What are Employee Benefits? Why are they important?

What are Employee Benefits?

Employee benefits are additional compensations employers provide employees above and beyond their basic salary or wages.

There are several forms through which employee benefits can find expression.

Health insurance
Retirement savings plans
Paid time off
Life and disability insurance
Employee assistance programs
Tuition assistance
Child care

How Much Do Benefits Cost Per Employee?

Employee benefits are either very cheap or very expensive, depending on the type of benefit, the employer’s size, and the industry. They usually range from 20% to 40% of employees’ wages or salaries.

Why are Employee Benefits Important?

Employee benefits are important for several reasons:

Attracting and retaining talent: Providing an employer with a comprehensive benefits package helps them to attract and retain strong employees. A good benefits package will help prevent job seekers from choosing a competitor with more power to lure them away.
Employee satisfaction and well-being: Employee benefits can increase your employees’ general happiness, which can, in turn, boost morale and productivity.
Legal compliance: Many employee benefits are required by law, such as Social Security tax and Medicare taxes, workers’ compensation insurance, and unemployment insurance.
Tax advantages: Certain employee benefits, such as retirement savings plans or health savings accounts, have tax benefits for you and the employees.
Corporate image and reputation: Employee benefits can improve an employer’s image and corporate reputation.