Employee Benefits and Services

Employee Benefits and Services

Management is concerned with attracting and keeping employees, whose

performance meets at least minimum levels of acceptability and at keeping

absenteeism and turnover to tolerable levels
The provision of benefits and services can be and are important in maintain

the employees and reducing the turnover and absenteeism low.

The purpose of such benefits is to retain people in the organization and

stimulate them to greater effort and higher performance.

They foster loyalty and act as a security base for the employee.

Concept
Employee benefits and services

Any benefits that the employee receives in addition to direct remuneration

Fringes embrace a broad range of benefits and services that employees
receive as part of their total package. It is based on critical job factors and
performance. Benefits and services however are indirect compensation
because they are usually extended as a condition of employment and are not
directly related to performance
*fringe benefits are also called welfare expenses, wage supplements sub wages
or social charges, etc

Concept
Benefits and compensation provided to the employees

usually depend on the conditions of employment and

other factors like security, safety, health, welfare and
recreation of employees
These benefit programs must be managed carefully to

enhance recruitment and to boost the morale of the

employees

Why Organizations Provide Benefits

Employee demand: To meet rising prices and increased cost of

living employees demand various types of benefits
Example: Variable dearness allowance, Enhanced HRA

Trade union demands: The growth and strength of trade unions

has substantial influence on the benefits and services a
company offers

Employers

preferences: Employers prefer to give benefits to

employees as it enhances employees morale and works as an
effective motivational tool provided it is within the accepted
norms and limits

Factors influencing the decision to set up a particular employee benefit

and service program
Cost
Ability to pay
Needs of the employees
Bargaining strength of the trade union
Tax consideration
Social responsibility
The reaction of employees

Benefits
1.

Payment for time not worked

(a) Vacation
(b) Holidays
(c) Sick leave
(d) Miscellaneous types of non-working plans
(e) Shifts premium

Benefits
2. Employee Security
1.

Severance pay

2.

Lay-off

3.

Guaranteed annual wage

4.

Supplementary unemployment benefits

5.

Retrenchment compensation

Benefits
3. Safety benefits

4. Health Benefits
(a) Medical benefit or insurance
(b) Managed care

Health maintenance organization

Preferred-provider organization

5. Maternity benefit
6. Dependent benefit
7. Insurance benefits
(a) Life insurance
(b) Vision insurance
(c) Dental insurance

8. Welfare and recreational facilities

(a) Educational assistance
(b) Legal assistance
(c)Housing facilities
(d) Financial services
(e) Employee assistance programs

Benefits
9. Old age and retirement benefits
(a) Provident fund
(b) Pension
(c)Deposit linked insurance
(d) Medical benefit
(e) Gratuity
(f) Retirement counseling

Employee services
In addition to fringe benefits, organizations also provide

services that employees find desirable.

These services are provided at low or no cost to the
employee.
These are provided at the discretion of the management
with consultation with the trade unions.

These services include

Services related to type of work performed- includes subsidies for the

purchase and upkeep of work clothing and uniform.

Eating facilities
Transportation facilities
Child care facilities
Housing services
Financial and legal services
Recreational, cultural and social programs
Educational services
Medical services
Outplacement services
Flexible time
Cafeteria service

Fringe benefits in India

When a study was conducted , it was revealed that

19,60,981 companies pay little over 2148.3 million in

wages and fringe benefits per year in India.
The fringe benefits were high in mining and plantation
industries low and very low in manufacturing sector.
The quantum of the bonus varied sector to sector
A. Payments for time not worked
B. Statutory fringe benefits
C. Voluntary benefits

Problems raised by benefit programs

Charge of Paternalism = When too many benefits & services are offered to

employees , a feeling develops that employers are playing the role of parents and
workers are looked upon as children.
Excessive Expenditure = Its a very costly affair and involves a great deal of

paper work
Maintenance of least productive worker = With increase in benefits and

services employees ,particularly when they are not very productive ,tend to stick
to their jobs and are not interested in changing them.
Neglect of other personnel functions = Due to excessive concern from

management they stop emphasizing on other aspects of personnel programs

which can develop a concern among the employees .

Administration of benefits and services

Organizations have seldom established objectives, systematic plans and

standards to determine the variability of the program

Lack of employee participation
Managers take little interest in benefits program and trade unions are almost
hostile to schemes
Employees have little awareness about such programs
These problems can be avoided if following steps are taken:
To establish benefit objectives
To assess environmental factors
To assess competitiveness
To communicate benefit information
To control benefit costs and evaluation

Social Security
ILO defined Social Security as the protection

which the society provides for its members through

a series of public measures,
against the economic and social distress that
otherwise would be caused by the stoppage or
substantial reduction of earning
resulting from sickness, maternity, employment
injury, unemployment, invalidity, old age,
provision for medical care, provision for subsidies
for families with children

Social Security
The Workers Compensation Act,1923
The Employees State Insurance Act,1948
The Employees Provident Funds and Miscellaneous

Act,1952
The Employees Deposit-linked Insured Scheme,1976
The Maternity Benefit Act,1961
The Payment of Gratuity Act,1972

Welfare Legislations
The Factories Act,1948

Covers areas including health ,welfare, safety, working

hours, annual leave & employment of women &
children
The Mines Act,1952
Facilities for mine workers like creche, shelters for
food & rest, sanitary & refreshment facility

Welfare Legislations
The Motor Transport Workers Act,1961

provisions for canteens, clean,ventilated rest rooms,

uniforms,washing allowance, medical facilities, first
aid facilities for motor transport workers etc

The Contract labour (Regulation &

Abolition)Act,1970
The contractor is required to provide the following
welfare & health measures to the contract workers

Welfare measures
There are also a number of voluntary welfare
a)
b)
c)
d)
e)
f)
g)

amenities provided to the employees

Educational Facilities
Housing Facilities
Transport Facilities
Recreational Facilities
Consumer Cooperative Societies
Creches
Labour welfare officers

QWL

MODULE 4

Quality of Work Life (QWL)

QWL is a value driven process, which is aimed

towards meeting the twin goals of enhanced

effectiveness of the organization and improved
quality of life at work for the employees
QWL is tge degree to which work in the

organisation contributes to material and

psychological weel being of its members

QWL
Major categories that provide the framework
Adequate and fair compensation
Safe and healthy working conditions
Opportunity to use and develop human
capacities
Opportunity for continued growth and security
Social integration in the work organisation
Right to personal privacy
Work and total life space
Social relevance of work life

QWL
27

Working Conditions
Proper Illumination
Temperature
Pressure
Noise
Humidity
Congenial Atmosphere
Supervisor
Empathetic Colleagues
Gender Equality