One of the primary strategies used by employers to retain and attract employees to their organization is by offering impressive employee benefits above and beyond their regular wage.
And for good reasons! Studies indicate that 92% of employees consider employment benefits an important aspect of job satisfaction.
Additionally, 63% of candidates look for employee benefits mentioned in job postings to determine if they want to apply for the company.
And the benefits of providing extra perks to employees don’t end there.
Since 72% of professionals look for work-life balance while finding jobs, offering non-monetary employee benefits like flexible working hours, remote working options, and paid time off can increase employee retention and productivity.
Read on to learn more about employee benefits and get clarity on related questions like the following:
- What is the meaning of employee benefits?
- Why employee benefits are important?
- What are the most popular employee benefits?
- What are some examples of employee benefits?
Employee Benefits Definition
Employee benefits, also known as fringe benefits are additional perks offered by companies to their employees over and above their regular salaries or wages.
From free meals to commute allowances and medical insurance, employee benefits can be offered in different forms.
And although managing employee benefits can become a time-consuming task for the human resources department, it has many advantages and is a pivotal criterion for attracting and retaining employees in the company.
Besides, there are certain law-mandated employee benefits, known as statutory benefits, that companies are obliged to provide to their full-time employees in the US. These include:
- Social Security and Medicare
- Unemployment insurance
- Workers' compensation insurance
- Family and Medical Leave Act (FMLA) protections
- Time off for civic duties, such as voting and jury duty
However, Medicare and Social Security benefits are not solely borne by the employers alone. The law mandates that employers must withhold 6.2% and 1.45% of the employee’s gross compensation as payroll deductions for the stated benefits.
Also Read: What is a hostile work environment?
Importance of Employee Benefits
Employee benefits mandated by federal law are intended to provide workers with retirement income, and medical care, and to mitigate financial or economic hardships that can be caused due to unemployability, disability, and other liabilities caused by workplace injuries or illnesses.
Now, let’s take a look at why offering nonmandatory employee benefits is important for any company or business:
Increases Job Satisfaction
Offering employee benefits shows that the organization cares about its employees. When workers have perks like vacation time, profit shares, wellness programs, etc., they feel motivated to work better, be loyal to the company, and feel valued.
All in all, increasing their job satisfaction and decreases the likelihood of them resigning.
Highly skilled employees are hard to come by and replacing one is equally costly as studies show that it costs a company about 6 to 9 months salary of the position to replace an employee.
Also, employee benefits boost workplace morale, resulting in better work dynamics and fewer conflicts.
Supports a Positive Company Culture
To attract and retain good employees, having a good company culture is essential. Nobody wants to work for a company that undervalues its employees and has inadequate reward programs.
Providing thoughtful employee benefits shows that your company invests in the well-being of its employees and hence enhances your employer brand.
When your company offers employee benefits like a flexible working schedule, remote or hybrid work options, and paid time off, it supports their work-life balance.
This, in turn, increases their productivity at work, with fewer instances of them feeling burnout and even putting in fewer leave requests.
Also Read: What is employee attrition rate?
Types of Employee Benefits
As stated earlier, employee benefits need not be limited to monetary fringes but can be extended to thoughtful privileges.
Given below are 4 types of employee benefits that companies generally offer:
Under this category, employers offer various kinds of insurance coverage to their employees such as medical, life, accident, and disability insurance and retirement plans.
Employees can at times even opt to extend the medical insurance to their immediate family members like spouses, parents, and unmarried siblings.
Also, it is common for companies to offer disability insurance to factory and construction workers due to the slightly risky nature of these jobs.
For instance, if a worker sustains injuries during work, disability insurance can cover monthly payments for the employee until they make a full recovery.
The employee benefits insurance can also cover paid maternity leave for female workers.
While in many European countries like Austria and Finland, offering paid time off to employees is a legal mandate, employers in the US are not obligated to do the same.
Due to the same reason, companies offering employee benefits like paid time off have a higher chance of attracting potential employees and retaining good talent.
Depending on the employer, paid time off may or may not include sick leaves.
Meanwhile, if your company has more than 50 employees, the federal Family Medical Leave Act (FMLA) makes it mandatory to provide up to 12 weeks of unpaid leave while still protecting the employee’s job security.
Employees must meet the following conditions to qualify for family and medical leave under FMLA:
- Work experience with the company for more than 12 months
- Worked a minimum of 1250 hours
Under this category of employee benefits, companies offer bonuses, profit shares, stock options, layover allowances, performance awards, etc. to their workers.
These compensations can be a part of incentive programs to motivate employees and increase productivity at work.
Employee perks include flexible working hours, remote working options, commute allowances, free meals, laptops, tuition reimbursement, skill refining programs, etc.
This category of employee benefits is mostly appreciated by millennials and provides an optimum work-life balance that enhances their job satisfaction.
Employee Benefits Examples
For your reference, given below are some examples of employee benefits offered by different companies:
Costco Employee Benefits
- Above minimum wage salary
- 4 free store memberships that are valid for a year and worth 60$ each
- Health insurance including dental and vision
- 50% higher hourly pay on Sundays
- Semi-annual and annual bonuses
- Retirement benefits up to $500 per year.
- Paid time off for employees who have worked more than 90 days prior to the leave request
- 7 paid holidays every calendar year
Also Read: How to find a job you love in 2022?
Key Points from the Blog
- Employee benefits, also known as fringe benefits are additional perks offered by companies to their employees over and above their regular salaries or wages.
- Employee benefits mandated by federal law are intended to provide workers with retirement income, and medical care, and to mitigate financial or economic hardships.
- Providing thoughtful employee benefits shows that your company invests in the well-being of its employees and hence enhances your employer brand.
- Companies offering employee benefits like paid time off have a higher chance of attracting potential employees and retaining good talent in the US.
- Offering good employee benefits helps boost productivity, retain employees, and increase overall job satisfaction for workers.
- Flexible working hours, remote working options, commute allowances, free meals, laptops, tuition reimbursement, skill refining programs, etc. are some examples of employee benefits.