Benefits

Benefits are payments or entitlements that are provided by an employer and offered to its employees. Benefits are also referred to as company benefits, employee benefits, and fringe benefits. In most cases, benefits are promised to an employee as part of an employment agreement. Benefits can also be extended via the government. In this situation, people are provided payments or entitlements based on being a citizen of that country.

In countries without national healthcare, employers are often burdened with offering health insurance in benefit packages.

Some types of benefits include health insurance, life insurance, paid vacation and sick leave, maternity and paternity leave, 401(k) contributions, pensions, profitsharing, bonuses, and stock options. Companies also provide nonfinancial benefits like employee wellness programs, weight loss programs, and exercise facilities. In many cases, the employer will provide access to the benefit and make payments on behalf of the employee. For example, many companies will provide employees with health insurance. This usually includes providing access to the healthcare and paying a portion of the premiums on behalf of the employee.

The purpose of providing these entitlements or benefits is to attract and retain employees. Typically, companies will offer benefits along with a salary as part of an employment contract. Some companies are able to secure and maintain more qualified employees because of the benefits that they offer. In many cases, [Page 134]the organization will increase the value of the original benefits package over time. For example, in some companies, employees are not eligible to participate in 401k profit-sharing programs until they have completed two years of employment with the company. After an employee is eligible for the program, they are only partially vested in the beginning and become fully vested over time.

Generally, the employer bears all or the majority of the cost for the company benefits. For benefits like paid vacation time and sick leave, the employer bears all of the cost. However, many benefits, like healthcare, require a shared cost that is split between the employer and the employee. For healthcare, the employer typically pays the major portion of the premiums, while the employee pays a smaller portion. Providing benefits to employees can be quite costly. As the cost of healthcare continues to rise in most countries, providing employees with paid vacation time, stock options, healthcare, and other benefits has become quite expensive. Therefore, most companies try to limit these expenses. If not managed properly, the costs associated with company benefits can become a financial burden for the organization.

Company benefits are not always offered to all employees. The cost associated with providing benefits is a major factor influencing why benefits are not extended to all employees. Generally, company benefits are extended to employees who are considered full-time and/or salaried. Although some organizations provide benefits to part-time or hourly employees, these benefits are usually limited and not comparable to the benefits provided to full-time employees. In most cases, part-time or hourly workers are provided very few, if any, benefits at all.

Cultural Influence

Providing employees with company benefits has become customary in many countries around the world. Cultural influences and laws have a direct impact on what benefits a company can and will provide its employees. As a result, the benefits that are offered to an employee can vary significantly from one company to another. Most companies end up offering a unique package of benefits that is based on its country's customs and laws, the size and type of organization, and its financial situation. Some other factors that can directly impact which benefits a company offers an employee can include things related to the employee, like educational background, skill level, job title, and length of time the employee has worked for the company.

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