Definition
Employee benefits, also known as fringe benefits, are additional compensations provided by employers to employees over and above their base salary or wages. These benefits are designed to provide additional financial or personal advantages to employees and can come in various forms such as health insurance, retirement plans, paid time off, and more.
Examples
- Health Insurance: Coverage provided by employers to help employees with medical expenses.
- Retirement Plans: Employer-sponsored programs like pension plans or 401(k)s that help employees save for retirement.
- Paid Time Off: This includes vacation days, sick leave, and holidays provided as paid time away from work.
- Life Insurance: Policies provided by employers that offer financial compensation to beneficiaries in the event of the employee’s death.
- Tuition Reimbursement: Programs that cover the cost of further education for employees.
- Employee Discounts: Discounts on company products or services provided to employees.
Frequently Asked Questions
What are the typical employee benefits offered by employers?
Typical benefits include health insurance, retirement savings plans, paid time off, life insurance, and disability insurance. Additional benefits may include wellness programs, employee discounts, and professional development opportunities.
Are employee benefits taxable?
Some benefits, such as health insurance provided by employers, are generally not taxable. However, certain fringe benefits can be taxable, and it is essential for employees to understand how these will affect their overall tax situation.
How do employee benefits impact retention?
Employee benefits are crucial for retention as they enhance job satisfaction, reduce turnover rates, and help companies retain top talent by providing added value to employment beyond the base salary.
What is the difference between mandatory and voluntary benefits?
Mandatory benefits are those required by law, such as Social Security, worker’s compensation, and unemployment insurance. Voluntary benefits are not legally required and are offered at the discretion of the employer, such as health insurance, retirement plans, and tuition reimbursement.
How do employers select which benefits to offer?
Employers typically design benefit programs by considering factors such as company budget, employee needs and preferences, industry standards, and competitive practices to ensure they remain attractive to current and potential employees.
Related Terms
- Compensation Package: The total of salary, wages, and benefits provided to employees.
- Fringe Benefits: Additional benefits supplementing an employee’s salary.
- Retirement Plan: Financial strategies set up by employers for employees’ post-retirement.
- Paid Time Off (PTO): Policies allowing employees to take paid leave from work.
- Health Insurance: Coverage that pays for medical and surgical expenses incurred by the insured.
Online Resources
- U.S. Department of Labor - Employee Benefits
- Internal Revenue Service (IRS) - Fringe Benefit Guide
- Society for Human Resource Management (SHRM) - Employee Benefits
Suggested Books for Further Studies
- Employee Benefits Planning by Barry Gerhart and Jerry M. Newman
- The WorldatWork Handbook of Total Rewards: A Comprehensive Guide to Compensation, Benefits, Executive Compensation, and Sales Compensation by WorldatWork
- Employee Benefits Design and Planning: A Guide to Understanding Accounting, Finance, and Tax Implications by Bashker D. Biswas
- Workplace Wellness That Works: 10 Steps to Infuse Well-Being and Vitality into Any Organization by Laura Putnam
- Strategic Compensation: A Human Resource Management Approach by Joseph J. Martocchio
Fundamentals of Employee Benefits: HR Management Basics Quiz
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