Employe Benefits

Group

Contents
Introduction Common & Uncommon Benefit Programs Fringe Benefits & its importance Leave Benefits Monetary Benefits Non Monetory Benefits ESI Act EPF Act Summary

Introduction

Compensation and benefits structures have been

changing over the last few years and the major drivers for these changes are, Changing income tax rules in India Viewing compensation on a total remuneration basis Changing employee expectations: want more cash compensation Introduction of fringe benefit tax

Common benefit programs

Percentage of companies providing

Personal Loan Company accomodation Car Program Personal Accident insurance Hospitalization Cover Percentage of companies providing

Provident Fund
Gratuity 0 20 40 60 80 100 120

Uncommon benefit programs

Percentage of companies providing
House Rent Deposit Loan

Hard Furnishing
Club Membership Employee Education Vehicle Loan Housing Loan Group Term Life Insurance Superannuation Regular Medical Check Up 0 10 20 30 40 50 60 Percentage of companies providing

FRINGE BENEFITS
Benefits given to employees in addition to their salary or wage are called fringe benefits.
These include the following: Rent free accommodation Free uniforms Subsided food Leave travel concession Leave with pay Company vehicles for use Medical reimbursement Free education for employees children Insurance Provident fund, gratuity and pension Consumer co-operative stores Company organized tours, etc

Importance of fringe benefits

Fringe benefits are importance as these: Satisfy certain needs of the employees. Make the employees more loyal to the enterprise Motivate employees to perform their jobs well. Help to develop employer-employee relationships. Meet the demands of trade unions. Ensure the welfare of employees. Improve the image of the concern. Help to fulfill certain legal obligations of the enterprise.

Hospitalization cover
Majority of the companies across sectors provide this benefit across all management levels excluding employees covered under mandatory requirements Companies are using the floater policy option to provide this benefit to the employees Most commonly employee, spouse and children are covered under this program. Only about 40% of companies extend this benefit to dependent parents Coverage amounts vary by management level rather than age
Management level
Senior management Middle management Junior management

Median coverage amount (INR)

300,000 275,000 200,000

Personal accident insurance

Majority of the companies across sectors provide this benefit across all management levels excluding employees covered under mandatory requirements. Interestingly, more companies provide it as fixed amount as compared to multiple of salary.
Management level
Senior management Middle management Junior management

Median coverage amt. (INR) Multiples of gross salary

800,000 600,000 500,000 36 months 36 months 24 months

Car program
Typically provided at middle management and above, in some cases provided to junior management (30 per cent) Senior management: 92 per cent Middle Management : 63 per cent Over 50% of companies have it as a company leased program Replacement period ranges from 3 to 4 years

LEAVE BENEFITS
Personal Leave With Pay Major Medical Leave Family and Medical Leave FMLA

Personal leave with pay

Amount of leave based on employee status The leave that you have earned is posted at the end of the month. It may agree upon by employee and head superior. Leave should be requested in advance.

Continuous Service
1 month to 3 years 37 months to 8 years 97 months to 15 years over 15 years

Accrual Rate Monthly 12 hours 14 hours 16 hours 18 hours

Accrual Rate Annually 18 days 21 days 24 days 27 days

Major Medical Leave

Earned after completing one month of service. It may be for illness or his immediate family mems illness.
Twelve-month Employees Once you have been absent due to illness for 32 hours, you are required to submit a completed Medical Certification in order to have the absence beyond the first eight hours taken from your Major Medical Leave balance. If you do not have a Personal Leave or Compensatory Time balance, the first day, or the portion that is not available from Personal Leave or Compensatory Time, will be taken as Leave Without Pay. Nine-month Faculty Once you have been absent due to illness for 32 hours, you are required to submit a completed Medical Certification. The first eight hours of absence due to illness is taken from accrued Major Medical Leave.

Nine-Month Faculty

Continuous Service

Accrual Rate Monthly

Accrual Rate Annually

1 month to 3 years 37 months to 8 years 97 months to 15 years over 15 years

13 1/3 hours 14 1/5 hours 15 2/5 hours 16 hours

15 days 16 days 17 days 18 days

Employees Other Than Nine-month Faculty

Continuous Service

Accrual Rate Monthly

Accrual Rate Annually

1 month to 3 years 37 months to 8 years 97 months to 15 years over 15 years

8 hours 7 hours 6 hours 5 hours

12 days 10.5 days 9 days 7.5 days

The Family and Medical Leave Act of 1993 (FMLA)

was established to help protect employees who missed work for medical reasons. "The Family and Medical Leave Act (FMLA) provides employees job protection in case of family or medical emergency. FMLA permits eligible employees to take up to 12 workweeks of unpaid leave during any 12-month period. There are three reasons that an employee can claim FMLA. They are 1) for the birth and care for a newborn child; 2) to care for an immediate family member (spouse, child, or parent) with a serious health condition; and 3) to take medical leave when the employee is unable to work because of a serious health condition. "Covered employers must grant an eligible employee up to a total of 12 work weeks of unpaid leave during any 12month period for one or more of these reasons" (U. S. Department of Labor [USDL], n.d.) There are several qualifications that both employers and employees must have in order to qualify for FMLA. An employer covered by FMLA is one who employs 50 or more employees. The employee must be employed with the company for at least 12 months

Monetary Benefits

Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time. Basic Salary Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services.

House Rent Allowance Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work.

Conveyance Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.

Leave Travel Allowance These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization.

Medical Reimbursement
Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements.

Bonus

Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one months salary of the employee. Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity

Challenging Job

Physical Work Enviro

Education

Non Monetary Benefits

Professional Develop

Relaxed Enviro

EDUCATION
VERY FEW COMPANIES INVEST IN THEIR EMPLOYEES. PART OF THE PROBLEM IS THAT EMPLOYEE BENEFITS TEND TO BE AVAILABLE TO ALL EMPLOYEES, REGARDLESS OF THE DEPARTMENT. IT IS CONSIDERED BETTER NOT TO OFFER EDUCATION BENEFITS TO DEVELOPERS THAN TO HAVE TO OFFER THEM TO ALL WORKERS ACROSS THE BOARD. UNFORTUNATELY, DEVELOPERS DONT QUITE SEE IT THAT WAY. IT IS A POORLY HIDDEN FACT IN THE INDUSTRY THAT DEVELOPERS ARE EXPECTED TO LEARN NEW SKILLS AT THEIR OWN EXPENSE AND ON THEIR OWN TIME, NOT WHILE ON THE CLOCK. NO ONE WOULD RUN A FACTORY AND EXPECT THE PLANT WORKERS TO LEARN THE SAFETY RULES AT HOME, SO WHY DOES THE IT INDUSTRY EXPECT IT? SOME DEVELOPERS WITH OUTDATED SKILL SETS MIGHT FIND WORK MAINTAINING A LEGACY PIECE OF CODE BUT THEY MIGHT NOT. PUT SOME MONEY INTO KEEPING YOUR DEVELOPERS UP TO DATE, EVEN IF YOU DONT PLAN TO MAKE USE OF THOSE SKILLS, AND YOUR STAFF WILL BE A LOT HAPPIER. NOT ONLY WILL THEY KNOW YOU VALUE THEM, BUT THEY WILL BE LESS LIKELY TO JUMP SHIP FOR A JOB THAT GIVES THEM THE CHANCE TO STAY FRESH.

WORK / LIFE BALANCE

MANY DEVELOPERS WORK A LOT MORE THAN 40 HOURS A WEEK. INDEED, A LOT OF THEM DO IT WITHOUT BEING ASKED. THE FLIP SIDE IS THAT THEY SOMETIMES NEED SOME FLEXIBILITY ON THEIR EMPLOYERS PART, TOO. LETS GET REAL: IF SOMEONE WORKS 48 HOURS A WEEK FOR SIX MONTHS, AND THEN 60 HOURS A WEEK FOR THE LAST SIX WEEKS OF THE PROJECT, DO YOU REALLY NEED TO DEDUCT IT FROM HIS VACATION TIME IF HE WANTS TO TAKE A HALF DAY TO SEE HIS KIDS BASEBALL GAME? WOULD IT KILL THE DEPARTMENT OR HURT THE PROJECT IF HE TOOK A FEW DAYS OFF FOR NO GOOD REASON AT ALL? IF YOU SUDDENLY START TO ENFORCE THE TIME-OFF RULES AFTER PUSHING YOUR TEAM HARD, EMPLOYEES WILL START TO WONDER IF YOU HAVE A HEART AT ALL. GIVE YOUR PEOPLE SOME TIME OFF, EVEN IF IT DELAYS A PROJECT, WHEN YOU SEE BURNOUT IS APPROACHING. IT COSTS TENS OF THOUSANDS OF DOLLARS TO RECRUIT A DEVELOPER, WEEKS (OR MONTHS) TO INTEGRATE THE NEW DEVELOPER INTO A PROJECT, AND SO ON. MISSING A DEADLINE BY A DAY OR TWO TO MAKE SURE THAT YOUR TEAM STAYS TOGETHER HURTS A LOT LESS.

RELAXED ENVIRONMENT
HOW OFTEN DOES YOUR TEAM SEE CUSTOMERS FACE TO FACE? PROBABLY NOT TOO OFTEN. SO WHY ARE YOU ENFORCING THE DRESS CODE? DEVELOPERS TEND TO BE LESS HAPPY ADHERING TO CERTAIN RULES OF PROFESSIONALISM, SUCH AS HAIR AND BEARD LENGTH, DRESS CODES, OFFICE DECORATION STANDARDS, AND SO ON, THAN OTHER EMPLOYEES IN THE FIRM. GIVING THEM A BIT OF LEEWAY (WITHIN REASON, OF COURSE) WILL COST YOU NOTHING AND HELP KEEP THEM CONTENT. THIS ALSO APPLIES TO THINGS LIKE PERSONAL CALLS, THE TIMING OF BREAKS, AND SO ON. I HAVE YET TO MEET A DEVELOPER WHO LIKES TO WORK IN A FACTORY ENVIRONMENT, WITH SCHEDULED BREAKS, NO CALLS ALLOWED, ETC.

PROFESSIONAL DEVELOPMENT
PROFESSIONAL DEVELOPMENT IS MORE THAN EDUCATION. IT CAN RANGE FROM ALLOWING DEVELOPERS TO SPEND A FEW HOURS A WEEK ON A PERSONAL PROJECT WITH NEW TECHNOLOGIES TO LETTING THEM TRY THEIR HAND AT A DIFFERENT JOB. WOULD YOU RATHER SEE YOUR CAREER-MINDED EMPLOYEES TRYING ON A NEW JOB TITLE OR LEARNING NEW SKILLS WHILE ON YOUR PAYROLL OR ON SOMEONE ELSES? THE IT INDUSTRY IS FAIRLY FLUID, AND MANY DEVELOPERS WANT A TRUE CAREER PATH, NOT JUST THE ROAD FROM DEVELOPER TO SENIOR DEVELOPER. GIVE THEM THAT PATH AND YOU CAN RECRUIT AND KEEP THEM.

FREE FOOD
I KNOW THAT THIS SOUNDS VERY 1990S DOT-COM BUBBLE. BUT SOME GOOD IDEAS CAME OUT DURING THAT ERA, AND ONE OF THEM WAS FREE FOOD. MANY DEVELOPERS WORK THROUGH LUNCH. IT IS A WELL ESTABLISHED FACT THAT EVEN A MOMENTARY DISTRACTION SEVERELY HURTS PRODUCTIVITY. I AM NOT SUGGESTING THAT YOU CHAIN YOUR CODERS TO THEIR DESKS AND STUFF THEIR FACES WITH GRUEL. BUT MAKING A HEALTHY, FREE MEAL AVAILABLE TO THOSE FOLKS HEADS DOWN AND IN THE ZONE WILL KEEP THEIR EFFICIENCY AND MORALE UP. AND LETS BE HONEST, FOR WHAT IT COSTS TO KEEP A GOOD DEVELOPER ON STAFF, HOW MUCH CAN IT REALLY HURT YOUR BUDGET TO THROW A PIZZA OR HOAGIE IN THERE ONCE IN A WHILE?

A CAREER PATH
SOME DEVELOPERS HAVE NO DESIRE TO EVER GO PAST SENIOR DEVELOPER. OTHERS LOOK TOWARD ARCHITECT OR PROJECT MANAGER, OR SOME OTHER JOB TITLE, AS THEIR CAREER GOAL. REGARDLESS, AN EMPLOYER THAT HELPS ITS DEVELOPERS MEET THEIR CAREER GOALS, AND MAKES IT CLEAR THAT PROGRESS IS BEING MADE, IS MUCH MORE LIKELY TO RETAIN ITS EMPLOYEES. A LOT OF COMPANIES TALK A GREAT GAME IN THE INTERVIEW ABOUT HOW THEY HELP THEIR TEAM ACHIEVE THEIR DREAMS. BUT LOOKING AT HOW SOME COMPANIES TREAT THEIR PEOPLE, ITS EASY TO SEE WHY FOLKS GET CYNICAL ABOUT THAT PROMISE. WHEN PUTTING YOUR PEOPLE ON THE CAREER TRACK OF THEIR CHOICE IS SOMETHING YOU ACTIVELY WORK TO DO, YOUR PEOPLE SEE IT AND ARE MUCH LESS LIKELY TO LEAVE. AFTER ALL, WHY LEAVE FOR A PROMISE, WHEN THE CURRENT REALITY LOOKS PRETTY ROSY?

DEVELOPERS AND OTHER TECHIES LIKE HAVING TOYS TO PLAY WITH.

TOP-OF-THE-LINE TOOLS

SPENDING FEW HUNDRED DOLLARS TO BUY A HIGH QUALITY WORKSTATION -CODERS FEEL VALUED AND SPECIAL.
NEW GADGETS

EXPENSES YOU CAN JUSTIFY- COMPILING CODE, PERFORMANCE PROFILING

SAVES TIME AND PERFORMANCE IMPROVES.

PHYSICAL WORK ENVIRONMENT

DUMP AND DUNGEON ENVIRONMENT. CANDIDATE YOU INTERVIEW MAY FEEL YOUR OFFICE TO BE LESS COMFORT COMPARED TO OTHERS. UPGRADES IMPROVE ERGONOMICS AND PRODUCTIVITY THROUGH ENCOURAGING BETTER POSTURE, REDUCING EYE STRAIN, AND SO ON.

P W E (CONT)
THERE ARE SO MANY REASONS TO WELCOME CANDIDATES INTO A PLEASANT OFFICE. FOR ONE THING, FIRST IMPRESSIONS REALLY DO MATTER. FOR ANOTHER, CANDIDATES WHO SEE THAT YOU REFUSE TO PAY MORE THAN $20 FOR A CHAIR WILL WONDER WHAT THEIR BONUS WILL LOOK LIKE. AN ERGONOMIC WORK ENVIRONMENT HELPS RETAIN THE EMPLOYEES. HEADACHES FROM CHEAP FLUORESCENT LIGHTING

A GREAT PROJECT AND A WINNING TEAM

A GREAT PROJECT AND A WINNING TEAM

ATHLETE VS DEVELOPERS. IN SPORTS, WHEN GREAT ATHLETES GO TO A TEAM THAT IS DOING BADLYLURED IN WITH THE PROMISE OF HEADING UP A NEW ERA FOR THAT TEAM.

TO GET THE VERY BEST DEVELOPERS, YOU EITHER NEED TO HAVE A GREAT PROJECT AND A WINNING TEAM OR YOU NEED TO PONY UP THE BIG BUCKS.
ATTRACT THE DEVELOPERS TO HELP YOU IN COMPLETING THE PROJECT.

A CHALLENGING JOB
FEW TOP-TIER PEOPLE -LIKE WORKING IN AN UNCHALLENGING JOB. MORGAN FREEMAN DOES NOT ACT IN B-FILMS WHEN A CANDIDATE (OR EMPLOYEES) GIVEN A JOB THAT IS CHALLENGINGOVERLOOK THE ALTERNATIVES. TELL THE PROSPECTIVE CANDIDATES WHY THE JOB WILL BE A CHALLENGE, AND THEY WILL LEAVE THAT INTERVIEW ALREADY SAVORING THE THRILL OF VICTORY WHEN THEY MEET IT. SHOW THEM A JOB THAT ANY ENTRY-LEVEL PERSON CAN HANDLE, AND THEY WILL WONDER HOW LONG THEY WILL BE THERE UNTIL THEY ARE REPLACED WITH AN ENTRY-LEVEL PERSON.

Benefits under the ESI Act 1948

Six kinds of benefits are provided under the Act: Sickness benefit Maternity benefit Disablement benefit Dependents benefit Medical benefit and Funeral expenses.

Sickness Benefit
Standard Benefit rate,
Min. period is 71days/yr Max. period is 91days /yr. Lowest rate is Rs. 14/Highest rate is Rs. 195/-

Maternity Benefit
Minimum 80 days in the immediately preceding two consecutive contribution periods is must. Max. period is 91days /yr

Disablement benefit
Permanent disablement, whether total or partial, as a result of an employment injury (injury caused by an accident arising out of and in the course of employment).
Benefit for the whole of life.

Dependents benefit
When an insured employee dies as a result of an employment injury, his widow and children and in case the employee does not leave behind him a widow or children, his other dependants, are entitled to receive periodical payments.

Medical benefit
Sickness of Insured employee or (where medical benefits is extended to his family) a member of his family. Available to the employee during any period for which contributions are paid in respect of him or in which he can claim sickness benefit.

Funeral expenses

Max. payment 2500/Elder member of his family will get it.

Benefits cannot be combined

Both sickness benefit and maternity benefit; or Both sickness benefit and disablement benefit for temporary disablement; or Both maternity benefit and disablement benefit for temporary disablement.

Offences
If any person (a) Fails to pay any contribution payable by him under the Act; or (b) Deducts from the wages of an employee the employer's contributions ; or (c) Fails to submit any return required by the regulations, or makes a false return. He would be punished with imprisonment up to 1 year or with fine up to Rs. 4000/- or with both.

Revision w.e.f. 01.12.2007

Daily rates of sickness is increased by 20% Disability Benefit increased to 50% from 40% For dependent also increased to 50% from 40%. For funeral it increased to rs.3000 from 2500.

Benefits Under EPF act

Major Benefits

Provident Fund Benefits Pension Benefits Death Benefits

Provident Fund benefits

Contribution up to 8.33% Employer also can contribute 12% Member can withdraw from these accumulations to cater to financial exigencies in life No need to refund unless misused On resignation, the member can settle the account. i.e., the member gets his PF contribution, Employer Contribution and Interest.

Pension Benefits
How to Get? Attain age of 50 or more years. Complete service total of 10years. Pension amount is distributed thro post office or any nationalized bank.

Pension Benefits
Scheme Certificate: Shows Service & family of member. Attaining age of 50, he can apply for pension by surrendering. This is better than withdrawal, as a member dies holding a valid scheme.

Pension Benefits
Withdrawal Benefit: Not eligible for pension. Calculation only based on his last average salary and service. Not based on actual amount available in Pension Fund Account Contribution to PF is 8.33% & 1.16%

SITUATIONS
Four situations: On Superannuation Before Superannuation Death of the member Permanent disability

 On Superannuation: More than 58years More than 10years of service Before Superannuation: Age limit 50-58years More than 10years of service.

 Death of the Member: Death while in service Death while not in service Permanent Disability: Unfit for the employment.

Death Benefits
Provident Fund Amount to Family (or to Nominee) Pension to Family (or to Parent / Nominee) Capital Return of Pension Insurance (EDLI) amount to Family (or to Nominee) No amount is taken from Member for this facility. Employer contributes for this. Nominee is basically determined as per the information submitted by the member at this office through FORM-2

Employees' Deposit Linked Insurance (EDLI) Scheme

Maximum amount payable is Rs. 60,000/-. Average PF Balance, salary and service are the factors considered for the calculation of this amount.

Advance/ Withdrawals may be availed for the following purposes :

Marriage / Education Treatment Purchase or construction of Dwelling house Repayment of Housing Loan Purchase of Plot Addition/Alteration of House Repair of House Lockout Withdrawal Prior to Retirement Other Advances

For Marriage / Education

For Treatment

Purchase or construction of Dwelling house

Repayment of Housing Loan

Continue.

For the purchase of site/ plot

Addition/alteration of house

Repair of house

Lockout or closure of the establishments

Withdrawal prior to retirement

ADVANCE TO MEMBER AFFECTED BY CUT IN THE SUPPLY OF ELECTRICITY

Types of Benefit - Grant of advance to members affected by cut in the supply of electricity. Eligibility - The advance may be granted only to a member whose total wages for any one month commencing from the month January 1973 were 3/4th or less than 3/4th of wages for month. Eligible Amount - Wages for a month OR Rs.300/Form - No.31 Documentary Support - Certificate from State Govt. regarding cut in the supply of electricity

GRANT OF ADVANCE TO MEMBERS WHO ARE PHYSICALLY HANDICAPPED

Types of Benefit- To Physically Handicapped member for purchase of an equipment required to minim the hardship on account of handicap. Eligibility- Production of medical certificate from a competent medical practitioner to the effect that he is physically handicapped. Eligible Amount- Basic wages + DA for six months or own share of contribution with interest or cost of equipment which ever is least. NOTE The amount of advance/withdrawal is not required to be refunded under normal circumstances. If the amount is not utilized, the same should be refunded with penal interest A fixed minimum balance in the account will be kept before arriving at the amount of advance admissible subject to the above conditions For calculation/ computing the period of membership U/P 68B, 68BB, 68K, total service exclusive of periods of break under the same employer before the scheme is applied to him, as well as period of membership of the fund is always included

In Summary.
Employee benefit programs have been rationalized over the years across levels Significant reduction in benefit programs such as company accommodation and related benefits, loans, superannuation and club membership Provident fund, health insurance and personal accident insurance are prevalent across all sectors Employee education programs are more prevalent in the new economy sectors such as IT and ITES Increased emphasis on cash based compensation to meet employee expectations Flexible benefit plans have moderate popularity across all sectors Compensation being viewed from a Total Remuneration or Cost to Company basis

Thank You