Benefits are part of the way that employees are compensated for their labor for a company. Employee benefits are often administered by the Human Resources department
and vary greatly between employers. Benefits, sometimes called perks, can vary from simple insurance to sophisticated financial products and legal protections, to niceties like gym memberships, free lunch, and car allowances. Overall, they are an important way that employers retain top talent and contribute greatly to morale, productivity, and job satisfaction.
Employee benefits are forms of compensation or incentives apart from the normal wages or salaries that are provided by a business, often used as recruitment or retention tools within their workforce. The most common form of benefits have traditionally included group insurance plans, retirement plans, investment plans, vacation time (either paid or unpaid) and sick leave. In recent years insurance plans and retirement plans have been reduced or cut by many companies due to the need for cost controls. Other benefits that are not uncommon include company vehicles or a car allowance, daycare, tuition reimbursement and profit sharing.
Often these types of non-monetary forms of compensation are referred to as "perks", and may be given to employees based on performance, tenure with the company or rank. The movie caricature of the "executive washroom" is a typical example of a perk for higher-level employees, although more realistic examples might be company vehicles, lunch allowances, or access to company-owned or company-partnered amenities like golf courses, gyms, etc.
Some benefits will still fall under a taxable status as income, whereas others can be provided pre-tax protection as effective tax shelters for the employee. Examples of this kind of benefit may be a flexible spending account or health insurance benefits. Most employer-provided benefits will be tax-deductible by the employer, affording an even better incentive to provide them for employees. In some cases employers offer a cafeteria-style menu of benefit options from niche-service providers that the employees can choose from, allowing them to opt for the offerings that best fit their situation.
When comparing two jobs within one industry or within two different regions-including countries, it is of paramount importance to assess the total compensation package, including all benefits, and to be prepared for dramatic variations, e.g., between paid-vacation time in Europe and in the U.S.
A 2007 study by the CEPR
(Center for Economic Policy Research) reported that "The United States is the only advanced economy in the world that does not guarantee its workers paid vacation. European countries establish legal rights to at least 20 days of paid vacation per year, with legal requirement of 25 and even 30 or more days in some countries. Australia and New Zealand both require employers to grant at least 20 vacation days per year; Canada and Japan mandate at least 10 paid days off."
Likewise, given their greater resources and revenues, large corporations are much likelier to have substantial benefits packages than small or start-up companies-benefits that can tip the scales when comparing and evaluating such different kinds of companies and their job offers.