Employee Benefits: Definition, Examples and Best Practices  

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

July 31, 2020 By Sara Ana Cemazar Share on Twitter! Share on Facebook! Share on LinkedIn!
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employee benefits

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 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 the effective recognition program and maximize your results. 

employee recognition playbook

Employee Benefits Definition

Employee benefits are non-wage compensations which 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 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 compensation 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 would also include monetary incentives like employee bonuses in the description of employee benefits. However, employee benefits are surely defined by being added on top of base pay.

Top 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 money they get as compensation for their work. 

Take a look at benefits that employees want the most. 

top 3 employee benefits

Health insurance 

The most desired employee benefit is also the most expensive one. Health insurance costs amount to more than $7k on annual basis for single coverage and $20k 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 wellbeing benefits to their employees, which successfully decrease chances of developing chronic diseases among employees. 

Flexible working hours 

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

remote work

Nevertheless, the long 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. 

💡 Find out what are other benefits of remote work here. 

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 vacation to de-stress from work. 

US employees are known for taking less vacation days then their colleagues in other developed countries. According to statistics, 85% of all employees in US have received paid vacation days in 2017, averaging with 10 days of paid time off. 

13 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 the half of world’s workforce are 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 withing and allows additional education, is what makes a company an attractive employer. 

employer branding

Student loan assistance 

Assisting your employees with repayment of their student loan 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. 

Sick leave 

During COVID-19 outbreak, all of us learned a lot about the way the viral diseases spread. Therefore, allowing your employees to take a paid sick leave enables them to recuperate and come back to work when they are healthy, at the same time minimizing the chances of infecting your other employees. 

Retirement plan 

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

Employee wellbeing program 

In recent years, employee benefits are leaning towards health and wellbeing of employees. This is not surprising, since job seekers and employees are realizing the importance of both mental and physical health in their everyday lives. 

employee wellbeing

An employee wellbeing program can also help your employees prevent 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. 

Salary increase 

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

💡 See how you could leverage compensation and benefits to improve your employee experience.


Bonuses are a very attractive employee benefit, but you should be careful to tie this employee incentive to both individual and team achievementsThat 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. 

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. 


Offering daycare solutions is probably one of the most important employee benefits for parents. In fact, women are often the ones that drop out of work during their child’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. 

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. 

As statistics show, Germany, Japan, Sweden and more countries offer more than 30 weeks of paid maternity leave, while US offers only 2.8 weeks of paid maternity leave.  

parental leave stats

💡 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 that are starting a family to your company. 

Lunch at work 

Some employees might really be attracted to this kind of employee benefit. Providing your employees 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. 

Office yoga 

Another employee perks that befalls into 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. 

Scholarship program for employees’ children 

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

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 might be able to attract young travel enthusiasts to your company easily. It is interesting that 57% of companies have a policy in place for employees aged 20-30 to extend business trips with vacation time. 

employee benefits

How to Design and Launch an Employee Benefits Program 

Designing and launching an attractive and successful employee benefits program is a comprehensive tasks 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 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 need to communicate with your executives and other key players that will help you determine the budget you have 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’ opinion on the matter 

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

💡 Use our Employee Survey Solution to find out which benefits your employees really want. 

5. Create basic employee benefits package 

After doing your research 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 of their choice without burdening your company too much financially. 

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 persona in charge of them. Also, it would be great if you could create 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 company’s social media and on 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 annual basisChange the procedures or add new benefits your employees would like to have. 

employee benefits infographics

Making Recognition a Part of Your Benefits Program 

As you create your employee benefits program, think of employee recognition, too. Employee recognition has multiple benefits like 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. 

💡 Get our employee appreciation letter templates and employee appreciation quotes to recognize your employees’ work quickly and efficiently.

Of course, employee appreciation should be given for encouraging other positive behaviors like creativity, teamwork and hard work. Get our Recognition and Rewards Buyer’s Guide to determine which employee recognition solution is a perfect fit for your company’s goals.