Benefits vs Salary Sacrifice
Benefits are anything special offered to staff as well as salary during employment. The most popular benefits are disability, medical, and lifetime cover; pension; and paid holidays. These days, benefits are also available for staff at home, such as paternity leave, sickness absence and parental leave.
There are four major types of employee benefits, including; medical benefits, disability, vision, and paid time off. A disability insurance policy gives employees certain medical expenses and treatments, and pays disability tax. Vision insurance offers certain benefits, such as eye exams and frames, contact lens maintenance and rehabilitation, etc. A vision insurance policy is very useful for senior citizens, people with eye problems and children who are close to glasses or contacts. Lastly, paid time off is an employee benefit that provides time off from work to participate in extra-curricular activities.
Employees may also receive compensation paid directly to them by the employer, rather than bonuses or commissions. Compensation paid directly to workers varies in type, including cash, tips, shares, vacations, and so on. Tips are usually the more frequent form of compensation paid, but employers may also pay employees annual leaves, prorated salaries, bonuses, and insurance premiums. Annual leaves may be unpaid or scheduled on a yearly basis.
Employers are required by law to calculate their employees’ regular income and take all appropriate benefits into account. However, some employers also use “stacked” wages to attract and retain good employees. In other words, employees may be eligible for benefits such as vacation bonuses, but employers may not offer them because they think they will be inefficient. Also, some employers may have a preferred wage system, meaning they pay employees more in one place (such as in corporate housing) than they would in another (such as by giving them more vacation leave). Employers may also withhold benefits from employees who fail to meet mandatory work hours requirements. They can also limit certain benefits, usually those that are considered “perks” or “entitlements,” in order to preserve a sense of equity between employees and management.
Certain employee benefits can be very expensive, particularly if they are given to highly paid employees. Employees may be entitled to certain types of disability or life insurance, or they may not be able to get these services if they are injured at work. However, some employers voluntarily provide disability or life insurance for their employees, or they may pay the full cost if they do not provide it for employees themselves. If an employee’s death is due to a work-related injury, employers may be liable for medical costs that exceed the employees’ regular salary.
Flexible benefits provide employees with a variety of options, which may include insurance, meals, health care, and so on. These options may be very important to employees, but employers must still offer competitive wages and salaries. Otherwise, employees will not be likely to purchase the benefits they need. Therefore, employers must balance the need for insurance against the ability to pay for the premiums.