Employees’ Compensation Benefits


The employee benefits and privileges entail a variety of cash, indirect or non-cash compensation customarily provided to the workers besides the regular salaries. The primary aim of this type of payback is to ensure that they have increased the economic security of various staff members and, most notably, improve employee retention in the organizations. In addition, they offer personnel together with their family’s premium medical care and retirement income. They also play a critical role in mitigating economic hardships arising from disability and loss of work. Nevertheless, they also cover for the liabilities arising from workplace injuries and illness.

The legally required benefits that employers must provide include health insurance, vacation, retirements savings plan, long-term disability, and even overtime pay. Therefore, various managers should always review their obligations and mandate under the state and local laws, which may also provide additional mandated benefits. Thus, this paper presents a critical discussion, giving a general overview and importance of employee benefits; it gives the different types of compensation benefits and ends with a conclusion.

General Overview and Importance of Employee Benefits

Employee benefits are significant as they are responsible for improving countless employees’ lives and their families. They also impact the financial and administrative sections of a business entity positively. In most cases, the majority of the companies tend to operate in an environment where an educated workforce has come to anticipate more comprehensive or premium benefits programs (Budnick et al., 2020). However, the lack of a specific program has substantial consequences as it can paralyze its ability to improve its retention programs and attract more customers. Over the recent years, most organizations have increased the offering of a wide range of nontraditional and traditional benefits.

Types of Compensation Benefits

Employee benefits are primarily divided into mandated bonuses, healthcare and welfare privileges, retirement and pension gains, and, most importantly, fringe benefits. The mandated bonuses entail social security, unemployment insurance, and workers’ compensation (Gilani & Cunningham, 2017). Nevertheless, a few states also tend to mandate short-term disability into this category. The social security act came up with laws and regulations whose objectives and goals were to provide and cater for the material and the basic needs of individuals and their families.

The act is also responsible for protecting aged individuals and disabled persons against the illness expenses that are likely to exhaust their little savings. Moreover, it plays a pivotal role in keeping families together and giving children a platform for growing and developing in a more secure and healthier environment. The finances of the social security initiative arise from the contributions made by the employers and self-employed individuals into an insurance scheme that offers income during the retirement period.

The worker’s compensation is regarded as an employer-financed initiative responsible for compensating employees who have been injured because of work-related issues. Every state in the US has implemented various compensation laws that facilitate the protection of employees against income loss and burdensome medical expenses arising from workplace accidents and injuries (Yoopetch et al., 2021).

The majority of the states have this law mandatory except Texas and New Jersey, whereby it is voluntary. In the US, most organizational compensation plans provide detailed coverage of medical fees associated with the injuries incurred directly from work. An example is that it is the role of the construction employee to seek compensation if the scaffolding accidentally falls on his head.

Healthcare and welfare privileges are regarded as the most critical and well-known employee benefits. Although the federal law does not mandate private organizations and employers to provide health care benefits, most organizations have decided to offer voluntary bonuses. Nonetheless, the organizations and managers remain the decision-makers on whether to offer healthcare benefits or not because there are advantages and shortcomings (Yoopetch et al., 2021). Therefore, the employers offering health advantages have a higher probability of attracting and retaining employees who make the organization more successful. In addition, the healthcare benefits are associated with tax gain privileges.

The employees are also entitled to paid vacation benefits from their employers. The process is vital since it enables company workers to determine when to take a break. It also enables the staff members to reduce unscheduled or unplanned absences. In addition, this benefit offers a competitive advantage, increases autonomy, lowers administrative costs, gives employees higher morale, and most importantly, improves employee retention (Gilani & Cunningham, 2017). Most organizations also offer overt time pay to employees who work overtime. Overtime work enables the organization to improve its productivity, boost employee careers, and generate more money. Furthermore, the employees are entitled to training assistance to increase and improve productivity and enhance work uniformity.


It is clear that the employee benefits are vital as they play a crucial role in influencing and maintaining talented workers that will ensure the firm achieves its set of goals and objectives. They also ensure that the employees receive the best healthcare services if they fall ill. In addition, they help the employees cater to the healthcare bills, encourage them to save for retirement, and, most importantly, encourage them to take a break when needed.


Budnick, C. J., Rogers, A. P., & Barber, L. K. (2020). The fear of missing out at work: Examining costs and benefits to employee health and motivation. Computers in Human Behavior, 104, 1-48. Web.

Gilani, H., & Cunningham, L. (2017). Employer branding and its influence on employee retention: A literature review. The Marketing Review, 17(2), 239-256. Web.

Yoopetch, C., Nimsai, S., & Kongarchapatara, B. (2021). The effects of employee learning, knowledge, benefits, and satisfaction on employee performance and career growth in the hospitality industry. Sustainability, 13(8), 1-14. Web.

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BusinessEssay. 2022. "Employees' Compensation Benefits." December 15, 2022. https://business-essay.com/employees-compensation-benefits/.

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BusinessEssay. "Employees' Compensation Benefits." December 15, 2022. https://business-essay.com/employees-compensation-benefits/.