Chapter 13

Benefits & Services

1- Benefits & types of employee benefit plans.

Benefits are indirect financial & non financial payments given to

employees for continuing their employment with the company. They
may include health and life insurance and vacations.

Types of employee benefit plans are:

- Supplement pay: sick leave or vacation pay.
- Insurance: life or health insurance
- Retirement: pensions.
- Employee services: child-care facilities.

2- Pay for time not worked.

(1) Supplemental pay benefits:

Benefits for time not worked such as unemployment insurance,

vacation & holiday pay, sick pay, and parental leave.

A) Unemployment insurance: provide weekly benefits if a person is

unable to work through some fault other than his or her own. These
benefits derive from an unemployment tax on employers who
terminate these employees, taxes is collected and administrated by the
state.

B) Vacation & holiday pay: number of paid vacation days and

holidays varied by employers, employers should provide a premium
payment for work on holidays.
C) Sick leave (pay): provide payment to employee when he/she goes
out of work because of illness. Misuse of sick leave might incur
employers a great cost.
D) Parental leave: this related to the family medical leave act of 1993
in USA, this act states that:
- Up to 12 weeks of unpaid leave within a one year period.
- Employees must take unused paid leave first. (Annual vacations)
- Employees on leave retain the health benefits.
- Employees have the right to return to their jobs at any time in an
equivalent position.

(2) Servancy Pay:

- A one time payment when terminating an employee.
- This payment makes sense on several grounds (reasons), as follows:

(A) Act as a humanitarian gesture as well as good public relations.

(B) Avoid litigation from former employees.
(C) Satisfy worker adjustment and retraining notification act.
(D) Reassure good intentions for employees who stay on after the
employer downsizes his workforce.

(3) Supplemental unemployment benefits (SUB):

Payments that supplement the laid-off employee's unemployment

compensation. The employer here makes contribution to a reserve
fund from which SUB payments are made to employees for the time
the employees are out of work due to layoffs, reduced work weeks or
reallocations.

3- Insurance benefits
(A) Worker's compensation
- Provide income and medical benefits to work related accidents
(victims) regardless of fault.
- Death or disability: a cash benefit based on earnings per week of
employment.
- Specific loss injuries: statutory list of losses.

(B) Controlling worker's compensation costs

Minimizing the number of workers compensation claims is an
important goal for all employers. This can be done through:
- Screen out accidents-prone workers.
- Make the workplace safer.
- Thoroughly investigate accidents claims.
- Use case management to return injured employees to work as soon
as possible.

C) Hospitalization, medical, and disability insurance

- Aimed at providing protection against hospitalization costs, and loss

of income arising from accidents or illness occurring from off-the job
causes.

- Many employers purchase such insurance from life insurance

companies or causality insurance companies.

D) Health Maintenance Organization (HMO)

- A prepaid health care system that generally provides routine round-
the-clock medical services as well as preventive medicine in a clinic-
type arrangement for employees.

- Employees in this case pay a nominal fee in addition to the fixed

annual fee the employer pays.

- HMOs should receive a fixed annual contract fee per employee from
the employer.

4- Flexible Benefits programs

Sometimes referred as the Cafeteria approach, because employees do
have different preferences for benefits.
- Each employee is given a benefit fund budget to spend on such
benefits he/she prefer.
- The fund limits the total cost for each benefit package.
- Core plus action plans, establish a core set of benefits which are
mandatory for all employees.
- Flexible spending accounts enable employees to pay for medical and
other expenses with pretax dollars.

5- Flexible work arrangements

A) Flextime

- A plan whereby employees workdays are built around a core of mid-

day hours when all workers are required to be present.

- Workers can arrange their own starting and stopping hours before
and after the core period.

- Flextime will have many positive impacts on employee productivity,

employee absenteeism and job satisfaction.

B) Compressed work weeks

(1) Increase productivity through:

- Less disruption from shift changes
- Longer-time off-work periods.
- Reduce absenteeism

(2) Longer workdays VS. Short workdays

- Four days per week, and 9 hours per day.

- Six days per week and 6 hours per day
- Two days on, two days off, three days on, two days off, two days on.
- Three 12-hours shift for three days, then off the next 4 days.