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NATHAN DUBLIN

KATHERINE DENISE QUERI

Mrs. Milan Bernardo

INDUSTRIAL RELATIONS 217


EM
Employment Benefits Program
A. DEFINITION AND KEY CONCEPTS

B. EVOLUTION OF THE EMPLOYEE BENEFITS PROGRAM

C. THE PSYCHOLOGY OF THE EMPLOYEE BENEFITS PROGRAM

D. THE ECONOMICS OF THE EMPLOYEE BENEFITS PROGRAM

E. BENEFITS AS PART OF THE TOTAL REWARDS SYSTEM


1. DEFINITION AND CONCEPTS

 Programs that include a wide array of


alternative pay forms ranging from payments
for time not worked (vacations, jury
duty)through services (drug counseling,
financial planning, cafeteria support) to
protection (medical care, life insurance and
pensions) (Compensation Management in a Knowledge-Based
World 7th edition by Richard I. Henderson)
DEFINITION AND CONCEPTS

 No simple classification of benefits and


services has achieved wide acceptance. Some
current discussions distinguish those
mandatory benefits required by law (that is,
unemployment insurance or workers’
compensation, for example) from those
provided on a voluntary or negotiated basis.
Another common classification describes
them as public, unilateral, …
DEFINITION AND CONCEPTS

mutual and negotiated basis; still another


notes four types identified by the major
needs they are expected to fill on table 12.3 It
is immediately apparent that they overlap;
some benefits meet more than one single
need or purpose. (Personnel Management and Industrial
Relations 6th edition by DaleYoder)
DEFINITION AND CONCEPTS

 Benefits and services, sometimes called


indirect compensation, account for nearly 40%
of average firm’s compensation costs in the
United States and an even higher percentage
in most countries of the EU.
(Personnel Management and Human Resources by William B. Werther Jr. and
Keith Davis)
DEFINITION AND CONCEPTS

 Benefits are any supplements to wages given


to employees. They include health and life
insurance, vacation, pension, educ. Plans,
and discounts on co. prod., for instance. (Human
Resource Management 6th edition by Gary Dessler)
DEFINITION AND CONCEPTS

 Here are the Basic Benefits for Employees


covered by the Philippine Labor Code:
Social Security Systems (SSS) Contributions
Republic Act No. 8282, otherwise known as
the Social Security Act of 1997, refers to the
social security system in the Philippines that
is initiated, developed and promoted by its
Government.The social security system is
DEFINITION AND CONCEPTS

 …aimed at providing protection for the SSS


member against socially recognized hazard
conditions, such as sickness, disability,
maternity, old age and death, or other such
contingencies not stated but resulted in loss
of income or results to a financial burden.
(The Labor Code with comments and cases )
DEFINITION AND CONCEPTS

 It’s a kind of compensation provided in a form


other than direct wages and paid for in a
whole or in part by an employer, even when
it’s provided by a third party. (Employee Benefits Plain
And Simple by James A. Jenks and Brian L.P. Zevnik, 1993)
DEFINITION AND CONCEPTS

 Compensation other than hourly wage or


salary. Including paid vacation; medical
insurance coverage; tuition reimbursements.
(Employee Benefits: A Primer for Human Resource Professionals by Joseph J.
Martocchio 2003)

 Ultimately, if employees refer to an employer


consideration as a benefit, it is by definition a
benefit.(Employee Benefit Planning. 2nd ed. by Robert M. McCaffrey
1992)
2. EVOLUTION OF EMPLOYEE BENEFIT PROGRAM
EVOLUTION OF EMPLOYEE BENEFIT PROGRAM
EVOLUTION OF EMPLOYEE BENEFIT PROGRAM
EVOLUTION OF EMPLOYEE BENEFIT PROGRAM
EVOLUTION OF EMPLOYEE BENEFIT PROGRAM
EVOLUTION OF EMPLOYEE BENEFIT PROGRAM
3. PSYCHOLOGY OF EBP

 United States
 Federal Insurance Contributions Act tax or FICA for example 401(k)
and 403(b) contributions however exemptions are health premiums,
some life premiums, and contributions to flexible spending accounts
PSYCHOLOGY OF EBP

 Canada
 Employee benefits in Canada usually refer to employer sponsored
life, disability, health and dental plans. Other than employer
sponsored health benefits, the next most common employee
benefits are group savings plan (Group RRSPs and Group Profit
Sharing Plan), which have tax and growth advantages to individual
savings plan.
PSYCHOLOGY OF EBP

 United Kingdom
 Here, employee benefits are characterized by three terms: flexible
benefits (flex) and flexible benefits packages, voluntary benefits and
core benefits.
THE LABOR CODE

Under the Philippine Labor Code are six basic employee benefits, for an
individual who is legally working in the Philippines. These basic employee
benefits cover most occupations, agricultural or non-agricultural, provided
that the associated compensation for every salient Daily Minimum Wages
still apply.
Under general circumstances, any legally employed worker who work
eight (8) hours a day on a 48 hours a week schedule is covered under
the Philippine Labor Code. Commencing from the time the employee
starts to work and until twenty-four (24) hours later is considered one
work day. The eight-hour work need not be continuous and may be
staggered within the one workday stretch.
The term "employee" denotes any person legally employed in the Philippines,
any person compulsorily covered by the GSIS under the Commonwealth
Act 186, or any person compulsorily covered by the SSS under Republic Act
1161. Such employee is automatically covered for these government
mandated employee benefits.
THE LABOR CODE

1. Contribution to Home Development and Mutual Fund (HDMF)


The employer(s) is required to contribute per month not less than
P100.00 to the employee's Home Development and Mutual Fund. In
accordance to the periodic remittance schedule provided by HDMF,
the employer(s) will remit this contribution, in addition to that of
the employee's, which is to be deducted from his/her payroll.
2. The 13th Month Pay
As mandated by the Presidential Decree No. 851, the employee shall
receive a bonus salary equivalent to one (1) month, regardless of the
nature of his/her employment, not later than December 24 of every
year.
THE LABOR CODE

3. Service Incentive Leave


Book III, Chapter III of the Labor Code of the Philippines covers the
employee's benefit for Service Incentive Leaves. According to Article
95, an employee who has rendered at least one year of service is
entitled to a yearly five days service incentive leave with pay. (See:
Article 95, Conditions of Employment)
4. Meal and Rest Periods
Under Article 83, the employee is provided a one-hour employee
benefit for regular meals, when working on an eight (8 hour) stretch.
Employees are also provided adequate rest periods in the morning
and afternoon which shall be counted as hours worked. (See: Article
83, Conditions of Employment).
THE LABOR CODE

5. The employee and his/her employer(s) are to contribute for the social
security benefits of the said employee in accordance to a given schedule
by the Philippine Social Security System. Monthly employee
contribution depends on the employee's actual monthly salary. (See:
Circular No. 33-P)

6. Contribution to National Health Insurance Program (NHIP)


The employee and his/her employer(s) are to contribute for the medical
insurance of the said employee in accordance to the Republic Act 7835
on Medicare Program which is administered by the Philippine Health
Insurance Corporation (Philhealth). Monthly employee contribution
depends on the employee's actual monthly salary. The contribution
schedule is provided by Philhealth. (See: Philhealth Premium
Contribution Schedule)
4. ECONOMICS OF EBP
ECONOMICS OF EBP
ECONOMICS OF EBP
ECONOMICS OF EBP
ECONOMICS OF EBP
ECONOMICS OF EBP
THE CONCEPT OF TOTAL COMPENSATION

The Organizational Reward/ Compensation System

Intrinsic Rewards Extrinsic Rewards

Financial Nonfinancial

Indirect Compensation Direct Compensation

Protection programs Pay for time not worked Employee Services and
Perquisites

Public Private At work Not at Work General Limited

Source: Courtesy of American Compensation Association, Scottsdale, Ariz.


5. BENEFITS AS PART OF TOTAL REWARD SYSTEM
 Paul O’Malley, European head of total reward at Mercer HR Consulting:
"Total reward is compensation benefits and careers, encompassing
training and development. Some people join companies because of the
career opportunities and some leave because of the lack of them.
Employers should look at balancing compensation benefits with career
movement and development."
BENEFITS AS PART OF TOTAL REWARD SYSTEM

 Judith Inglis, a consultant at Aon:


"Total reward has two parts; in its purest form it’s the entire package of
benefits, such as finance, pay, bonuses, cars; employee recognition,
opportunities, quality of working life and other non-financial elements.
But it’s also about communication. It doesn’t matter what you provide,
the value will only be as good as the perception of it. A return relies on
recognition by employees."
BENEFITS AS PART OF TOTAL REWARD SYSTEM

 Chris Charman, a consultant at Towers Perrin:


"Total reward has four quadrants: basic pay and bonuses, long-term
incentives; benefits such as pensions and cars, the working
environment – physical and cultural – and leadership. It’s a useful way
for an organisation to think about delivering employees the things that
they value. It’s about taking a holistic perspective of the whole
benefit/reward package offering."
BENEFITS AS PART OF TOTAL REWARD SYSTEM

 Eddie Hodgart, a consultant at Watson Wyatt:


"By total reward, we mean total compensation – base pay plus variable
pay, plus additional benefits and the cost of benefit provision, such as
pensions, cars and holidays. [It is also] the benefits that are hard to
value, such as culture, environment, working time, maternity and
paternity benefits, plus the way it is communicated and delivered."
BENEFITS AS PART OF TOTAL REWARD SYSTEM

 Darren Smith, a consultant at Hewitt Associates:


"Broadly speaking, total reward refers to managing most or all of a
company’s reward elements in an integrated way. In other words,
proactively integrated design and delivery of each individual reward
element is working in concert with other elements in a manner that
best supports an organisation’s business strategy and workforce needs.
In short, focusing on the whole package and not just the individual
parts."
BENEFITS AS PART OF TOTAL REWARD SYSTEM

 Total reward encompasses all the benefits that employees gain from
their labour, ranging from basic financial rewards, such as pay,
bonuses and overtime payments, to traditional employee benefits,
such as private medical insurance, holiday entitlement and pensions,
and even more nebulous concepts such as the working environment
and job satisfaction. Finally, it encompasses the communication of
the value of these different aspects to employees together with
their perception of this value.
BENEFITS AS PART OF TOTAL REWARD SYSTEM

 While employee benefits really came to the fore in the


80s and 90s, many firms have begun to think about total
reward as they assess the benefits they offer to
employees. It may be that firms are looking to revamp
their benefits package and perhaps introduce flexible
benefits, which are often associated with total reward.
BENEFITS AS PART OF TOTAL REWARD SYSTEM
Mergers and acquisitions can also set an organisation off
down the total reward route. The need to bring together
different terms and conditions will require an assessment
of which benefits do and which don’t work.
BENEFITS AS PART OF TOTAL REWARD SYSTEM

 Taking a total reward approach, therefore, has the


potential to motivate employees and empower
employers. It means that organisations will be able to
identify which are the most effective aspects of their
reward programme in terms of motivating employees
and ultimately enhancing the company’s financial
performance.
SUMMARY

1. An employee’s base pay income tends to create his or her standard of living;
benefits protect it.
2. Because of current tax policies and group purchasing power, employers can obtain
most employee benefit coverage more cheaply than can individual employees..
3. Benefit programs that require or permit some employee conbtributions can offer
broader coverage and tend to gain a higher level of employee awareness and
understanding.
4. The overall responsibility for employee benefit management is best placed in
personnel/human resources. Although a variety of resources is needed (tax,
investment, insurance, actuarial, legal, accounting, and data processing), the logical
focal point for centralized responsibility is the function most broadly concerned
with employee needs and concerns.
SUMMARY

5. To optimally manage the total compensation dollar, employee benefits


and direct compensation should be closely coordinated, ideally on a peer
level with a common supervisor.
6. Each organization should articulate its own set of objectives and priorities
for employee benefits. These statements need to be consonant with other
organizational and employee relations objectives; they can therefore be
expected to vary from company to company.
7. The foundation for any firm’s employee benefit program is the group of
applicable federal and state mandatory benefits, such as Social Security,
worker’s compensation, and unemployment insurance. No private plan
adoptions or revisions should be undertaken without a clear
understanding of current requirements and projected changes in these
public programs.
SUMMARY

8. To be effective, benefit plans must be responsive to the analytically


identified and/or expressed need of employees. This is ideally achieved
through cafeteria or flexible plan approach.
9. Benefit cost control is essential , but it must be performed openly and with
employee understanding and involvement. Otherwise, employee
perceptions of the value of benefit plans may be overshadowed by
suspicion and distrust.
10. Since many benefits are part of a hidden payroll, their value must be
regularly and clearly communicated to employees through all available
media to gain a desirable level of awareness.
SUMMARY

11. Employees must have easy access to prompt and knowledgeable answers
to questions about benefits. Meeting ERISA reporting and disclosure
requirements is not enough. Provisions for effective two-way
communication are essential.
12. At least annually, an organization should measure its performance against
stated benefit objectives. This should include a review of the objectives
themselves, result of efforts to reach short-term goals, individual plan
performance and some assessment of employee views.
References:
 Compensation Management in a Knowledge-Based World 7th edition by Richard I. Henderson

 Personnel Management and Industrial Relations 6th edition by Dale Yoder

 Personnel Management and Human Resources by William B. Werther Jr. and Keith Davis

 Human Resource Management 6th edition by Gary Dessler

 The Labor Code with comments and cases

 Employee Benefits Plain And Simple by James A. Jenks and Brian L.P. Zevnik, 1993

 Employee Benefits: A Primer for Human Resource Professionals by Joseph J. Martocchio 2003

 Employee Benefit Planning. 2nd ed. by Robert M. McCaffrey 1992


Thank you!