Employee Benefits

Managing Human Resources

Belcourt * Bohlander * Snell
Copyright 2008 by Nelson, a division of Thomson Canada Limited. All rights reserved.

5th Canadian edition

PowerPoint Presentation by Monica Belcourt, York University and Charlie Cook, The University of West Alabama

Objectives

After studying this chapter, you should be able to:

1. Describe the characteristics of a sound benefits program.
2. Indicate management concerns about the costs of employee benefits and discuss ways to control those costs. 3. Identify and explain the employee benefits required by law.

4. Discuss suggested ways to control the costs of healthcare programs.

5. Describe benefits that involve payment for time not worked.
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Objectives

(contd)

After studying this chapter, you should be able to:

6. Discuss the recent trends in retirement policies and programs.
7. Indicate the major factors involved in the management of pension plans. 8. Describe the types of work/life benefits that employers may provide.

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The Chief Objectives of Benefits Programs

Improve employee work satisfaction Meet employee health and security requirements Attract and motivate employees

Reduce turnover
Maintain a favourable competitive position

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Requirements for a Sound Benefits Program

Strategic Benefits Planning

Communicating Employee Benefits Information

Allowing for Employee Involvement

Providing for Flexibility

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Benefits for a Diverse Workforce

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Providing for Flexibility

Flexible Benefits Plans (Cafeteria Plans)
Benefit plans that enable individual employees to choose the benefits that are best suited to their particular needs.

A basic or core benefits package of life and health insurance, sick leave, and vacation ensures that employees have a minimum level of coverage. Employees use credits to buy whatever other benefits they need.

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Flexible Benefits Plans: Advantages and Disadvantages

ADVANTAGES Employees select benefits to match their individual needs. Benefit selections adapt to a constantly changing (diversified) workforce. Employees gain greater understanding of the benefits offered to them and the costs incurred. Employers maximize the psychological value of their benefits program by paying only for highly desired benefits. Employers limit benefit costs by allowing employees to buy benefits only up to a maximum (defined) amount. Employers gain competitive advantage in the recruiting and retention of employees.
Figure 11.1

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Flexible Benefits Plans: Advantages and Disadvantages (contd)

DISADVANTAGES Poor employee benefits selection results in unwanted financial costs. There are certain added costs to establishing and maintaining the flexible plan. Employees may choose benefits of high use to them that increase employer premium costs.

Figure 11.1

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Communicating Benefits Information

In-house publications (employee handbooks and organizational newsletters) Group meeting and training classes Audiocassettes/videotapes

Bulletin boards
Payroll inserts/pay stub messages Specialty brochures Employee self-service systems (ESS)
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Highlights in HRM
Crafting an Effective Benefits Communication Program
In building an identity: Design materials that are eye-catching and of high interest to employees. Develop a graphic logo for all material. Identify a theme for the benefits program. In writing benefits materials: Avoid complex language when describing benefits. Clear, concise, and understandable language is a must. Provide numerous examples to illustrate benefit specifics. Explain all benefits in an open and honest manner. Do not attempt to conceal unpleasant news. Explain the purpose behind the benefit and the value of the benefit to employees. In publicizing benefits information: Use all popular employee communication techniques. Maintain employee self-service (ESS) technology to disseminate benefits information and to update employee benefits selections. Use voice mail to send benefits information. Employ presentation software such as PowerPoint or Lotus Freelance to present information to groups of employees. Highlights 11.1 Maintain a benefits hotline to answer employee questions.
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Benefits Issues
Concerns of Management
Union demands for additional benefits Benefits offered by other employees

Tax consequences of benefits

Rising costs of providing benefits Benefits coverage for domestic partners

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Types of Employee Benefits

Required By Law
Canada /Quebec Pension Plans Employment Insurance Workers Compensation Provincial Hospital and Medical Services

Discretionary
Health care Payment for time not worked

Severance Pay

Life and LT care insurance Retirements and pensions

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Canada and Quebec Pension Plans

Covers all employees between ages of 18 and 70. Used to pay retirement pensions, disability benefits and survivor benefits. All contributions come from employers and employees

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Employment Insurance
Benefits paid to claimants who are unemployed and actively seeking employee. Amount paid is determined by the number of hours of employment in the past year, and the regional unemployment rate. Additional benefits may be extended for situations involving illness, injury, quarantine, and for maternity, paternity or adoption leave.

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Workers Compensation Insurance

Workers Compensation Insurance
Provincial and territorial insurance (funded by an employer payroll tax) provided to workers to defray the loss of income and cost of treatment due to workrelated injuries or illness. Factors influencing the employers insurance rate:

The risk of injury or illness for an industry. The companys frequency and severity of employee injuries (the companys experience rating).

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Reducing Workers Compensation Costs: Key Areas 1. Perform an audit to assess high-risk areas within a workplace. 2. Prevent injuries by proper ergonomic design of the job and effective assessment of job candidates. 3. Provide quality medical care to injured employees by physicians with experience and preferably with training in occupational health. 4. Reduce litigation by effective communication between the employer and the injured worker. 5. Manage the care of an injured worker from the injury until return to work. 6. Provide extensive worker training in all related health and safety areas.
Figure 11.3

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Provincial Hospital and Medical Services

Many employers offer third party benefit coverage for additional benefits, beyond provincial health care.

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Discretionary Major Employee Benefits

Health care benefits Payment for time not worked Severance pay Life insurance Retirement programs

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Payment for Time Not Worked

Vacations with pay

Severance pay

Time Not Worked

Paid holidays

Sick leave

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Retirement Programs
Silver Handshake
An early-retirement incentive in the form of increased pension benefits for several years or a cash bonus.

Preretirement Programs
Counseling Seminars Workshops Retirement tryouts

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Types of Pension Plans

Contributory plan
Contributions to a plan are made jointly by employees and employers.

Defined-benefit plan
The amount an employee is to receive upon retirement is specifically set forth.

Noncontributory plan
Contributions to a plan are made solely by the employer.

Defined-contribution plan
The basis (amount) an employer contributes to the pension fund is specified.

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Federal Regulation of Pension Plans

Vesting
A guarantee of accrued benefits to participants at retirement age, regardless of their employment status at that time.

Pension Portablity
Employees who leave an organization can leave their funds in their current plan or transfer those funds to a locked-in RRSP or into their new employers pension plan.

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Employee Services: Creating a Work/Life Setting

Employee Assistance Programs (EAPs)
Services provided by employers to help workers cope with a wide variety of problems that interfere with the way they perform their jobs.

Typically provide diagnosis, counseling, and referral for advice or treatment for problems related to alcohol or drug abuse, emotional difficulties, and financial or family difficulties.

Child and Elder Care

Care provided to a child or an elderly relative by an employee who remains actively at work.

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Family-Friendly Benefits: Balancing Work and Home Needs

Child care/elder care referral services Time off for childrens school activities Employer-paid onsite or near-site child care facilities

Flexible work hours scheduling

Employer-accumulated leave days for dependent care Subsidized temporary or emergency dependent care Extended leave policies for child/elder care Sick-child programs (caregiver on call) Work-at-home arrangements/telecommuting Partial funding of child care costs

Customized career paths

Figure 11.5

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Other Benefits and Services

Awards Recreational and Social Credit Unions Purchasing Assistance Transportation Pooling Housing and Moving Food Services On-Site Health Services Legal Services Financial Planning

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Key Terms
contributory plan defined-benefit plan defined-contribution plan elder care employee assistance programs (EAPs) flexible benefits plans (cafeteria plans) noncontributory plan severance pay silver handshake vesting workers compensation insurance

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