Employee Benefits

As Indian economy increases it results to the transformation of social and cultural traditions, it is also changing the financial expectations of Indian workers. Rapid growth in India’s business sector is creating huge demand for skilled labour and driving up wages. Hence companies provide their employees and workers with variety of Benefits. These benefits are in various forms of value that are provided by an employer to their employees for their contribution in the performance of the organization. Some of the benefits are mandatorily prescribed under the law which serves as incentives to the employees and encourages them to work harder for the organization. These benefits can be in financial or non-financial terms , Long term or short term etc. It may also include educational, residential, medical or, allowances facilities to enable employees to work in a healthy and peaceful environment. So basically it is nothing but consideration given by organization in exchange of service rendered by employees.

Employee Benefits include:

1. Short term benefits such as wages, salaries ,Bonus, paid annual leave ,awards and recognition.

2. Health benefits which includes health insurance, mental health counselling and physical health check up.

3. Group life and health insurance in which groups constitutes employees of organizations ,members of society or customers of financial institutions.

4. Allowances which means fixed amount of money given monthly in addition to salary to meet particular type of expenditure. Some of the allowances are House rent allowance, Foreign allowance ,Medical allowance ,Transport allowance, Children hostel allowance etc.

5. Post employment benefits which are mandatory under the prescribed law includes the following:

a) Gratuity: As per the Payments of Gratuity Act ,1972, Gratuity is a statutory benefit paid to employees who have rendered continuous service for at least five years (In case of death or disablement , gratuity is payable, even if employee has not completed 5 years).The gratuity benefit is payable either on resignation, death , retirement or termination of employment. Gratuity payment liability increases as the salary and tenure of employment increases. Salary as per gratuity includes all emoluments earned by the employee while on duty or on leave including dearness allowance as well but it does not include Bonus, commission etc.

Applicability of this Act: The Payments of Gratuity Act ,1972, is applicable to any establishment employing 10 or more persons as notified by central government. Once the act applies , it continues to apply  even if strength of employees falls below 10.

b) Encashment of leave salary : Employees in the organisation are entitled to certain leaves during the year. The leaves can be availed during the year or can be carried forward if company rules permit. At the time of leaving employees can encash the accumulated leave if the company’s rules permit. Employers offer leave encashment during service tenure or at the time of retirement as per companies rule.

C) Voluntary retirement scheme: Voluntary retirement scheme also known as Golden hand shake.  Voluntary retirement scheme is a method used by companies to reduce surplus staff. This mode has come about in India as labour laws do not permit direct retrenchment of unionized employees.VRS applies to an employee who has completed 10 years of service or is above 40 years of age. The VRS employees gets the compensation. They receive lumpsum VRS compensation from the employers.

d) Superannuation Benefit: Superannuation is a type of voluntary benefit extended to employees of an organization. When  an employee retires, he no longer gets a salary but needs a regular income .The superannuation scheme provides answer to this problem ,it’s a voluntary pension plan catering to the retirement needs of the employee, an ensures a pension after his retirement.

Conclusion: Employee benefits serve as a source of financial security for employees and their families and makes them feel satisfied. It is also serves as one of the tool to make team valued  and appreciated. And these benefits are generally been carried out in order to attract and retain excellent people to represent companies.