1. Benefits and Services
Chapter 13
Md. Al-Amin (Mli)

2. Basic Factors Employee compensation Direct financial payments
All forms of pay or rewards going to employees and arising from their employment.
Direct financial payments
Pay in the form of wages, salaries, incentives, commissions, and bonuses.
Pay for performance programmes
Indirect financial payments
Pay in the form of financial benefits such as insurance.

3. Benefits
Benefits
Indirect financial and nonfinancial payments employees receive for continuing their employment with the company.

4. The Benefits Picture Today
Most full-time employees in Bangladesh receive benefits.
Benefit is a major expense (about one-third of wages and salaries) for employers.

5. Private-Sector Employer Compensation Costs

6. Types of Employee Benefits
Supplementary benefits
Insurance benefits
Retirement benefits
Services

7. Supplementary Benefits
Benefits for time not worked
The most costly benefit
Large amount of time off that most employees receive

8. Supplementary Benefits (cont.)
Vacations and holidays
Number of paid vacation days varies by employer.
Number of holidays varies by employer.
Premium pay for work on holidays.
10 days in Japan, 25 days in Sweden, 25 in France 33 in Denmark.
What about your research organization?

9. Supplementary Benefits (cont.)
Sick leave
Provides pay to an employee when he or she is out of work because of illness.
Usually up to 12 days per year
Some people misuse of sick leave
Research reveals that illness accounted for only 45% on unscheduled sick absences, family issues (27%), personal needs (13%), and a mentality of entitlement (9%).
Research also reveals that the average cost of absenteeism per employee per year was $789

10. Supplementary Benefits (cont.)
Leave Cost Reduction Tactics
Repurchase unused sick leave at the end of the year by paying their employees a sum for each sick leave day not used
Holding monthly lotteries in which employees with perfect attendance are eligible for a cash prize

11. Supplementary Benefits (cont.)
Parental leave
Parental leave is granted for family purpose
Women workers are eligible for parental leave during the period of pregnancy
Furthermore, women and men who have single-parent households often tend to enjoy the parental benefit
Up to 12 weeks of unpaid leave within a one-year period
Employees must take unused paid leave first.
Employees on leave retain their health benefits.
Employees have the right to return to their job or equivalent position.

12. Supplementary Benefits (cont.)
Severance pay
A one-time payment when terminating an employee.
Reasons for granting severance pay:
Acts as a humanitarian gesture and good public relations.
Mirrors employee’s two week quit notice.
Avoids litigation from disgruntled former employees.

13. Insurance Benefits Workers’ compensation
Provides income and medical benefits to work-related accident victims or their dependents, regardless of fault.
Death or disability: a cash benefit based on earnings per week of employment.
Specific loss injuries: statutory list of losses

14. Insurance Benefits Controlling worker compensation costs
Screen out accident-prone workers.
Train up people.
Make the workplace safer.
Thoroughly investigate accident claims.

15. Insurance Benefits (cont.)
Hospitalization, health, and disability insurance
Health insurance looms large in many people’s choice of employer, because it is so expensive.
75% of the employees in one recent survey called it their most important benefit
Provide for loss of income protection and group-rate coverage of basic and major medical expenses for off-the-job accidents and illnesses.
Accidental death and dismemberment
Disability insurance

16. Retirement Benefits (cont.)
Pension plans – They are financial programs that provide income to individual employees in their retirement
Types
Contributory: employees contribute to the plan.
Noncontributory plans: employer makes all contributions to the plan.
Qualified plans: plans that meet requirements for tax benefits for employer contributions.
Nonqualified plans: plans not meeting requirements for favorable tax treatment.

17. Personal Services Credit unions
Separate businesses established with the employer’s assistance to help employees with their borrowing and saving needs.
Employees usually become a member by buying a share of the trade union’s stock for a small fee
Members can then deposit savings that accurate interest at a rate determined by the credit union’s directors
Loan eligibility and loan’s rate of interest are usually more favorable than banks and financial companies

18. Personal Services Employee assistance programs (EAPs)
Provide counseling and advisory services:
Personal legal and financial services
Child and elder care referrals
Adoption assistance
Mental health counseling
Life event planning

19. Family-Friendly (Work-Life) Benefits
Subsidized Child Care
Most working people make private provisions to take care of their children
Employers who want to reduce the distraction associated with finding reliable child care can help various ways
Company sponsored and subsidized day care facilities can attract employees, reduce absenteeism, reduce turnover rate and increase productivity of the employees.

20. Family-Friendly (Work-Life) Benefits
Sick Child benefits
What would you do when your children are sick and you need to get to work?
You are less likely to turn up. If you turn up, you performance level might not meet the requirements
Study shows that unexpected absences climbed to about 2.4% and children sickness is one of the major reasons
Today, more organizations are offering sick children benefits along with regular children benefits

21. Family-Friendly (Work-Life) Benefits
Elder Care
The responsibility for caring an aging relative can effect employees’ performance at work
Study shows to care for an older relative, 64% of the employees took sick leave or vacation time, 33% decreased work hours, 22% took leaves of absence, 22% changed their job status from full- to part-time, 16% quit their jobs and 13% retired jobs
So, it is strategic imperative that employers provide elder care services

22. Special Benefits Provident Fund (PF)
This is a special retirement saving scheme sponsored by the employer which allows an employee to save certain percentage (5%-10%) out of their basic income every month. The saving will be matched by the employer with 100% contribution.
The total savings will be due to the employee upon his/her retirement or resignation or termination.
** Sometimes employer doesn’t pay his or her portion of PF contribution during termination, only employee’s contribution is paid back.
For instance, the employee contribution is TK 500 per month, the employer would also contribute TK 500 per month. The total contribution to PF would be:
(Employee’s TK 500+ Employer’s TK 500)= Contribution to PF is TK 1,000

23. Provident Fund (cont’d)
PF Calculation
Total Salary TK. 70,000
Basic TK 40,000
House Rent TK 20,000
Telephone TK 2,000
Medical TK 5,000
Miscellaneous TK 3,000
Provident 5% of Basic
Employee’s contribution (5% of 40,000) = TK 2,000
Employer’s contribution (5% of 40,000) = TK 2,000
Total contribution to PF per month = Tk 4,000
Total contribution to PF (TK. 4000*12) = Tk 48,000

24. Provident Fund (cont’d)
Assuming that the employee gets an increment of 10% every year over his/her basic salary.
Year
Basic Salary (TK.)
Employee’s Contribution (5%)
(TK)
Employer’s Contribution (5%)
PF/ Month
PF /
1st
40,000
2000
=4000
12*4000= 48,000
2nd
(10 increase)
44,000
2200 =
4400
4400*12= 52800
3rd
(10% increase)
48,400
2420 =
4840
4840*12= 58080

25. Provident Fund (cont’d)
If you have served for an unbroken period with clean record, then you will get employer’s contribution. For example, if you have served for more tan or equal to 5 years, you are entitled for the entire amount of employer’s contribution. Usually, there is a schedule that organization follows. It is given below:
Vested Schedule:
Q: After 3rd year, the employee decides to quit. How much PF s/he will get?
No. of years served
Proportion of employer’s contribution
5 years and above
100% match
4 years
80% match
3 years
60% match
2 years
20% match
Less than 2 years
0% match

26. Provident Fund (cont’d)
Year
Basic Salary (TK)
Employee’s Contribution
(5%) (TK)
Total (TK)
Employer’s Contribution (5%)
(TK)
Employer’s Contribution Total (TK)
1st
40,000
2000
2000*2= 24,000
2nd
(10 increase)
44,000
2200
2200*12=
26400
3rd
(10% increase)
48,400
2420
2420*12= 29040
Total
79440
Now, as schedule, for PF calculation after 3rd year, employee would get his entire contribution and employer will pay 60%.
Hence, PF would be: TK 79,440+ (60% of TK 79,440) = Tk. 127,104
Employers usually put the money in the banks and get returns. For example, a big company like Beximco can pool the money received from employees for PF and invest/ save that in the banks to earn returns.

27. Special Benefits: Gratuity
Gratuity: It is a onetime lump-sump payment given to the employees on the last day of their employment as a gift of their valuable service to the organization. Usually, employees are eligible between 5 to 10 years of continuous employment. It is one of the retirement benefits offered by the employer to the employee upon leaving his/her job.
If an employee quits after 10 years:
Gratuity amount= (5*5th year’s basic salary) + (5*10th year’s basic salary)
If an employee quits after 8 years:
Gratuity amount = (5*5th year’s basic salary) + (3*8th year’s basic salary)
If an employee quits after 20 years:
Gratuity amount: (5*5th year’s basic salary) + (5*20th year’s basic salary)
** If the employee leaves before 5 years of service, he is not entitled for gratuity.

28. Thank you!