© 2002 McGraw-Hill Ryerson Ltd.1 Chapter 11 Employee Benefits and Services

© 2002 McGraw-Hill Ryerson Ltd.2 The Role of Indirect Compensation Societal Objectives Organizational Objectives Reduce fatigue Discourage labour unrest Satisfy employee objectives Aid recruitment Reduce turnover Minimize overtime costs Employee Objectives

© 2002 McGraw-Hill Ryerson Ltd.3 Sources of Financial Protection for Workers Protection for WorkersSources of ProtectionLegislating Government Financial Security Fair remunerationMinimum wage actsFederal and provincial RetirementCanada Pension PlanFederal (except in Quebec) Involuntary unemploymentEmployment InsuranceFederal Industrial accidentsWorkers’ compensation actsFederal and provincial Medical careHealth insurance plansProvincial Child sustenanceFamily allowancesFederal

© 2002 McGraw-Hill Ryerson Ltd.4 Contributory Plans Benefits that require the employer to contribute to the cost of the benefit.

© 2002 McGraw-Hill Ryerson Ltd.5 Canada Pension Plan A mandatory, contributory, and portable pension plan applicable to all self-employed persons and employees in Canada, except those working for the federal government. It pays retirement pensions, disability pensions, pensions for surviving spouses, lump-sum death benefits, and benefits to children of disabled contributors.

© 2002 McGraw-Hill Ryerson Ltd.6 Employment Insurance A program started in 1940 to help alleviate the monetary problems of workers in Canada during the transition from one job to another.

© 2002 McGraw-Hill Ryerson Ltd.7 Workers Compensation Compensation payable by employers collectively for injuries sustained by workers in the course of their employment. Each province has a workers’ compensation act.

© 2002 McGraw-Hill Ryerson Ltd.8 Voluntary Benefits Insurance Benefits Life Insurance Health-Related Insurance Salary-Continuation Plans

© 2002 McGraw-Hill Ryerson Ltd.9 Severance Pay Payment to a worker upon permanent separation from the company, usually for causes beyond the worker’s control.

© 2002 McGraw-Hill Ryerson Ltd.10 Long-term Disability Insurance A benefit plan that provides the employee with an income, usually a percentage of normal take-home pay, in the case of long-term illness or injury.

© 2002 McGraw-Hill Ryerson Ltd.11 Guaranteed Annual Wage Agreement wherein an employer assures employees that they will receive a minimum annual income regardless of layoffs or a lack of work. The guaranteed amount is usually a fraction of the employee’s normal full-time earnings.

© 2002 McGraw-Hill Ryerson Ltd.12 Supplemental Unemployment Benefits Private plans providing compensation for wage loss to laid-off workers, usually in addition to benefits provided under government employment insurance programs. SUB plans are employer-financed.

© 2002 McGraw-Hill Ryerson Ltd.13 Employee Security Benefits Private Pension Plans Approximately 40% of all Canadian employees are covered by private pension plans. Most employers contribute to these plans.

© 2002 McGraw-Hill Ryerson Ltd.14 Employee Security Benefits Pension Benefit Standards Act Federal act regulating pension plan industries under the jurisdiction of the Government of Canada.

© 2002 McGraw-Hill Ryerson Ltd.15 Paid Time-Off Benefits On-the-Job Breaks Paid Sick Leave Holidays and Vacations

© 2002 McGraw-Hill Ryerson Ltd.16 Employee Services Educational Assistance Financial Services Social Services

© 2002 McGraw-Hill Ryerson Ltd.17 Employee Assistance Programs Comprehensive company program that seeks to help employees to overcome their personal and work- related problems.

© 2002 McGraw-Hill Ryerson Ltd.18 Cafeteria Benefit Programs Programs that allow employees to select the mix of benefits and services that will answer their individual needs.

© 2002 McGraw-Hill Ryerson Ltd.19 Hypothetical Benefit Selection of Two Different Workers Worker A Age 27, female, married with one child. Husband a graduate student. Worker B Age 56, male, married with two grown and married children. Wife does not work outside of the home. $345Supplemental dental insurance$0 Supplemental health insurance: 245Maternity0 935$100 deductible0 0Prescription drug coverage625 Life Insurance: 100$20,000 for worker $10,000 for spouse0 600Vacations Holidays Pension Plan1,615 0Jury duty pay0 100Disability Insurance Weekly income benefit205 $3,845Total$3,845

© 2002 McGraw-Hill Ryerson Ltd.20 Benefit Audit Identify opportunities for financial and human resource savings Ensure that insurers of third-party administrators are doing a good job Exert effective control over their benefits area Identify who is in control of the benefits budget Check how their employee claiming habits compare against other Canadian employers