Dessler, Cole, Goodman and Sutherland Fundamentals of Human Resources Management in Canada Chapter Nine Employee Benefits and Services © 2004 Pearson Education Canada Inc., Toronto, Ontario 9-1

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-2 The Changing Role of Employee Benefits –benefits traditionally used to reward loyalty and tenure –employee services more important today in post- job security era –benefits traditionally used to reward loyalty and tenure –employee services more important today in post- job security era

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-3 Government-Sponsored Benefits Employment Insurance (EI) Canada/Quebec Pension Plan (C/QPP) Workers’ Compensation Provincial Health Care Plans

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-4 Government-Sponsored 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

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-5 Government-Sponsored 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

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-6 Government-Sponsored 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

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-7 Government-Sponsored 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

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-8 Voluntary Company-Sponsored Benefits –additional pay for time not worked –vacations and holidays –short term disability/sick leave –long term disability insurance –leaves of absence –additional pay for time not worked –vacations and holidays –short term disability/sick leave –long term disability insurance –leaves of absence

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-9 Insurance Benefits –Life insurance –Supplementary health care/medical insurance –Life insurance –Supplementary health care/medical insurance

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-10 Insurance Benefits Deductible –annual amount of health/dental expense paid by employee before insurance benefits will be paid Deductible –annual amount of health/dental expense paid by employee before insurance benefits will be paid Supplementary Health Care/Medical Insurance

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-11 Retirement Plans –membership requirements –benefit formula (defined benefit only) –retirement age –funding (contributory or non-contributory) –vesting –portability –membership requirements –benefit formula (defined benefit only) –retirement age –funding (contributory or non-contributory) –vesting –portability Pension Planning Issues

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-12 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

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-13 Employee Services –subsidized childcare –subsidized employee transportation –food services –educational subsidies –subsidized childcare –subsidized employee transportation –food services –educational subsidies Job-Related Services

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-14 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 …

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-15 Flexible Benefit 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

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-16 Flexible Benefit 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)

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-17 Benefit-Related Issues –reduce accident or illness-causing conditions –rehabilitation programs for injured/ill employees –reduce accident or illness-causing conditions –rehabilitation programs for injured/ill employees Controlling Workers’ Compensation Costs

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-18 Benefit-Related Issues –increase the amount paid by employees –publish a restricted list of drugs covered –offer health promotion programs –implement risk assessment programs –increase the amount paid by employees –publish a restricted list of drugs covered –offer health promotion programs –implement risk assessment programs Reducing Health Benefit Costs

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-19 Benefit-Related Issues Managing Retiree Benefit Costs -costs growing as boomers retire -offer limited benefits -support wellness programs Lowering Long Term Disability Costs -disability management programs Managing the Cost of Stress -prevention and early intervention programs for depression and other mental health issues

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-20 Recent Trends –same-sex benefits –early retirement windows –eldercare –family-friendly benefits –wellness programs –same-sex benefits –early retirement windows –eldercare –family-friendly benefits –wellness programs

© 2004 Pearson Education Canada Inc., Toronto, Ontario 9-21 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