Benefits

 

Benefits represent a form of compensation in addition to an employee’s remuneration. Some types of benefits are mandated by the government, while others are provided voluntarily by the company. Offering company-sponsored benefits can prove an effective method of attracting and retaining employees.

Legislated benefits

Legislated benefits are mandatory — all employers must provide these benefits to their employees. These benefits include:

• Employment Insurance: both employer and employee contributions are required
• Canada Pension Plan: both employer and employee contributions are required
• Workers’ Compensation: the rate paid by the employer depends upon the industry; in Ontario, coverage is mandatory for some industries and optional for others

Employer-sponsored benefits

While employer-sponsored benefits represent a significant cost to employers, many start-ups have discovered that they must offer a competitive benefits package to attract and retain quality employees. Defining the benefits offering is a crucial business decision—it should not be a“one-size-fits-all” proposition. As costs continue to rise, any decision to provide benefits should consider the company’s financial situation, the ability to contain costs and your employees’ demographics.

Employer-sponsored benefits come in many different forms and can range from basic to deluxe, with costs being very little to none, or high. They include, among others:

• health insurance (e.g., prescription drugs, , paramedical coverage, out-of-province emergency)
• vision care
• dental insurance
• life insurance
• paid sick days
• short-term disability insurance
• long-term disability insurance
• retirement/pension plans (separate from Canada Pension Plan)
• educational assistance
• wellness programs
• employee assistance programs
• flexible work arrangements

Setting up your benefits package

Do your research when developing a benefits package. A suitable and affordable plan must meet the unique needs of your organization and employees. Before making any decisions, investigate the following resources:

• insurance brokers that specialize in small groups
• insurance agencies
• boards of trade/chambers of commerce
• professional and trade associations

Containing costs

In general, the cost of employer-sponsored benefits is regularly estimated to add at least 15% to a company’s total compensation costs. To contain costs, many employers implement some or all of the following strategies:

• sharing the cost of premiums between the company and employee
• annual and/or dispensing fee deductibles
• yearly or lifetime maximums
• coinsurance—the ratio of coverage shared between the insurer and the insurance company for covered benefits

References:

Butteriss, M. (1999). Help Wanted: The Complete Guide to Human Resources for Canadian Entrepreneurs. Toronto: John Wiley & Sons.

Tags: benefits, compensation, retention