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TRANSCRIPT
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Chapter no. 13BENEFITS AND SERVICES
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1.Hassan Abbas2.Islam Aslam
3.Muhammad Saad4.Adil Naeem5.Muhammad Suleman
Group members
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Where from this word isderived ?
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Compensation
D irect co m p en sa tio n In d ire ct co m p e n sa tion
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Direct compensation refers tomonetary benefits offered andprovided to employees in return of the services they provide to theorganization. The monetary benefitsinclude basic salary, house rent
allowance, Car policy , medicalreimbursements,
Direct Compensation
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1)Some employers provide these programs for labor market reasons.
2) Some want to keep a union out, or the unionwon them through negotiations.3) Some feel that providing benefits and services
increases employees performance.
Why Offer Benefits andServices?
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Benefits
Supplementalpay Executive servicesInsurance benefits Retirement benefits
Types of Employee Benefits
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• Supplemental pay benefits provide pay for time not worked including,
• unemployment insurance,• vacation and holiday pay, etc.• It Also known as(Pay for Time Not
Worked).
upplemental Pay
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Insurance benefits fall into 3categories
• Worker’s compensation• Hospitalization, health, and disability• Life insurance
nsurance Benefi ts
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• The retirement benefits are those,which provide to employees afterretirement and at the time of retirement these are included.
• Employee stock ownership.• Old age benefits.• House benefits.• Life insurance plans.
•
et irement Benefi ts
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• Many employers provide the sorts of personal services that employees needat one time or another.
• Provide credit.• Cafeteria Approach.
• Child and elder care referrals
• social and recreational opportunities.
xecutive services
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–IGURE 13 2 - ,Private Sector Employer Benefits Costs by Category March2009
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MUHAMMAD SAAD
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Pay For Time Not WorkedWhat this mean??
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• It means that employees usually getbenefits when they don’t have towork.
• It is one of the most costly benefitsreceive by the employers.
• Another name for this is “ Supplemental Pay
Benefits”
Pay For Time Not Worked
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Pay For Time Not Worked
Vacations and holidays
Parental leave
Supplemental unemployment benefi
upplemental Pay Benefits
Unemployment insurance
Sick leave
Severance pay
:t includes
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• Unemployment Insurance – Provides for benefits if a person is
unable to work throughno fault of his or her own.
– Is an employer payroll tax that isdetermined by an employer’s rateof personnel terminations.
– Tax is collected and administered bythe state. –
Pay for Time Not Worked
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,No unemployment benefit should be given to only those who are unable
to do any job due to no fault of.their own
Should companies give benefits to those who are dismiss from their
job ?
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Pay for Time Not Worked
• Vacations and Holidays – Number of paid leave days and
holidays varies by employer.
– Qualification for and calculation of holiday and leave pay varies byemployer.
– Premium pay for those who work
on holidays.
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Pay for Time Not Worked(cont’d)
• Sick Leave – Provides pay to an employee when he
or she is out of work because of
illness.• Costs for misuse of sick leave• Pooled paid leave plans
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Pay for Time Not Worked(cont’d)
• Personal illness is 45% of unscheduledsick leave
• Family issues 27%• Personal needs 13%• Mentality of entitlement 9%• Stress 6%
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–IGURE 13 4 Online Request
for Leave Form
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Pay for Time Not Worked(cont’d)
• Parental Leave – The Family Medical Leave Act of 1993
(FMLA)• Up to 12 weeks of unpaid leave within
a one-year period.• Employees must take unused paid
leave first.
• Employees on leave retain their healthbenefits.
• Employees have right to return to jobor equivalent position.
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–IGURE 13 3 Your Rights Under
the Family and Medical Leave Act
of 1993
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Pay for Time Not Worked(cont’d)
• Severance Pay – A one-time payment when terminating
an employee.• Reasons for granting severance pay:
– Acts as a humanitarian gesture and goodpublic relations.
– Mirrors employee’s two-week quit notice. – Avoids litigation from disgruntled former
employees. – Reassures employees who stay on after
the employer downsizes its workforceof employer’s good intentions.
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Pay for Time Not Worked(cont’d)
• Supplemental Unemployment Benefits(SUB) – Payments that supplement the laid-off or
furloughed employee’s unemploymentcompensation.• The employer makes contributions to a
SUB reserve fund.
• SUB payments are made to employees forthe time the employee is out of workdue to layoffs, reduced workweeks, orrelocations.
• SUB payments are considered previously
earned compensation for unemploymentcalculation ur oses.
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HASSAN ABBAS
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InsuranceBenefits
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Insurance Benefits
• Required by Law or Voluntary benefitsprovided by employers to employees
’orkers Compen sa tion ea th Insu ra nce
n su ra nc e B en ef it s
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Insurance Benefits (cont’d)
• Workers’ Compensation – Provides income and medical benefits
to work-related accident victims or
their dependents, regardless of fault.
• Law influencing Workers’
Compensation in Pakistan – Workmen’s Compensation Act 1923
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Workers’ Compensation
• How benefits are determined – Workmen’s Compensation Act 1923
deals with the calculation of wages
and benefits and percentages of losses.
– Three Schedule 1, 3, and 4 relates tocalculations
• How to get benefits – It must be proved that the worker was
on the job when injury occur
regardless oh his/her fault
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Case
• If you are a employer and instructs all the workers to wear safetygoggles in machine room, all
workers wore them but one didn’t,and he gets injured in machineroom.
• Will he get Workers’Compensation Benefits
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Worker’s CompensationCosts
• Controlling workers’ compensationcosts – Screen out accident-prone workers. – Make the workplace safer. – Thoroughly investigate accident
claims.
– Rehabilitation programs – Use Case Management to return
injured employees to work as soonas possible.
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Case Management
• Treating injured workers on caseto case basis.
• Physicians and medical staff
determine the best plan foreach case.
• One most common cost control
technique in United States
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Insurance Benefits(cont’d)
In su ra n ce
-n d g ro u p ra te cove ra g e o f b a sic a n d m a jo r m e d ical ex p e n
rm e n t
, , ,is the act of cutting tearing pulling wrenching or otherwise re
urance provides income protection for salary loss due to illness o
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Employers and InsuranceCompanies
• Employers for the purpose of Hospitalization, Health, andDisability Insurance may contractwith – Life Insurance Companies – Health Maintenance Organizations
(HMOs) – Preferred Provider Organization(PPOs)
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Employers and InsuranceCompanies
• Health Maintenance Organization(HMO) – A medical organization consisting of
specialists operating out of a healthcare center.
• Provides routine medical services toemployees who pay a nominal fee.
• Receives a fixed annual contract feeper employee from the employer (oremployer and employee), regardlessof whether it provides that person
with service.
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Employers and InsuranceCompanies
• Preferred Provider Organizations(PPOs) – Groups of health care providers that
contract to provide services atreduced fees.• Employees can select from a list of
preferred individual health providers.• Providers agree to discount services
and to submit to utilization controls.• Employees using non-PPO-listed
providers may payall costs or only costs above the
reduced fee structure for services.
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Health Care Cost ControlTrends
1.Getting employees involved andempowered , and making sure that theyknow the cost (medical) of theirdecisions.
2.Getting employees pay more for their sharein medical insurances .
3.Prevention programs- immunizations,routine check-ups
4.Taking Special steps in Recruitment process
5.Outsourcing health care planadministrations to outside companies
6.Conducting audits to reduce frauds in
medical claim
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Short term, Just in TimeWorkers
• Benefits may be given by employersaccording to company policy
• May be given by staffing agency• May be outsourced to the
administrative companies
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ADIL NAEEM
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Retirement Benefits
• Social Security(Federal Old Age and Survivor’sInsurance) – A federal payroll tax (7.65%) paid by
both the employee and the employeron the employee’s wages
• Retirement benefits at the age of 62• Survivor’s or death benefits paid
to the employee’s dependents
• Disability payments to disabledemployeesand their dependents
– The Medicare program• Health services to people age 65 or older
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Retirement Benefits(cont’d)
Defined benefit
plans Defined contribution plans Qualified
plans
Types of Pension Plans
Nonqualified plans
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Defined benefit plan:A defined benefit pension plan is a
type of pension plan in which an employerpromises a specified monthly benefit onretirement that is predetermined by aformula based on the employee'searnings history, tenure of service andage, rather than depending on investmentreturns.
Defined Contribution plan:In defined contribution plan the
amount of the employer contribution isspecified . In this plan Only employer
contributions to the account are
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Qualified plan:Is a retirement account or plan that
meets tax law requirements which permitthe deferment of tax and the tax-freeaccumulation or appreciation of assetsheld within the plan.
Non-qualified plan:A retirement plan that does not
qualify for the federal tax advantagesreceived by qualified plans, but which, inturn, is subject to fewer restrictionsregarding participants and contributionlimits
Retirement Benefits
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Retirement Benefits(cont’d)
( )401 k plans
Savings and thrift plans
Employee stock ownership plans
Cash balance pension plans
-Deferred profit sharing plans es of Defined Contribution Plans
Types of Defined
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Types of DefinedContribution Plans
401(k)plan:
• A defined contribution plan offered by a corporation toits employees, which allows employees to set aside
tax-deferred income for retirement purposes
Thrift saving plan:
• The thrift savings plan is a defined-contribution plandesigned to give federal employees the sameretirement savings related benefits that workers inthe private sector enjoy with 401(k) plans.
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Types of DefinedContribution Plans
Deferred profit sharing plan:• Type of deferred compensation plan in which
an employee's shares are held in a trust withother accrued benefits until his orher retirement
Employee stock ownership plan:• In employee stock ownership plan contributions
are made by the sponsoring employer, and cangrow tax-deferred But unlike other retirementplans, the contributions must be invested in thecompany's stock. The benefits for the company
include increased cash flows, tax savings, andincreased roductivit from hi hl motivated
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Types of DefinedContribution Plans
Cash balance pension plan:• In a cash balance plan, the benefit
amount is computed based on aformula using contribution andearning credits, and eachparticipant has a hypothetical
account
R ti t B fit
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Retirement Benefits(cont’d)
• Employee Retirement Income SecurityAct (ERISA) of 1974 – Established guidelines for “qualified”
pension plans.
– Requires fiduciary responsibility.• Pension Benefits Guarantee
Corporation (PBGC) – Insures plans that terminate without
sufficient fundsto meet obligations.
– Guarantees only defined benefit plans.
– Pays individual pensions up to $54,000
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HAFIZ ISLAM ASLAM
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Pension Plans
Membership requirements Vesting scheduleBenefit formula Planfunding
Policy Issues in Pension Planning
E l ’ V i Ri h
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Employees’ Vesting Rightsunder ERISA
• Cliff Vesting – Gives participants full right to the
employer’s matching contributionafter three years of service.
• Graded Vesting – Gives participants an increasing right
to the employer’s matchingcontribution over a six-yearschedule of 20% after two years of service and 20% for eachsucceeding year thereafter.
P i d E l
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Pensions and EarlyRetirement
• Early Retirement Windows – Offer specific employees (often age 50-plus)
an incentiveto voluntarily retire earlier than usual.
– Offer a combination of improved orliberalized pension benefits plus a cashpayment.
– Require careful program construction toavoid oversubscription and timely deliveryto avoid potential age discriminationclaims.
• Older Workers’ Benefit Protection Act(OWBPA)
– Imposes limitations on waivers that purportto release a terminating employee’spotential claims against the employer
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Personal Services
• Credit Unions – Separate businesses established with the
employer’s assistance to help employeeswith their borrowing and saving needs.
• 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
E l A i t
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Employee AssistancePrograms
1
.e aware of legal issues
.nsure professional staff ing
Steps for Launching an EAP Program
.evelop a pol icy s ta tement
-aintain conf ident ia l record.eeping systems
2
3
4
F il F i dl (W k Lif )
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Family-Friendly (Work–Life)Benefits
• Subsidized child care• Sick child benefits• Elder care• Time off • Subsidized employee transportation• Food services• Educational subsidies
• Fitness and medical facilities• Flexible work scheduling
Flexible Benefits
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Flexible BenefitsPrograms
• Cafeteria (Flexible Benefits) Approach – Each employee is given a limited benefitsfund budgetto spend on preferred benefits.
– Types of plans• Flexible spending accounts• Core plus option plans
• Employee Leasing – Professional employer organizations or
staff leasing firms – Handle human resources functions for
leased employees of small firms – Can provide benefits by aggregating
employees into larger insurable groups – Can raise worker commitment, co-
employment, and workers’
–IGURE 13 6
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IGURE 13 6 Online Survey of
’Employees Benefits
Preferences
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Flexible Work Schedules
• Flextime• Compressed workweek schedules
• Workplace flexibility
• Job sharing
• Work sharing
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Questions
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Thank you