What are Employee Benefits?

In an organization employees are the most important resource and most important asset. They can lead an organization to the sky or can be the reason for unsuccessful of business. Therefore, it is very much important that employees of an organization should be satisfied by the environment of the organization and most importantly with the salary, wages incentives, etc.

But with salary, wages an organization provides various services and programs which are called employee benefits. Earlier these services and programs were called fringe benefits. Employee benefits have become part of employee compensation because nowadays it is regarded as one of the most important things to retain employees in an organization and keep them satisfied.

Employee benefits play a major role in maintaining employee's standard of living. If any employee suffers from a health problem and the organization looks after him and pays all his expenses in his treatment then it creates an image of a caring employer.

Such employee benefits are not related to the performance of the employees. These advantages are separate from their compensation.

In simple words, employee benefits are those benefits which are separate from wages, salary, and timely payment.

Features of Employee Benefits

• Employee benefits are payments made to the employee in addition to his salary and wages.
• These are not given according to the performance of employee but it is given to every employee just to boost their interest so that they can
• Employee benefits are a cost to an organization. Whatever monetary benefits are given to the employees are accounted as the cost of the origination.
• These benefits are given to all the employees irrespective of their hierarchy.
• There are not any criteria for getting employee benefits.
• This is a positive cost for the employer because it will increase the productivity of the organization indirectly.

Common Employee Benefits

• Lunch free of cost or at a discounted rate.
• Free medical facility to the employee and his family.
• Their life is insured against any accidents or illness. Many countries have made a provision for this.
• They get retirement benefits such as provident fund, gratuity, Pensions, etc.
• Many governments and non-government organizations allow paid holidays.
• Many organizations also provide free education to the children of the employee and also provide transportation cost to the school or college-going children of the employees. Transportation cost is also provided to the employees for coming to the offices.it is provided free of cost or at a subsidized rate.
• Accommodation is also provided to the employees so that they can live with their family also.
• Many organizations also provide paid leave to the employees who are willing to get higher studies. In some cases, the organization itself bears all the expenses for the education of its employees.

Objectives of Employee Benefits

It is very much important to create an environment of belongingness with the employees and organization by introducing some great schemes and programs for the benefit of employees.

Following are the objectives of the employee benefits:

• One of the most important objectives of employee benefits is to attract and retain the employees in the organization.
• Employee benefits are also provided to fulfill the needs of the employee which he cannot afford. By fulfilling his needs, it creates a good social relationship between employer and employee.
• The organization also provides employee benefits because similar organizations also provide such benefits. This is just to retain the employees in the organization for longer.
• Some employees who hold some special position in the organization gets special benefits so that he can keep contributing to the productivity of the organization.
• Employee benefits are also provided to enhance the standard of living of the employee so that they are mentally happy and satisfied with their quality of life and working life.
• Providing employee benefits is the commitment of the organization to fulfill the social needs of the employees by ensuring decent working conditions reasonable salary or wages, providing a platform to improve the skills of the employees.
• Supporting employees in their bad phase of life creates a strong relationship between employees and employers.

Guidelines for Effective Benefit Programs

Following are some important guidelines for an effective employee benefits program:

• It must be considered an important tool of human resource management.
• The benefits program must secure the future of the employees. It should be the policy of the organization.
• All companies provide employee benefits so any organization must compete with other organizations in providing benefits to the employees because Labor is globally mobile.

Problems in Adoption and Administration of Employee Benefits

• Employees feel it is their right: Organization gives employee benefits for the welfare and benefits of the employee. But employees consider it is as their right so when the organization is unable to bear such cost and cut down any benefit from the schemes then employees start protesting to get back that benefit.
• Pressure from trade unions: Many organizations get pressure from trade unions to adopt any particular schemes. But organization gets problem adopting that scheme because sometimes that becomes costly for the organization.
• Overemphasis: Some organizations take this as a most important element of human resource and neglects other HR functions.
• Huge cost: Organization gas to incur huge cost on benefits.

Context and Applications

This topic is significant in the professional exams for both undergraduate and graduate courses, especially for      

• BBA
• B.COM
• M.COM