EMPLOYEE COMPENSATION AND BENEFITS 11

11 OBJECTIVES Understand Determinants of Employee Compensation Evaluate Traditional and Non-Traditional Benefits Comprehend Performance Related Pay System

11 EXTERNAL FORCES Business Reasons Collective Bargaining Favorable Tax Legislation EMPLOYEE COMPENSATION AND BENEFITS

11 Compensation Structure in India 1.Basic Salary 2.Dearness Allowance (DA) a) Flat Rate b) Graduated Scale c) Index-based DA 3. HRA and CCA EMPLOYEE COMPENSATION AND BENEFITS

11 Types of Employee Benefits 1.Traditional 2.Non-Traditional EMPLOYEE COMPENSATION AND BENEFITS

11 Traditional Types of Employee Benefits Health Insurance. Life Insurance and Retirement Medical insurance Life insurance Dental insurance Optical insurance Accidental death insurance Disability insurance Business travel insurance EMPLOYEE COMPENSATION AND BENEFITS

11 Traditional Types of Employee Benefits EMPLOYEE COMPENSATION AND BENEFITS Annual leave Holidays (national and state) Sick leave Personal leave (birthday, other choice of reason) Emergency leave Compassionate leave (funeral, family illness) Religious observance Community service (voting, jury duty, court witness, volunteer fire department) Education/training Leave without pay Leave of absence (paid or unpaid) Parental (formerly maternity) leave Some leaves are those which are legally required while others are added to attract employees Leave

11 EMPLOYEE COMPENSATION AND BENEFITS Table 11.1 Comparative Analysis CountryLegally required minimum leave Australia 20 work days (4 weeks). 2 weeks can be ‘ sold ’ to employer. Additional Long service leave is also payable. 10 public holidays are payable to employees as well. CanadaDetermined by provincial law, working days depending on province. In addition, 5-10 public holidays depending on province France5 weeks + 2 weeks of reduction of working time Germany4 working weeks Greece20 working days or more depending on the years in the company Hong Kong7 days India1 work day for every 20 days worked (around 12 work days a year) JapanIncluding sick leave: 18 days paid time off; offi cially, fi ve weeks (in reaction to the karoshi – occupational sudden death due to overwork and stress problem). South Korea10 working days. MalaysiaStarts at 8 days for fi rst 2 years employment with an employer. Increases to 12 days for between 2 and 5 years employment and 16 days for 5 or more years. Plus, depending on which state, around 14 public holidays

11 EMPLOYEE COMPENSATION AND BENEFITS Table 11.1 Comparative Analysis CountryLegally required minimum leave MexicoStarts at minimum 6 days for the fi rst year of employment. Increases to 8 days after the second year, to 10 days after the third year, 12 days after the fourth year, and to 14 days from fi fth to ninth year, then with every 5 years increases by two days Pakistan15 working days Russia28 calendar days Singapore14 days (executive and above); 7 days with 1 additional day per year up to a maximum of 14 days (non-executive) South Africa21 consecutive days Switzerland28 calendar days (= 20 work days). Taiwan7 days. United Kingdom 5.6 weeks (28 work days) United StatesNone.

11 EMPLOYEE COMPENSATION AND BENEFITS Table 11.2 Comparative Analysis – Maternity and Paternity Leave Country Paid maternity Paid Paternity Unpaid maternity Unpaid paternity Restrictions leave leave leave leave

11 EMPLOYEE COMPENSATION AND BENEFITS Table 11.2 Comparative Analysis – Maternity and Paternity Leave Country Paid maternity Paid Paternity Unpaid maternity Unpaid paternity Restrictions leave leave leave leave

11 NON-TRADITIONAL EMPLOYEE BENEFITS EMPLOYEE COMPENSATION AND BENEFITS 1. Employee Assistance Programs 2. Employee Stock Option Plans 3. Flexi time 4. Golden Handshake. 5. Overtime 6. Flexible Benefits 7. Day Care. 8. Tuition Reimbursement 9. Membership in Organization 10. Perquisites

11 PERFORMANCE RELATED PAY EMPLOYEE COMPENSATION AND BENEFITS Merit Pay Variable Pay Bonus Milestone Bonus Spot Bonus. Non-cash Bonus Sign on Bonus Retention Bonus Profit Sharing. Piece Work Skill-Based Pay