When an employer is negotiating a benefit package for his or her employees both parties would be expected to benefit. A benefit package that only suited the employee would not work well in the long term because of the imbalance in the relationship.
There are two good reasons for an employer offering a good benefits package:
As far as the employee is concerned a benefit package can help in planning for retirement and also the occurrence of an unexpected event.
Not all employee benefit packages are identical, so the employer has to look at such factors as age structure and the gender of his or her workers before finally selecting a suitable benefit package.
Providing a work sponsored pension is a popular benefit package as it enables workers to start some sort of savings plan to help them when they reach retirement age. There are two main types of pensions which are the 'defined contribution' and ‘defined benefit’ pensions.
Defined contribution pensions are when both employee and employer deposit into a pension account every year a set amount of money. When the employee finally retires the amount the pension is valued at will depend on how much has been deposited.
The defined benefit pension is not so popular these days but is still available for use. This pension is calculated by the use of a formula. The formula takes into consideration the length of employment with the particular employer and the value of the final salary.
Following four days off work due to sickness most employees can expect to receive £86.70 per week. This is called statutory sick pay, and this amount is paid for the first 6 months off work due to illness or injury. As an add-on some employers offer extra benefits for the period of recovery for an injury or sickness.
Another benefit that employers sometimes offer is called income protection. This is when an employee gets paid between 60 and 80% of his or her monthly salary as income when he or she is unable to work due to a long term illness or an injury. When an employer offers this benefit it is called group income protection and it covers an employee for any medical condition he or she may have had before working for his or her present employer. It's also often a lower cost for an employer than if an employee took out a similar policy independently because the chance of someone claiming is spread across all those covered. This cover normally starts when eligibility for statutory sick pay has ended normally after 6 months. This payment continues until the employee is able to return to work or has reached retirement age. Sometimes a limited term is attached to the policy meaning the payment is only made for a certain period of time to the employee.
Private medical insurance as an employee benefit pays for private treatment for some medical conditions but not necessarily all. The employer decides on what is covered. Any money is paid directly to the health provider.
This is a payment made directly from the insurer to the health provider and does not go through the employee as income. This type of employee benefit is a great add-on as it enables an employee to get much needed dental treatment without delay. This can preserve the teeth for a longer period of time, eliminating the need for costly dental implants and other cosmetic teeth reconstruction procedures. Most people see their teeth as one of their most important assets so to be able to keep them in good shape and maintain a lovely white smile is a great employee benefit.
Critical illness insurance is a type of insurance when an employee receives a lump sum tax free if he or she is diagnosed with a specified medical condition taken from a list. To be eligible for the payment the employee has to be still alive for a stated minimum period, which is normally from 14 to 28 days. A medical examination normally takes place so that both the employee and employer are aware of the medical status of the employee so that risk factors for an illness can be addressed early on and the lifestyle or other adjustments can be made sooner rather than later.
Life Insurance is provided by some employers when a lump sum which is tax – free is paid to family members if an employee dies. This is usually calculated based on their salary with a specified policy for calculating which could be for example 4 times the employee’s salary at the time of death.
Some employers who depend on their employees to carry out work related tasks using their private vehicle offer incentives or car allowances so that an employee can purchase a vehicle for work use. Some employers may pay a mileage allowance when the employee uses his or her car for company purposes.
If an employee uses public transport to get to work some employers may pay for an annual public transport pass for their employees so that they get the best price for their travel to and fro from work. Normally, employers will treat this as an interest free loan and will require that the employee pays the value of the loan back over a specified period of time.
Overall, as an employee there are many potential employee benefits that you may find you gain if you work for a particular company. Some that are tied in with particularly expensive procedures such as extensive dental care are worth investigating when you join a company.