All Employee Benefits: Definition, Examples, and Best Practices
All Recognition and Rewards

Employee Benefits: Definition, Examples, and Best Practices

Author: Ravijojla Novakovic Last updated: July 31, 2020 Reading time: 15 minutes

Employee benefits are important to your present and future employees. Find out what the best perks to implement in your company are.

Employee benefits are offered together with salary as a company’s compensation package. Often, these benefits provide employees with necessary goods or services that make their lives easier and better. 

In this article, we will explain what employee benefits are and present a list of the most popular employee benefits. Furthermore, we will outline the best practices for implementing an employee benefits program in your company. 

Before we start, get our Employee Recognition Playbook and learn how to complement your employee benefits program with an effective recognition program and maximize your results

What Is the Definition of Employee Benefits?

Employee benefits are non-wage compensations that are provided to employees in addition to their salaries. They are also sometimes called employee perks

The purpose of employee benefits is to make the work more attractive and rewarding, therefore directly improving employee retention. Employee benefits are given on an individual basis and depend on employees’ performance, seniority, or other factors. 

For employees, benefits sometimes define the attractiveness of an employer. Sometimes, employee perks are more important to employees than the competitive compensation package itself, because they can make up for commodities more important than money to some, like time.

This employee benefits definition could be challenged since some other benefit plans would also include monetary incentives like employee bonuses in the description of employee benefits.

Top 3 Most Desirable Employee Benefits 

As you would expect, some employee benefits are more popular than others. These employee benefits are popular either because they represent being taken care of – like insurance – or because they represent something employees cannot buy with the money they get as compensation for their work. 

Take a look at the benefits that employees want the most. 

1. Health insurance 

The most desired employee benefit is also the most expensive one. According to KFF’s 2023 Employer Health Benefits Survey, the average annual premium for employer-sponsored health insurance in 2023 is $8,435 for single coverage and $23,968 for family coverage. Although it is expensive, health insurance is also becoming a part of the norm. The Bureau of Labor Statistics report shows that 90% of employees in large and mid-sized private businesses are offered medical benefits. 

It is obvious that employees are putting health first on their list of priorities. However, it is useful to know that employers can also offer a variety of employee well-being benefits to their employees, which successfully decreases the chances of developing chronic diseases among employees. 

2. Flexible working hours 

Remote working options are very high on the list of desired employee perks. Since the COVID-19 pandemic, employers have been forced to enable employees to work from home. However, employees might not have had the best experience working from home during a pandemic, especially if they did not have a dedicated workplace, comfortable chairs, or someone to care for their children. 

Nevertheless, the pertaining myths of lower productivity and slacking when working remotely are now busted. Flexible working hours have numerous benefits, with better work-life balance and cutting time spent on commuting at the very top of the list. 

3. Paid time off 

Unlimited vacation time or more paid time off is also one of the most popular employee perks out there. It makes perfect sense: time is one commodity you cannot buy with money. Besides, employees are becoming more aware of how much they need a vacation to de-stress from work. 

US employees are known for taking fewer vacation days and paid holidays than their colleagues in other developed countries. According to labor statistics alone, 85% of all employees in US received paid vacation days in 2017, averaging 10 days of paid time off.

Most popular employee benefits

15 Examples of Employee Benefits 

There are many employee benefits that companies can include in their portfolio. However, not all of these benefits will be attractive to all your candidates or employees. 

Before developing your employee benefits program, try to assess your employees’ preferences and consider the fact that half of the world’s workforce is already Millennials. They might prefer benefits that allow them more freedom, like more vacation days or student loan repayment assistance. 

One of the most important aspects of a workplace, in Millennials’ opinion, are opportunities for career advancement. Employee development, or whether an employer supports promoting from within and allows additional education, is what makes a company an attractive employer. 

1. Student loan assistance 

Assisting your employees with repayment of their student loans could put your company right at the top of your candidates’ list. With student loans being a big problem for young generations who may not know all the financial options they have, assisting with repayment or providing financial counseling to develop a student loan repayment plan is a great employee benefit to offer. 

2. Sick leave 

During the COVID-19 outbreak, we learned a lot about how viral diseases spread. Therefore, allowing your employees to take paid sick leave enables them to recuperate and return to work when they are healthy while minimizing the chances of infecting your other employees. 

3. Retirement plan 

A retirement plan is a great employee perk to offer, especially since many specialists you will be looking for are in their late 30s and 40s. By that age, they have probably realized how important a good retirement plan can be.  

4. Employee wellbeing program 

In recent years, employee benefits have leaned towards the health and wellbeing of employees. This is not surprising since job seekers and employees realize the importance of their financial security and mental and physical health in their everyday lives.

An employee wellbeing program can also help your employees prevent the development of some diseases and diminish some side effects of their sedentary lifestyle. Also, it has proven to be cost-effective for employers because preventing diseases turns out to be cheaper than treating already-developed illnesses. 

Read our full report on employee wellbeing, its importance, and best practices. 

5. Salary increase 

A nice way to ensure your employees’ salaries will increase is to offer it in your employee benefits package. In it, you can mention that salaries are revised annually and increased according to employees’ performance based on achieving previously set goals. 

6. Bonuses 

Bonuses are a very attractive employee benefit, but you should be careful to tie this employee incentive to both individual and team achievements. That way, you will be ensuring that you are motivating your employees to act as a part of the team as well as on their own. 

Find out what are the other good ways to motivate your employees. 

7. Profit sharing 

Profit sharing is a monetary employee benefit that is not that common among SMEs or enterprise companies but is present in small businesses and startups. The profit share motivates employees to work harder because their effort could be awarded with a significant monetary prize. 

This also gives employees a sense of responsibility and is a good way to boost team spirit in small, aspiring teams. 

8. Daycare  

Offering daycare solutions is probably one of the most important employee benefits for parents. In fact, women are often the ones who drop out of work during their children’s early years because they cannot afford daycare. Moreover, it is alarming that in 2016, 2 million parents made career sacrifices due to problems with childcare in the US. 

9. Paid parental leave 

Another employee perk that is more popular among women, paid parental leave is considered to be one of the most essential benefits a parent can get. Sadly, US companies are miles behind their European counterparts when it comes to providing paid parental leave. 

Statistics show that Germany, Japan, Sweden, and other countries offer more than 30 weeks of paid maternity leave, while the US offers only 2.8 weeks of paid maternity leave.  

Employers, take note: here is your opportunity to differentiate yourself on the market! Include paid paternal leave and daycare services in your employee benefits to attract young professionals who are starting a family to your company. 

10. Lunch at work 

Some employees might really be attracted to this kind of employee benefit. Providing your employees with healthy meals for lunch means they do not have to plan and cook their meals in advance, and they can have a delicious lunch without going outside the office. Plus, you will be directly taking care of your employees’ health. 

11. Office yoga 

Another employee perk that befalls into the wellbeing category is office yoga. Your employees might not know all the benefits of yoga, such as relieving stress or improving physical endurance. Therefore, try offering this useful perk to your compensation package in order to help your employees deal with stress. 

12. Scholarship program for employees’ children 

Scholarships are a great way to attract candidates to a company because every parent wants to secure their child’s future. This is yet another financial employee benefit you might consider including in your company’s perks portfolio. 

13. Vacation reimbursement 

It may seem expensive, but offering vacation reimbursement might not cost you as much as you think. Most of this expense is deductible, so you can easily attract young travel enthusiasts to your company. It is interesting that 57% of companies have a policy in place for employees aged 20-30 to extend business trips with vacation time. 

14. Retirement benefits

Retirement benefits are a cornerstone in fostering financial security and stability for employees. They provide a safety net for individuals transitioning from their active working years to retirement. Importantly, these provisions offer employees a means to accumulate wealth over time, ensuring they can maintain a comfortable standard of living during their non-working years. Beyond mere financial planning considerations, retirement benefits contribute significantly to employee satisfaction, morale, and loyalty.

Here are the most common types of retirement benefits:

  • Pension Plans: Traditional defined benefit pension plans provide retirees with a fixed, regular payment based on factors such as salary and years of service.
  • 401(k) Plans: Employer-sponsored retirement savings plans where employees can contribute a portion of their salary on a pre-tax basis, often with employer-matching contributions.
  • 403(b) Plans: Similar to 401(k) plans but designed for employees of non-profit organizations, including schools and hospitals.
  • Profit-Sharing Plans: Employers contribute a percentage of the company’s profits to a retirement plan distributed among eligible employees.
  • Employee Stock Ownership Plans (ESOP): Employees receive shares of company stock as part of their retirement benefits, aligning their financial interests with the company’s performance.
  • Retirement Healthcare Benefits: Some employers extend healthcare coverage into retirement, helping retirees manage medical expenses.

15. Employee Assistance Programs

Employee Assistance Programs (EAPs) are employer-sponsored initiatives designed to support employees in managing various aspects of their personal and professional lives.

EAPs contribute to overall job satisfaction, motivate employees, and are seen as strong additions to employees’ benefit plans. When a company offers a personalized employee assistance program, it shows the organization has a mature conception of employee benefits and its overall employee experience. It’s important to note that certain employee benefits are treated as confidential information, especially if it’s regarding an employee’s marital status, sensitive health information, or their disability status.

The most common employee assistance programs are:

Legal Assistance: Employees can access legal consultations through EAPs for guidance on personal legal matters such as family law issues, wills, and other non-work-related legal concerns.

Financial Counseling: EAPs may offer financial counseling services to help employees manage personal financial challenges, budgeting, debt, and other money-related issues. This assistance program is particularly beneficial to employees who recently finished university and need help with their taxable income, tax deductions on financial rewards, and other financial planning.

Crisis Intervention: In the event of a workplace crisis or traumatic incident, EAPs can provide critical incident stress debriefing and support to help employees cope with the emotional impact. This benefit also includes additional time off needed to recover.

Counseling Services: EAPs provide confidential counseling services to employees facing challenges such as stress, anxiety, depression, substance abuse, or relationship issues. This counseling is typically short-term and aims to assist employees in managing and resolving their concerns.

Domestic partner benefits. Some employers offer benefits to unmarried domestic partners. Requirements to qualify vary from simply signing a form to showing proof of domestic partnership or financial interdependence, but the goal is to offer the same benefits to married employees and support a culture of equality. Some examples would include medical insurance, dental insurance, or short-term disability insurance for unmarried partners of employees.

It’s not hard to imagine a situation where certain benefits are used to retain talented employees. For instance, if you had an employee who used to be productive in their role but had difficulties, giving them discretionary benefits

How To Design and Launch an Employee Benefits Program? 

Designing and launching an attractive and successful employee benefits program is a comprehensive task that often befalls HR Professionals. However, by thinking it through, you might make your employee benefits program very attractive to potential employees and set your company apart in a competitive, candidate-driven market, as well as improve your employee turnover rates. 

Here is an outline of steps you should take in order to create a competitive employee benefits program. 

1. Identify the company’s goals 

By having a clear set of objectives in mind, you will always know how to justify offering specific employee perks to your executives. Also, consider identifying the age group you want to attract and retain in your company. Does your company want to stand out in the labor market? Is attracting Millennials one of your organization’s goals? 

2. Determine your budget 

As always, before you start any serious work, you must communicate with your executives and other key players, which will help you determine your budget for employee benefits. 

3. Research your state’s labor law 

You must ensure compliance with your state and national laws. However, you might find some useful information on tax deductions for some financial benefits, and it may significantly influence your decision on the final employee benefits package. 

4. Ask for your employees’ opinions on the matter 

As one of your goals could be to improve employee retention rates, ask your employees which benefits they are mostly interested in. It will give you a sense of your workforce’s immediate needs and some nice-to-have perks you might include. 

5. Create a basic employee benefits package 

After researching and identifying your goals and budget, it is time to design a basic employee benefits package that you will offer to all of your current and future employees. As you’ve seen previously in this article, health insurance, paid time off, and flexible working hours are the most popular employee perks right now, so try to include all of them in your company’s basic portfolio. 

6. Add optional benefits package 

On top of your basic employee benefits package, create an optional package. For example, offer your employees one additional financial benefit of their choice. That way, they can either choose student loan repayment, retirement plan or another benefit without financially burdening your company. 

7. Communicate new benefits to your employees 

It is very important that you let your employees know about their new rights and obligations related to employee benefits. In the end, the new benefits announcement makes for great news you will be happy to deliver. 

8. Designate an employee benefits info corner 

If you want your employee benefits to be used and your employees to make the most of them, designate a person in charge of them. Also, it would be great if you could create an online guide or website with all the forms and procedural information on how to get to certain benefits. 

9. Advertise your employee benefits 

Tell the world! Use your newly designed employee benefits program to attract new, high-quality employees. In other words, use this substantial content for your employer branding. Mention your employee perks in every job ad you create, or make a PR announcement, spread it on the company’s social media and your career page.  

10. Evaluate your benefits on an annual basis 

In order for your employee benefits package to stay relevant, it must be regularly updated. Therefore, evaluate your benefits package on an annual basis. Change the procedures or add new benefits your employees would like to have. 

Making Recognition a Part of Your Benefits Program 

Benefits packages are seen as a means to attract and retain employees, reward employee loyalty, and create tangible employer contributions. They lower healthcare costs, influence employee happiness, and encourage employees to do their best.

As you create your employee benefits program, think of employee recognition, too. Employee recognition has multiple benefits, such as improving productivity, retention, and employee morale. Make sure to let your employees know that, apart from perks, they can also win monetary or non-monetary awards based on their performance. 

When organizations have a way of rewarding employees with benefits and other monetary and non-monetary rewards, workers stay motivated and harbor strong feelings about their company. Introducing more indirect compensation, matching employee contributions, and exceeding their expectations is always a great idea.

Various Types of Incentives

Bi Wordwide researched the impact of different incentive types and found that diversifying your employee incentive portfolio with cash, gift cards, and non-momentary incentives increased sales volume and customer satisfaction.

At the end of the day, holistic benefits packages will win the day. When you combine them with streamlined employee recognition and rewards, you have a formula for winning company culture.💡 Get our employee appreciation letter templates and employee appreciation quotes to recognize your employees’ work quickly and efficiently.

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