Published in Human Resources Terms by MBA Skool Team
What is Employee Benefits?
Employee Benefits or Perquisites commonly known as Perks, are the different compensations provided to employees besides their regular wages/salaries. These may or may not be monetary. They include insurances (group, health, family, accident etc.), retirement benefits, sick leave, vacations, education fund etc.
Components of benefit plans:
• Employees’ provident fund: This is a government regulated compulsory scheme controlled by the Employee Provident Fund Organisation (EPFO). In this scheme employee and employer both pay 12% of the employee’s basic salary. 8.33% of the employer’s share is put to the pension fund.
• Gratuity: This benefit is mandated by law, Payment of Gratuity Act. Any employer with more than 10 employees are required to pay gratuity to his employees who have been associated with the organization for more than 5 years.
• Insurance: Employee Insurances such as health, accident etc. are provided as benefits to permanent employees and often cover their families too.
• Wellness programs: Vaccinations, yoga, meditation classes, regular health check-ups are conducted in company initiative
• Paid leave encashment: Organizations allow its employees to either carry forward the unused leaves to the next cycle or encash those leaves at the end of each financial year
• Flexible work hours: In the IT-ITES industry sector employees are given the option of working from home or mutually deicide a convenient work schedule with their superiors.
• Transportation: Transport facilities like bus services are provided to workers. In sectors providing 24/7 customer support, like BPOs, cab services are common.
• Education: Many employers encourage its employees to undertake higher education. Often the company funds these initiatives. The employee serves a few mandatory years for the company after completing the education.
Importance of benefit plans:
• Providing extra benefits helps in attracting potential candidates. It also helps in controlling attrition.
Example: Benefits such as child care facilities assist women employees to carry on their office activities comfortably and reduces the number of women leaving the workforce due to childcare issues
• It improves the productivity, as this helps grow a sense of belonging and security among the employees
• Premiums and taxes are deducted over offered benefits, which means profit for organization
• Benefits like insurances mean extra protection for self and family
• Vacations and paid leaves take care of mental and physical rest and allows employees to spend quality personal time with friend and families
• Retirement benefits are critical support at old age
Hence, this concludes the definition of Employee Benefits along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.