Employee Benefits and Services
EMPLOYEE BENEFITS AND SERVICES
INTRODUCTIONThe provision of benefits and services can be and
are important in maintain the employees and reducing the turnover
and absenteeism low. The purpose of such benefits is to retain
people in the organization and stimulate them to greater effort and
higher performance. They foster loyalty and act as a security base
for the employee.
Fringes embrace a broad range of benefits and services that
employees receive as part of their total package. It is based on
critical job factors and performance. Benefits and services however
are indirect compensation because they are usually extended as a
condition of employment and are not directly related to
performance
*fringe benefits are also called welfare expenses, wage
supplements, sub wages or social charges, etc
Employee benefits and services
Benefits and compensation provided to the employees usually
depend on the conditions of employment and other factors like
security, safety, health, welfare and recreation of employees
These benefit programs must be managed carefully to enhance
recruitment and to boost the morale of the employees
Why Organizations Provide Benefits ?Employee demand: To meet
rising prices and increased cost of living employees demand various
types of benefitsExample: Variable dearness allowance, Enhanced
HRA
Trade union demands: The growth and strength of trade unions has
substantial influence on the benefits and services a company
offers
Employers preferences: Employers prefer to give benefits to
employees as it enhances employees morale and works as an effective
motivational tool provided it is within the accepted norms and
limits
Factors influencing the decision to set up a particular employee
benefit and service program CostAbility to payNeeds of the
employees Bargaining strength of the trade union Tax consideration
Social responsibility The reaction of employees
Coverage of BenefitsPayment for time not worked (a) Vacation(b)
Holidays(c) Sick leave (d) Miscellaneous types of non-working
plans2. Employee Security Severance pay Lay-off Guaranteed annual
wage Supplementary unemployment benefits Retrenchment
compensation
3. Safety benefits
4. Health Benefits
5. Maternity benefit
6. Dependent benefit
7. Insurance benefits(a) Life insurance(b) Vision insurance(c)
Dental insurance
8. Welfare and recreational facilities(a) Educational
assistance(b) Legal assistance(c)Housing facilities(d) Financial
services(e) Employee assistance programs 9. Old age and retirement
benefits(a) Provident fund(b) Pension(c)Deposit linked insurance(d)
Medical benefit(e) Gratuity(f) Retirement counseling
Employee services In addition to fringe benefits, organizations
also provide services that employees find desirable. These services
are provided at low or no cost to the employee. These are provided
at the discretion of the management with consultation with the
trade unions.
These services include
Services related to type of work performed- includes subsidies
for the purchase and upkeep of work clothing and uniform.Eating
facilitiesTransportation facilitiesChild care
facilitiesOutplacement servicesFlexible timeCafeteria service
Problems raised by benefit programs Charge of Paternalism = When
too many benefits & services are offered to employees , a
feeling develops that employers are playing the role of parents and
workers are looked upon as children.
Excessive Expenditure = Its a very costly affair and involves a
great deal of paper work
Maintenance of least productive worker = With increase in
benefits and services employees ,particularly when they are not
very productive ,tend to stick to their jobs and are not interested
in changing them.
Neglect of other personnel functions = Due to excessive concern
from management they stop emphasizing on other aspects of personnel
programs which can develop a concern among the employees .
