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What are Employee Benefits?

Nicole Madison
Updated May 16, 2024
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Employee benefits are the extras or perks a person receives from his employer. These perks are in addition to the basic pay an employee receives in exchange for his work. For example, some common benefits include vacation pay and personal leave. Some types of employee benefits are required by law while others are optional. The list of legally required employee benefits varies from place to place.

In many places, employers are required to provide certain employee benefits. For example, employers in some places are required to pay certain taxes for the benefit of their employees. Often, employers are required by law to carry certain types of insurance as well. An employer may be required to have insurance that provides coverage if an employee is hurt on the job, for instance. Sometimes employers are also required to carry disability insurance to provide at least some income for employees who become disabled, even if the disability is not the result of a work-related injury.

Often, employers provide benefits that are beyond those required by law. Employers often do this because good benefit packages help them attract qualified employees. For example, a person may receive similar job offers from two different companies. If the pay is about the same, the job candidate may choose the company that provides the best benefit package. In some cases, benefits are seen as so important that a job applicant may consider taking a lower-paying job if the employee benefits are very attractive.

For many people, health care coverage is among the most desirable benefits. There are countless people who do not have medical coverage and have to pay out of pocket for doctor and dentist visits. A single hospitalization, even for something relatively minor, has the potential to cost an uninsured person a great deal in medical fees. If an individual has a family to care for, the potential costs may be even higher. As such, companies that offer generous medical coverage benefits may have an easier time attracting and keeping employees.

Another in-demand employee benefit is vacation time. Many companies offer paid vacation days for employees who have worked for them for a significant period of time. These days can be used for any purpose the employee sees fit. He may use them to travel around the world or even to simply loaf at home in his pajamas. Some companies offer each employee a set number of days, while others increase vacation time as employees gain seniority.

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Nicole Madison
By Nicole Madison
Nicole Madison's love for learning inspires her work as a SmartCapitalMind writer, where she focuses on topics like homeschooling, parenting, health, science, and business. Her passion for knowledge is evident in the well-researched and informative articles she authors. As a mother of four, Nicole balances work with quality family time activities such as reading, camping, and beach trips.
Discussion Comments
By anon144864 — On Jan 21, 2011

what are the fringe benefits?

By subway11 — On Aug 09, 2010

SurfNturf- I always found the employee medical benefits to be a little confusing sometimes.

I know there are HMO plans and PPO plans as well as HSA, or health savings accounts. Usually the HR benefits coordinator does an orientation every year regarding the roll out of the employee health benefits.

They usually do a good job trying to explain the differences between the medical coverage offered, but it is still hard to keep track of.

By surfNturf — On Aug 09, 2010

Oasis11- That is true. My husband has a car allowance and a performance bonus- so I do agree with that.

I wanted to add to that some companies also offer discounted stock purchase plans in which the employee can purchase the company stock at a significant discount.

Also, the same companies can provide pensions for the employee’s retirement. Pensions are really good tool to use to retain employees and attract new ones long-term.

Few companies offer this benefit, so when a company offers a pension plan many employees take notice.

When my husband worked at UPS and he was offered an employee stock purchase plan along with a company pension. UPS has some of the best benefits of any company out there.

By oasis11 — On Aug 09, 2010

Bhutan- I agree. I just wanted to add that an employee benefits program might also include a car allowance and an incentive bonus.

This is usually offered to employees in sales because they often have to drive a lot, and the bonus also provides additional incentive for them to perform better. Many members of management also receive similar benefits.

By Bhutan — On Aug 09, 2010

I agree that healthcare benefits and vacation time are the most desired voluntary employee benefits.

An employee benefits plan can also include short-term disability, long-term disability, life insurance coverage, 401(k) plans, and of course vacation time along with health care benefits.

Many companies do use their benefits package to entice employees to work for their firm. Like the writer said, there are many people who don't currently have health insurance. This is the most important of all the employee benefits and is going to be highly desirable for a potential employee.

Nicole Madison
Nicole Madison
Nicole Madison's love for learning inspires her work as a SmartCapitalMind writer, where she focuses on topics like...
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