Benefits & Services

Chapter 13

Presented by: FSZ

 Learning Objectives

 Discuss the different types of benefits

 Explain the policies for designing benefits plan

 Understand and explain the different types of special benefits

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 Benefits
 Indirect financial and non-financial payments employees receive for
continuing their employment with the company

 Important part of an employee’s compensation

 But inadequate benefits lead to employee dissatisfaction

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 Policies in designing Benefits Package
Which benefits to offer Who will be covered

Whether to include Coverage during

retirees probation
Policy Issues
Degree of employee
How to finance benefits
choice

Cost containment Communicating

procedures benefits options
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 Types of Employee Benefits

Types of Employee
Benefits

Pay for time

not worked Insurance Retirement Personal
(Supplemental benefits benefits services
pay benefits )
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 Supplemental Benefits
Unemployment Vacations and
insurance holidays

Supplemental
Sick leave
Pay Benefits

Severance pay Parental leave

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 Supplemental Benefits
 Unemployment Insurance

- Provides benefits when a worker becomes unemployed through some fault other
than his/her own

 Vacations & Holidays

- Number of paid leave days and holidays varies by employer

- Qualification for and calculation of holiday and leave pay varies by employer

- Premium pay for those who work on holidays

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 Supplemental Benefits
 Sick Leave

- Provides pay to an employee when he/she is out of work due to illness

- Usually up to 12 days per year

- Some people misuse sick leave

- Research reveals that illness accounted for only 45% on unscheduled sick
absences, family issues (27%), personal needs (13%), and a mentality of
entitlement (9%)

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 Supplemental Benefits

 What can be done to reduce the misuse?

- paying employees a sum for each sick leave day not used

- holding monthly events in which employees with perfect attendance are eligible for a cash prize

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 Supplemental Benefits
 Parental Leave
- women workers are eligible for parental leave during the  Severance Pay
period of pregnancy
- a one-time payment when terminating
- Under Article 4(1) of Maternity Protection Convention, an employee
2000, the period of maternity leave is not less than 14
Reasons for granting severance pay:
weeks
- mirrors employee’s quit notice period
- Rule 197(1) of the Bangladesh Service Rules (as amended
9 January 2011) provides female Government servants six
months

- The Bangladesh Labour Act, 2006 section 46, provides

female workers 16 weeks maternity leave
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 Insurance Benefits
 Workers’ Compensation
- provides income and medical benefits to work-related accident to victims or their
dependents, regardless of fault

- in the event of a worker’s death or disability, the person’s dependents receive a

cash benefit based on the worker’s earnings per week of employment

- in addition to these cash benefits, employers must provide medical, surgical and
hospital services as required for the employee

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 Insurance Benefits

 Controlling Workers’ Compensation Cost

- screen out accident-prone workers

- train up people

- make the workplace safer

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 Retirement Benefits
 Pension Plans
- plans that provide a fixed sum when employees reach a predetermined retirement
age or when they can no longer work due to disability

- can be classified on three basic ways

- contributory vs. noncontributory plans; qualified vs. nonqualified plans; and defined
contribution vs. defined benefits plans

- the employee contributes to the contributory pension plans, while the employer
makes all the contributions to the noncontributory pension plans

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 Personal Services
 Employee Assistance Programs (EAP)
- provide counseling and advisory services

- personal legal and financial services

- child and elder care referrals

- mental health counseling

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 Family-Friendly Benefits
 Subsidized Child Care

 Elder Care

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 Flexible Benefits Program
Cafeteria Benefits Plan
- a cafeteria plan is one in which the employer gives each employee a benefits fund
budget and lets the person spend it on the benefits he or she prefers, subject to
two constraints

- the employer must limit the total cost for each employee’s benefits package

- each employee’s benefits plan must include certain required items

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 Flexible Benefits Program
Flexible Work Schedules
- Flextime: a work schedule in which employees’ workdays are built around a core of
midday hours, and employees determine, within limits, what other hours they will
work

- Compressed workweek: schedule in which employee works fewer but longer days
each week

- Workplace flexibility: arming employees with the information technology tools

they need to get their jobs done wherever they are

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 Flexible Benefits Programs
Flexible Work Schedules

- Job sharing: allows two or more people to share a single full-time job

- Work sharing: refers to a temporary reduction in work hours by a group of

employees during economic downturns as a way to prevent layoffs

 Effectiveness
- positive effects on employee productivity, job satisfaction, and employee
absenteeism

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 Special Benefits
Provident Fund (PF)

- this is a special retirement saving scheme sponsored by the employer which

allows an employee to save certain percentage (5%-10%) out of their basic
income every month. The saving will be matched by the employer with
100% contribution

- the total savings will be due to the employee upon his/her retirement or
resignation or termination
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 Special Benefits
Provident Fund (PF)
- for instance, the employee contribution is TK 500 per month, the employer would
also contribute TK 500 per month. The total contribution to PF would be

- Employee’s TK 500+ Employer’s TK 500)= Contribution to PF is TK 1,000

- sometimes employer doesn’t pay his or her portion of PF contribution during

termination, only employee’s contribution is paid back

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 Special Benefits
 (PF) Calculation

Total Salary TK. 70,000 Employee’s contribution (5% of 40,000)

Basic TK 40,000 = TK 2,000
Employer’s contribution (5% of 40,000)
House Rent TK 20,000
= TK 2,000
Telephone TK 2,000
Medical TK 5,000 Total contribution to PF per month
Miscellaneous TK 3,000 = Tk 4,000
Total contribution to PF (TK.
Provident Fund @ 5% of Basic 4000*12) = Tk 48,000
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 Special Benefits
(PF) Calculation
Assuming that the employee gets an increment of 10% every year over his/her basic salary.

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 Special Benefits

(PF) Calculation
If you have served for an unbroken period with clean record, then you will get employer’s contribution.
For example, if you have served for more than or equal to 5 years, you are entitled for the entire amount
of employer’s contribution. Usually, there is a schedule that organization follows. It is given below:
Vested Schedule:
Q: After 3rd year, the employee decides to quit. How much PF s/he will get?

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Special Benefits
Provident Fund (PF)

Now, as schedule, for PF

calculation after 3rd year,
employee would get his entire
contribution and employer will
pay 60%.
Hence, PF would be: TK
79,440+ (60% of TK 79,440) =
Tk. 127,104

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 Special Benefits
Gratuity
- it is a onetime lump-sum payment given to the employees on the last day of
their employment as a gift to their valuable service to the organization

- usually, employees are eligible between 5 to 10 years of continuous

employment. It is one of the retirement benefits offered by the employer to the
employee upon leaving his/her job

- if an employee quits after 10 years:

Gratuity amount= 10*10th year’s basic salary

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 Special Benefits
Gratuity
- if an employee quits after 8 years:

Gratuity amount = 8*8th year’s basic salary

- if an employee quits after 20 years:

Gratuity amount = 20*20th year’s basic salary

- if the employee leaves before 5 years of service, he is not entitled for

gratuity
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 Thanks!
Any questions?
You can find me at
faseeha.zabir@northsouth.edu

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 Reference
Dessler, G. (2012). Human Resource Management (13th Edition).
New York: Pearson.

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