Dessler, Cole, Goodman, and Sutherland In-Class Edition Management of Human Resources Second Canadian Edition Chapter Nine Employee Benefits and Services © 2007 Pearson Education Canada 9-1

© 2007 Pearson Education Canada 9-2 The Strategic Role of Employee Benefits –benefits are indirect financial payments received by an employee during employment –develops loyalty, attract and retain employees –benefits average 37 percent of pay –benefits are indirect financial payments received by an employee during employment –develops loyalty, attract and retain employees –benefits average 37 percent of pay

© 2007 Pearson Education Canada 9-3 Legally Required Benefits Employment Insurance (EI) Canada/Quebec Pension Plan (C/QPP) Workers’ Compensation Provincial Health-Care Plans Vacation and Holidays Leaves of Absence Termination Pay

© 2007 Pearson Education Canada 9-4 Legally Required Benefits Employment Insurance (EI) –provides income benefits for individuals unable to work through no fault of their own Employment Insurance (EI) –provides income benefits for individuals unable to work through no fault of their own

© 2007 Pearson Education Canada 9-5 Legally Required Benefits Canada/Quebec Pension Plan (C/QPP) –provides retirement income and other benefits to individuals who contribute to these plans Canada/Quebec Pension Plan (C/QPP) –provides retirement income and other benefits to individuals who contribute to these plans

© 2007 Pearson Education Canada 9-6 Legally Required Benefits Workers’ Compensation –provides income and medical benefits to victims of work-related accidents and illness, regardless of fault Workers’ Compensation –provides income and medical benefits to victims of work-related accidents and illness, regardless of fault

© 2007 Pearson Education Canada 9-7 Legally Required Benefits Provincial Health-Care Plans –pay for basic hospital and medical services with no direct fee to patients Provincial Health-Care Plans –pay for basic hospital and medical services with no direct fee to patients

© 2007 Pearson Education Canada 9-8 Legally Required Benefits Vacation and Holidays – sets out minimum amount of paid vacation –minimum is two weeks –varies as per jurisdiction Vacation and Holidays – sets out minimum amount of paid vacation –minimum is two weeks –varies as per jurisdiction

© 2007 Pearson Education Canada 9-9 Legally Required Benefits Leaves of Absence – maternity, parental and adoption –bereavement leave Leaves of Absence – maternity, parental and adoption –bereavement leave

© 2007 Pearson Education Canada 9-10 Legally Required Benefits Termination Pay – pay in lieu of notice –severance pay –pay for layoffs Termination Pay – pay in lieu of notice –severance pay –pay for layoffs

© 2007 Pearson Education Canada 9-11 Voluntary Company-Sponsored Benefits Additional Pay for Time Not Worked –short term disability/sick leave -additional paid vacations and holidays –leaves of absence Additional Pay for Time Not Worked –short term disability/sick leave -additional paid vacations and holidays –leaves of absence

© 2007 Pearson Education Canada 9-12 Voluntary Company-Sponsored Benefits Insurance Benefits –group life insurance –supplementary health care/medical insurance –rising costs –retiree health benefits –long term disability insurance –disability management –stress and mental health benefits Insurance Benefits –group life insurance –supplementary health care/medical insurance –rising costs –retiree health benefits –long term disability insurance –disability management –stress and mental health benefits

© 2007 Pearson Education Canada 9-13 Voluntary Company-Sponsored Benefits Retirement Benefits –membership requirements –benefit formula (defined benefit only) –retirement age and phased-in retirement –funding (contributory or non-contributory) –vesting –portability Retirement Benefits –membership requirements –benefit formula (defined benefit only) –retirement age and phased-in retirement –funding (contributory or non-contributory) –vesting –portability

© 2007 Pearson Education Canada 9-14 Employee Services –credit unions –counseling services –employee assistance programs (EAPs) –other (social and recreational) –credit unions –counseling services –employee assistance programs (EAPs) –other (social and recreational) Personal Services

© 2007 Pearson Education Canada 9-15 Employee Services –subsidized childcare –elder care –family-friendly benefits –educational subsidies –subsidized childcare –elder care –family-friendly benefits –educational subsidies Job-Related Services

© 2007 Pearson Education Canada 9-16 Executive Perquisites –loans –golden parachutes –financial counseling –company relocation benefits –limousines –executive dining room –concierge service … –loans –golden parachutes –financial counseling –company relocation benefits –limousines –executive dining room –concierge service …

© 2007 Pearson Education Canada 9-17 Flexible Benefits Programs Advantages –choose benefits to suit individual needs –meet changing needs of workforce –increased employee involvement improves understanding –introduction of new benefits less costly (merely a new option) –cost containment: firm sets a dollar maximum Advantages –choose benefits to suit individual needs –meet changing needs of workforce –increased employee involvement improves understanding –introduction of new benefits less costly (merely a new option) –cost containment: firm sets a dollar maximum

© 2007 Pearson Education Canada 9-18 Flexible Benefits Programs Disadvantages –employees make bad choices (not covered for predictable emergencies) –increased administrative cost –adverse selection: employees pick only benefits they will use (subsequent high benefit utilization increases cost) Disadvantages –employees make bad choices (not covered for predictable emergencies) –increased administrative cost –adverse selection: employees pick only benefits they will use (subsequent high benefit utilization increases cost)

© 2007 Pearson Education Canada 9-19 Benefits Administration -increasingly specialized due to legal requirements and sophisticated users -trend to outsourcing this function -benefits communication critical for flexible benefit plans, and increasingly important for pensions -increasingly specialized due to legal requirements and sophisticated users -trend to outsourcing this function -benefits communication critical for flexible benefit plans, and increasingly important for pensions