grounds. It is a humanitarian gesture , and good public relations. In addition , most managers expect employees to give them at least one or two weeks’ notice if they plan to quit; it therefore seems appropriate to provide at least one or two weeks’ severance pay if an employee is being dismissed.
INSURANCE BENEFITS Most employers also provide a number of required or voluntary insurance benefits ,1. Workers’ Compensation2. Health Insurance
WORKERS COMPENSATION Provides income and medical benefits to work – related accident victims or their dependents regardless of fault. Workers’ compensation benefits can be monetary or medical. In the events of a worker’s death or disablement, the person’s dependents are paid a cash benefit based on prior earning – usually one – half to two –thirds the worker’s average weekly wage, per week of employment.
CONTROLLING WORKERSCOMPENSATION COSTS Minimizing the number of workers’ compensation clams is an important goal for all employers . While the employers insurance company usually pays the claims, the costs of the premiums depend on the number and dollar amount of claims . Workers’ compensation benefits costs are rising: They recently grew by 3.5% overall while wages grew by just 2.4%.
HOSPITALIZATION , HEALTH ,ANDDISABILITY INSURANCE Health and hospitalization insurance looms large in many people’s choice of employer, because such insurance is so expensive . Most employers therefore offer their employees some type of hospitalization , medical, and disability insurance . Most health insurance plans provide at least basic hospitalization and surgical and medical insurance for all eligible employees at group rates.
THERE ARE EMPLOYERS OFFERINGFOLLOWING HEALTH BENEFITS, Health maintenance organization (HMO) Preferred provider organizations (PPO) Mental Health Benefits The Pregnancy Discrimination Act Comprehensive Omnibus Budget Reconciliation Act Long-Term Care Life Insurance
RETIREMENT BENEFITS Social security Fedaral program that provides three types of benefits : retirement income at the age of 62 and thereafter ;survivor’s or death benefits payable to the employee’s dependents regardless of age at time of death: and disability benefits payable to disabled employees and their dependents . These benefits are payable only if the employee is insured under the Social Security Act.
PENSION PLANS• Plans that provide a fixed sum when employee reach a predetermined retirement age or when they can no longer work due to disability .There are following pension plans Defined benefits pension plan Defined contribution pension plan 401(k) plan Economic growth and tax relief reconciliation act Savings and thrift plan Deferred profit-sharing plan Employee stock ownership plan
PENSION ALTERNATIVES EARLY RETIREMENT WINDOWS : A type of offering by which employee are encouraged to retire early, the incentive being liberal pension benefits plus perhaps a cash payment. CASH BALANCE PLANS : Defined benefits plans under which the employer contributes a percentage of employees’ pension plans every year ,and employees earn interest on this amount.
CREDIT UNIONS Credit unions are usually separate businesses established with the employer’ assistance to help employees with borrowing and saving needs. Employees usually become members by purchasing a share of the credit union’s stock .
EMPLOYEE ASSISTANCE PROGRAMS A formal employer program for providing employees with counseling and/or treatment programs for problems such as alcoholism , gambling ,or stress.There are following key steps for launching a successfulEAP program :1. Develop a policy statement2. Ensure professional staffing3. Maintain confidential record- keeping systems4. Be aware of legal issues
FAMILY – FRIENDLY BENEFITS On – site child care ,fitness and medical facilities ,flexible work scheduling , telecommuting , occasional sabbaticals , loan programs for home computers , stock options , concierge services , even insurance for the family pet are all part of the compensation package in the new workplace.There are following family – friendly benefits:1. Effect on performance2. Subsidized Child Care3. Elder Care4. Other Job – Related Benefits5. Executive Perquisites
FLEXIBLE BENEFITS Individualized plans allowed by employers to accommodate employee preferences for benefits. In a survey of working couples , for instance , 83 % took advantage of flexible hours , 69% took advantage of the sorts of flexible – style benefits options packages we’ll discuss next; and 75 % said that flexible – style benefits plans are the sorts of plans they would like to see their companies.
BIBILIOGRAPHY Human Resource Management Tenth Edition Gary Dessler