A great deal goes into managing employee benefits.

What are Employee Benefits?

Below are some examples of common employee benefits that fall are managed by general and human resource managers.

• Remuneration

Remuneration refers to the compensation made to someone in exchange for services provided during the course of employment. A persons salary, bonuses, if any, and economic advantages are all considered to be a part of remuneration.

• Employee Stock Ownership Plan (ESOP)

An employee stock ownership plan (ESOP) is an employee benefit scheme that gives ownership interest to the employees of a company. It can also be called a corporate strategy whereby the company grants ownership to its employees. ESOP benefit both the company and the employees in terms of tax advantages. 

Basically, some companies use ESOP as a corporate strategy to level the wide gap between shareholders interest and employees interest. Some companies also facilitate ownership interests for their employees to serve as incentive or compensation for the work they have performed. ESOP signifies the ownership interest of a company held by employees of the company.

• Employee Contribution Plan

An employee contribution plan is a savings plan that enables employees to keep a certain portion of their monthly or bi-weekly income aside as savings in an investment account.

Defined contribution plans including the 401(k), the 404(b), profit-sharing plans, and employee stock ownership plans are a part of employee contribution plans in the U.S. Different versions of 401(k) plans consist of the traditional 401(k), safe harbor 401(k), SIMPLE 401(k), and automatic enrollment. Traditional 401(k) has been one of the most famous 401(k) plans till date.

• Pension Plan

A pension plan refers to a retirement fund where an employer contributes into an account that has funds for offering retirement benefits to his or her employees. The employer invests these funds on behalf of employees or workers, and the income received from such investments keeps on being accumulated until the employee or worker retires.

Besides contributions made by the employers, there are some pension scheme plans that involve making voluntary investments by employees. They can invest a certain portion of their wages or salaries into an investment fund so as to grab bigger amount at the time of retirement. Also, the employer can also try to meet a specific percentage of the yearly contributions made by the workers or employees.

• Health Benefits – Affordable Care Act

The Affordable Care Act places requirements on businesses to sponsor health insurance plans for employees.

A business with 50 or more full-time employees (defined as working 30 hours per week during any week of work) must allow employees to purchase health insurance for themselves and their dependents through the employer-sponsored plan.

Covered employers who fail to sponsor insurance plans may be subject to fine or tax penalty. The employer incurs a penalty if any employee who qualifies for a federal subsidy based upon her level of income purchases insurance through a federal or state insurance exchange.

Employers may also offer plans related to dental, vision, childcare, etc. Access to these plans are managed by the HR professional.

The topic of employment benefits is covered in greater detail in our human resource course.