employee benefits

Benefits: 

13– 1 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Benefits Supplemental Pay Employee Services Insurance Benefits Retirement Benefits Types of Employee Benefits

Employee Benefits in India : 

13– 2 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Employee Benefits in India Integral part of the compensation package. Determined by labor legislations, location, and tax laws. Generally, benefits include loans, housing, and transport. Other activities include celebrations, health programs, various allowances, family involvement, flexi timings. Fringe benefit tax (FBT).

Pay For Time Not Worked: 

13– 3 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Pay For Time Not Worked Vacations and Holidays Parental Leave Supplemental Unemployment Benefits Supplemental Pay Benefits Unemployment Insurance Sick Leave Severance Pay

Pay for Time Not Worked: 

13– 4 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Pay for Time Not Worked Unemployment Insurance Provides for benefits if a person is unable to work through no fault of his or her own. Is an employer payroll tax that is determined by an employer’s rate of personnel terminations. Tax is collected and administered by the state. Vacations and Holidays Number of paid vacation days varies by employer. Number of holidays varies by employer. Premium pay for work on holidays.

TABLE 13–2 An Unemployment Insurance Cost-Control To-Do Checklist: 

13– 5 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. TABLE 13 –2 An Unemployment Insurance Cost-Control To-Do Checklist Cause—Do You: Keep documented history of lateness, absence, and warning notices Warn chronically late employees before discharging them Have policy that three days’ absence without calling in is reason for automatic discharge Request doctor’s note on return to work after absence Make written approval for personal leave mandatory Stipulate date for return to work from leave Obtain a signed resignation statement Mail job abandonment letter if employee fails to return on time Require new employees to stipulate in writing their availability to work overtime, night shifts, etc. Set probationary periods to evaluate new employees Conduct follow-up interviews one to two months after hire Document all instances of poor performance, recording when and how employees did not meet job requirements Require supervisors to document the steps taken to remedy the situation Require supervisors to document employee’s refusal of advice and direction Make sure all policies and rules of conduct are understood by all employees Require all employees to sign a statement acknowledging acceptance of firm’s policies and rules File the protest against a former employee’s unemployment claim on time (usually within 10 days) Use proper terminology on claim form and attach documented evidence regarding separation Attend hearings and appeal unwarranted claims Check every claim against the individual’s personnel file Routinely conduct exit interviews to produce information for protesting unemployment claims Hold periodic workshops with supervisors to review procedures and support effort to reduce turnover costs Identify turnover problems as they occur by a. location b. department c. classification of employee

Pay for Time Not Worked (cont’d): 

13– 6 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Pay for Time Not Worked (cont’d) Sick Leave Provides pay to an employee when he or she is out of work because of illness. Costs for misuse of sick leave Pooled paid leave plans Parental Leave The Family Medical Leave Act of 1993 (FMLA) Up to 12 weeks of unpaid leave within a one-year period. Employees must take unused paid leave first. Employees on leave retain their health benefits. Employees have right to return to job or equivalent position.

Pay for Time Not Worked (cont’d): 

13– 7 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Pay for Time Not Worked (cont’d) Severance Pay A one-time payment when terminating an employee. Reasons for granting severance pay: Acts as a humanitarian gesture and good public relations. Mirrors employee’s two week quit notice. Avoids litigation from disgruntled former employees. Meets Worker Adjustment and Retraining Notification (“plant closing”) Act requirements. Reassures employees who stay on after the employer downsizes its workforce of employer’s good intentions.

Pay for Time Not Worked (cont’d): 

13– 8 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Pay for Time Not Worked (cont’d) Supplemental Unemployment Benefits (SUB) Payments that supplement the laid-off or furloughed employee’s unemployment compensation. The employer makes contributions to a reserve fund from which SUB payments are made to employees for the time the employee is out of work due to layoffs, reduced workweeks, or relocations. SUB payments are considered previously earned compensation for unemployment calculation purposes.

Insurance Benefits: 

13– 9 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Insurance Benefits Workers’ Compensation Provides income and medical benefits to work-related accident victims or their dependents, regardless of fault. Death or disability: a cash benefit based on earnings per week of employment. Specific loss injuries: statutory list of losses. Controlling workers’ compensation costs Screen out accident-prone workers. Make the workplace safer. Thoroughly investigate accident claims. Use case management to return injured employees to work as soon as possible.

Insurance Benefits (cont’d): 

13– 10 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Insurance Benefits (cont’d) Hospitalization, Health, and Disability Insurance Provide for loss of income protection and group-rate coverage of basic and major medical expenses for off-the-job accidents and illnesses. Accidental death and dismemberment Disability insurance

Insurance Benefits (cont’d): 

13– 11 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Insurance Benefits (cont’d) Health Maintenance Organization (HMO) A medical organization consisting of specialists operating out of a health care center. Provides routine medical services to employees who pay a nominal fee. Receives a fixed annual contract fee per employee from the employer (or employer and employee), regardless of whether it provides that person with service.

Insurance Benefits (cont’d): 

13– 12 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Insurance Benefits (cont’d) Preferred Provider Organizations (PPOs) Groups of health care providers that contract to provide services at reduced fees. Employees can select from a list of preferred individual health providers. Providers agree to discount services and to submit to utilization controls. Employees using non-PPO-listed providers may pay all costs or only costs above the reduced fee structure for services.

Trends in Health Care Cost Controls: 

13– 13 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Trends in Health Care Cost Controls Communication, Involvement, and Empowerment Health Savings Accounts Premiums and Co-Pays Cost-Control Trends Prevention Programs Claim Audits

Other Cost-Control Options: 

13– 14 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Other Cost-Control Options Automating health care plan administration Defined contribution health care plans Eliminating retiree health care coverage Benefits purchasing alliances Controlling Health Care Costs Outsourcing health care plan administration

Other Benefits Issues: 

13– 15 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Other Benefits Issues Life Insurance Types Group life insurance Accidental death and dismemberment Personnel policies Benefits-paid schedule Supplemental benefits Financing

Retirement Benefits: 

13– 16 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Retirement Benefits Social Security (Federal Old Age and Survivor’s Insurance) A federal payroll tax (7.65%) paid by both the employee and the employer on the employee’s wages Retirement benefits at the age of 62 Survivor’s or death benefits paid to the employee’s dependents Disability payments to disabled employees and their dependents The Medicare program

Retirement Benefits (cont’d): 

13– 17 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Retirement Benefits (cont’d) Membership Requirements Vesting Benefit Formula Plan Funding Policy Issues In Pension Planning

Personal Services: 

13– 18 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Personal Services Credit Unions Separate businesses established with the employer’s assistance to help employees with their borrowing and saving needs. Employee Assistance Programs (EAPs) Provide counseling and advisory services: Personal legal and financial services Child and elder care referrals Adoption assistance Mental health counseling Life event planning

Family-Friendly Benefits: 

13– 19 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Family-Friendly Benefits Subsidized child care Sick child benefits Elder care Time off Subsidized employee transportation Food services Educational subsidies Fitness and medical facilities Flexible work scheduling

FIGURE 13–7 Sample Survey of Employee Needs: 

13– 20 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. FIGURE 13 –7 Sample Survey of Employee Needs Source: Michelle Buckley, “Checkup for Health Benefit Offerings,” Compensation and Benefits Review , September/October 2000, p. 43. Reprinted by permission of Sage Publications, Inc.

Flexible Benefits Programs: 

13– 21 © 2009 Dorling Kindersley (I) Pvt. Ltd. All rights reserved. Flexible Benefits Programs Cafeteria (Flexible Benefits) Approach Each employee is given a limited benefits fund budget to spend on preferred benefits. Types of plans Flexible spending accounts Core plus option plans Flexible Work Arrangements Flextime schedules Compressed workweek schedules Job sharing Work sharing Telecommuting