A company’s success depends on the efficiency of its management, customer relations, organised processes, and the ability to take advantage of technological developments. You must have a capable, loyal, efficient, and responsive workforce for these processes to work.

An organisation cannot function without its employees. Investing in your employees 👨‍💼 is therefore equally necessary. It shows them that you appreciate their time, effort, and skills they employ in the company’s growth.

It is critical to do so, as new opportunities are available to employees every day. As per a survey, 82% of employees who know about the company’s culture and benefits will have a better impression of the company and stay longer.

Many companies introduce training and other employee development programs to help their employees grow. But, other than that, companies also need to offer additional perks to their employees. These are the non-salary expenses, also known as the employee benefit expenses. Through this article, we’ll highlight these benefits in greater detail.

Employee benefit expenses – what are they?

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As the name implies, employee benefit expenses refer to expenses incurred by the company to benefit its employees. These expenses may be cash 💵 or non-cash. They are over and above the basic salary employees receive and can include anything from health insurance to shopping coupons. While some of these benefits may be universal, some may be given as work appreciation.

Some of these benefits are mandatory for companies, such as employee provident funds, statutory leaves, gratuity, health insurance, and maternity leave. Other additional benefits such as bonuses, paid vacations, and dental insurance is subject to the organisation’s policies. Some companies may offer these benefits to retain and attract top talent. With the pandemic, companies that offer work-from-home benefits had a 25% lower employee turnover.

Importance of incurring these expenses

Employee benefits are meant for the benefit of employees. But, if we look at the larger picture, they indirectly have numerous benefits for the employer. Here is a list of such advantages:

A loyal workforce

As an organisation, you want to hire the best team. But, even if you attract the best talent, will it guarantee their loyalty in the long run? Probably not. You need to implement specific incentives to retain them and reduce employee turnover. It also helps to reduce the time and resources implemented in hiring new talent. Moreover, if employees stay around for the long term, the more organised and efficient processes are.

Enhanced productivity

An employee’s productivity is directly related to how happy and satisfied they feel at their company. A happy workforce 😀 also enhances employees’ motivation. If they feel motivated, they will work at their topmost efficiency and, thus, higher revenues for the company.

Healthy team

An old saying goes: health is wealth. Even if they are present, sick and tired employees won’t be able to work well. They may cause errors and even expose others to illness. Offering paid sick time 🤒 and health insurance will rejuvenate and energise your workforce. Additionally, your employees will feel that you care about them. The healthier the workforce, the higher the work productivity and, hence, the greater the organisation’s success.

Better talent

Hiring the right and the best team is a task. All companies strive to hire top candidates. However, with increased competition, how can that be done? It is where these additional incentives come into play. Nowadays, employees aren’t just looking at their salaries. It is also essential for them to know how invested the employer is in their employees.

Types of employee benefit expenses

The organisation must follow the accounting treatment outlined in IndAS-19 and AS-15 of the Income Tax Act for recording these expenses. Here are different types of benefits.

Statutory Benefit Expenses

These are the benefits required by law that an employer must provide to its employees. Following are the mandatory benefits expenses an employer needs to consider:

Employee’s provident fund (EPF)It is a government-mandated scheme for securing an employee’s future when they are no longer in service.
Health or medical insuranceAs per the circular issued by IRDAI (Insurance Regulatory Authority of India) on 1st April 2020, every company must provide a medical policy for employees.
GratuityIt is a gratitude benefit given by the employer for employees’ continuous years of service of 5 years or more.
Maternity LeavesFor organisations with a minimum of 10 employees, the women employees are entitled to paid leave of 26 weeks.
Other statutory leaves than maternity leavesAs per the Shop and Establishment Act, enacted in every state, employees are entitled to annual paid sick leaves or casual leaves.
Compensatory leavesIf employees work on holidays or work overtime, they are entitled to compensatory leaves along with additional pay of 2 times their wages.
Protection from harassmentThe Prevention of Sexual Harassment Act(POSH) needs to be implemented by every organization to prevent a hostile work environment.

Voluntary Benefit Expenses

In the previous section, we read about the expenses organisations must incur on their employees. Below are some additional employee benefits an organisation can provide.

  • Paid vacations
  • Childcare facilities
  • Wellness programs
  • Performance bonus
  • Food and entertainment coupons
  • Free concert or movie tickets
  • Access to clubs or lounge
  • Corporate discounts
  • Disability benefits
  • Critical Illness cover
  • Personal Accident Insurance
  • Higher Medical coverage
  • Work from Home
  • Education programs for career development

In a nutshell

Hopefully, after reading the above article, you have a better understanding of what employee benefit expenses are all about. Organisations must adopt these benefits as quickly as possible.

Surveys show that 50% of employees will leave their jobs for better employee benefits. For better guidance, you can always take the help of experts like Plum Insurance. They provide customised solutions regarding group health insurance, wellness programs, and more as per the needs of your employees.

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