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What Are The 4 Major Types Of Employee Benefits

Why Employee Benefits Are Important

4 Types of Employee Benefits | AIHR Learning Bite

When you ask what are the four major types of employee benefits, it is important to understand who uses these benefits and how they are used. Employee benefits are used by employees to attract and retain top talent. They can be used as a negotiating tactic to help you encourage experienced and educated professionals to work for your company rather than another company, and they can keep these individuals happier with their positions over the years.

Employees use these benefits for a wide range of purposes. For example, paid time off improves an individuals quality of life while also making it easier to manage finances when they need or want to take time off of work. Insurance helps individuals navigate through unexpected events and issues, such as a serious health issue or a disability. Retirement plans help workers prepare for the future when they no longer want to work or are no longer able to work. You can see why a great benefits plan is so important to workers.

Types Of Employee Benefits Every Hr Practitioner Should Know

In its 2019 Employee Happiness Index, HR tech company Benify distinguishes 4 categories of employee benefits:

This includes working hours & leave, skills development, food & beverage, and employee clubs, activities & gifts.

Working hours & leaveThink of flextime here for instance. Flextime gives your employees the possibility to decide about their working hours and/or the location they want to work from. Other examples include additional holidays and, one of the other benefits employees value most, paid parental leave.

Skills developmentRapid technological developments and the fact that people change jobs more often make skills development more important too. Skills development, however, is not just an important benefit for employees, its also essential for organizations if they want to remain competitive.

Food & BeverageWe already mentioned the meal vouchers in France. Other benefits that fall into this category include free lunches, fruit, and coffee. At AIHR, we get to enjoy a free lunch every day and its something thats very much appreciated by the team. As an added bonus, free lunch and fruit are also a good way to promote healthy eating habits at work.

Employee clubs, activities & giftsThere are heaps of possibilities when it comes to this category of the employee benefits package: knitting clubs, running groups, game nights, Secret Santas, anniversary gifts, you name it.

Types Of Employee Benefits To Look For In A New Job

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Most employers offer employee benefits packages, which can include basic health coverage and retirement planning. Employers may also offer a variety of other perks, depending on the nature of their companies. It can be worthwhile to find out what kind of benefits are available, especially if you’re seeking a new position.

In this article, we discuss the basic types of employee benefits and list additional perks that may interest you.

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Employee Compensation & Hr Benefits

So are employee benefits really necessary?

For employers and HR managers alike, company perks are a fantastic recruitment and retention tool, if used correctly.

Not only do employee benefit programs help attract top talent, but they also help to secure employees within the company and keep them loyal.

Furthermore, it shows workers that you, as their employer, share an investment in their overall health and their future.

Whats more, by actively encouraging your workers to get involved in perks, such as wellness programs, employees can improve their health and wellbeing. This could result in reduced healthcare costs for your organization.

Workers with fewer health risks mean fewer sick days, fewer trips to the doctor, and more time spent at work.

With employee compensation, everyone, from employer to HR manager to employee is a winner!

What Are The 4 Main Types Of Employee Benefits

Do you want your staff to have a Happy Retirement?

To set your Ohio business apart in the competitive employee marketplace, it is paramount that you look into various types of employee benefits. Particularly for small businesses, investing in an attractive employee benefits package is a must. Having benefits will not only help your business with recruiting, but it will assist with retaining your talented workers.

Additionally, employee benefits can improve employee health and morale while also giving your business certain tax advantages. To help you determine the right employee benefits that best fit your business and industry, refer to the four main types of employee benefits for inspiration.

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Prescription And Pharmacy Benefits

Many health coverage plans offer prescription benefits, such as lower co-pays for medicines and even no-cost prescriptions. Many pharmacy benefits contain a plan formulary along with tiered pricing for prescription drugs. The plan formulary lists the available medications under your specific prescription plan and often includes medications necessary for chronic and acute diseases.

Additionally, most prescription plans offer three different tiers of medication prices, with generic medications in the lowest cost options. The co-pay for certain prescription drugs can vary, depending on the tier on which the medicine is listed.

What Are The Two Types Of Employee Welfare

In most cases, employee welfare comes in monetary form, but it doesnt always bend that way. Other forms of employee welfare include housing, health insurance, stipends, transportation and provision of food. An employer may also cater for employees welfare by monitoring their working conditions.

What is the 4 types of benefits?

What are 5 types of benefits?

Here is a list of the top five types of benefits employers can offer to employees each can be a valuable tool for recruiting and retaining employees.

  • 1) Health Benefits.

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Communicate The Benefits Plan To Employees

Once the benefits package is established, you will need to communicate it to your employees. Employers are legally obligated to communicate details of provided benefits plans. However, how you do this is more important than many employers may think.

Your employees understanding of the new benefits is critical to securing their approval. If your employees do not approve, your efforts may lead to more problems than before – even if youve formulated a perfect benefits plan. Failing to implement an effective communication plan may have negative effects on recruiting, employee retention, and overall workforce morale.


If you chose to use your employees input in designing the new benefits plan, let them know that their input influenced the final product. They will be more open to the changes and appreciate you valuing their input!

A great benefits communication plan should target these objectives:

  • Create awareness and appreciation of the new benefits plan, and how it improves employee financial security.
  • Demonstrate a high-level understanding of the benefits offered, and develop similar levels of understanding for your employees.

What Are The Four Major Types Of Employee Benefits

4 Types of Employee Benefits Every HR Professional Should Know [UPDATE]

May 13, 2019

Most employers want to offer benefits to their employees, but do not know which to choose. Budget, number of employees, and similar factors can also play a role in your decision. By building an attractive employee benefits package, you can attract and retain quality employees, improve employee health and morale, and gain certain tax advantages.


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Retirement Benefits And 401k Plans

Retirement plans make the benefits package highly appealing to employees. According to Towers Watson, retirement benefits are apowerful attraction and retention factor. Improving the quality of retirement plans reduces employee turnover and increases employee satisfaction rates.

Employers are not required to offer retirement benefits. However, about77% of employees in private industries participate in employer-provided retirement benefits. 401k plans can offer significant tax advantages for the participants, and possibly company matches. Also, management fees vary widely from plan to plan which allows benefits administrators to develop the most cost-effective, best-managed plans.

Defined Benefit Plans Or Pension Plans

In this case, all investment-related risks are borne by the employer. Under this, the benefit amount providing to the employees is predefine. The amount is based on the salary drawn by the employee in his previous years as well as the total number of experience he holds.

Facts & Figures:

1. Industries consisting of a high level of unionization offer the Defined Benefit Plans. These sectors include Manufacturing Sector, Transportation Sector, and also, Construction Sector, etc.

2. Overall, 64% of the employees in the company can avail the Defined Contribution Plans.

3. The list of employees who can avail of the Defined Benefit Plans is generally lesser in only 15.6% on average.

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Lunch And Healthy Snacks

It is now common for companies to offer longer lunches than before.

Whereas in the past, it was typical to only offer 30 mins for a speedy lunch, many businesses are now offering up to 90 minutes. This is so employees can have more time for a relaxed lunch, and if the employees wish, time to do sport.

Whats more, companies are now offering free healthy snacks, such as fruit, in their offices. This is an attempt to keep employees happy and healthy.

Family And Medical Leave

Who Has Job Benefits?

As mentioned above, employers with 50+ full-time employees must offer Family and Medical Leave to any qualifying employee.

The FMLA dictates that any eligible employee is allowed to take up to 12 workweeks of unpaid leave during any 12-month period to care for a new child, a sick family member, or any family-related emergency without their employment being put at risk.

Employees are eligible for FMLA if they meet the following requirements:

  • An employee must have worked for the employer for at least 12 months
  • The employee must have worked at least 1,250 hours over the past 12 months
  • The employee must work for a company with at least 50 employees

State and local laws may dictate that employers require additional time for employees that qualify for FMLA. You should consult your local employment laws to ensure your HR department is compliant with updated FMLA laws.

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Who Gets Employee Benefits

Employee benefits will depend entirely on the company at hand, but there are laws regulating specific benefits. For example, most employers with at least 50 employees are required by law to provide healthcare plans. In these cases, all full-time employees would be eligible for healthcare benefits.

Another variable when looking at employee benefits is whether or not the employee is working for a private company or the government. For example, government workers are often granted at least ten paid federal holidays a year, and depending on the job can even be eligible for certain life insurance policies. Private companies are not guaranteed these same perks, but often have benefits seen outside of federal jobs .

Here Are The Top 10 Employee Benefits Worldwide:

  • Private Health Care Plan
  • Retirement / Pension plans
  • Work From Home and/or flexible hours
  • Food and snacks
  • Bonuses / Awards / Gifts
  • Company equipment

Note that the most popular benefits vary per location and there are also benefits that are exclusive to certain areas. For example, Australians can receive novated leasing as a benefit, enabling them to lease cars with their employer taking on the contracts obligations.

In the U.S., where paid parental leave isnt federally mandated by law like in other countries , time off for mothers and fathers is a popular company-offered benefit.

In four English-speaking countries, employee benefits may include:

Employee Discounts

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What Are The Example Of Benefits

One illustration of a benefit is the sum of money paid to you by your insurance provider in the event that your home is destroyed in a fire. A meal that is held with the intention of raising money for the Susan G. Komen foundation is an example of a benefit. That which is beneficial aid of any kind benefit gain financial support gain privilege profit.

Social Security And Medicare Contributions

Employee benefit programs: A breakdown of what workers should know about health and retirement plans

Most employers dont consider social security and medicare contributions to be employee benefits, but they are. These are long-term benefits that both employees and employers pay into, with the knowledge that the employee will have access to them in the future.

The OASDI and SSI Program Rates & Limits for 2021 published by the U.S. Social Security Administration

  • Employers are required to withhold Social Security tax at 6.2%, equal to or above the maximum wage base limit of 142,800.
  • Once you hit your max contributions on your wage base limit, social security stops being deducted from your paycheck.
  • Individuals who are self-employed pay tax at 12.4%. The Medicare tax is set at 2.9% .

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Learn More About Employee Benefits

Business owners often want to provide their workers with an attractive employee benefits package. However, budget restrictions often make it difficult to provide employees with every type of benefit. Therefore, it is important to choose wisely when creating a benefits package.

Medical, life, disability, and retirement are the most sought-after benefit options by talented employees. By offering these types of benefits to your staff, you will likely find it is easier to recruit talented employees and retain current workers.

For more information about types of employee benefits or to start building your employee benefits package, contact the employee benefits brokers at BBG Broker.

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Types Of Employee Benefits

REVIEWED BY:Charlette Beasley

Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.

Jennifer Hartman is an HR Specialist and staff writer for Fit Small Business, with over 15 years of experience in accounting, payroll, and human resources.

This article is part of a larger series on Employee Benefits.

Employee benefits, some of which are required by law, are an essential part of your personnel budget and can have a direct impact on hiring and retaining top talent. Knowing what the four major types of employee benefits are can help you choose the right ones for your company, depending on your industry, employee needs, and budget.

If you already know the benefits you want to provide but need help creating a detailed program, then check out our guide on How to Set Up an Employee Benefits Program.

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Family And Medical Leave Act Protections

The Family and Medical Leave Act entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. A covered employer is a private-sector employer with 50 or more employees, and all public employers. The FMLA provides eligible employees with up to 12 weeks of job-protected, unpaid leave during a 12-month period for qualifying family and medical reasons, and to handle qualifying exigencies, as well as up to 26 workweeks of unpaid, job-protected leave in a single 12-month period under the Military Caregiver Leave. Qualifying reasons would include the birth of a child, dealing with a serious or chronic personal illness, or caring for an immediate family member with a serious or chronic illness.

Note: In addition to benefits under the FMLA, some states and local jurisdictions require paid/unpaid family leave and/or paid/unpaid sick and safe leave. Employers must review their obligations under applicable state and local laws.

Highlights And Results Of The Findings

Employee Recruitment and Retention: 4 Engagement Tips

1. With the growing age, the older generations are more cornered to have a beneficial pension scheme. Also, it makes sense as the newbies or graduate teenagers joining the organization wont be much worried about their pension plans that they can avail themselves of after 40 to 45 years.

2. Regardless of age, the common thing that motivates all the generations is flexible working hours and paid leaves.

3. The topmost benefits that make employees of all generations focus on their work without any distraction from the outer world are good healthcare as well as wellness benefits.

4. The youngest generation of all, I.e., Generation Z, has given priority to financial wellness. With the increase in hiring, it will become one of the most critical employee benefits.

5. The foremost important thing that came up for the younger generation is that they are more impressed and influenced by the skill development programs. Also, it is evident as young people are more tech-savvy. They are always curious to learn new skills and abilities.

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Employee Benefit #15 Home Services

Work-life balance is endangered as remote work interferes with private time. Make it easier for them by providing them with free services, such as grocery delivery, cleaning, or laundry. According to Maid Sailors NYC Office Cleaning “There’s sudden growth for companies availing personal cleaning services for their employees working at home. Many organizations believe that providing employees with a hand to have a clean workspace at home can help them be more productive and efficient.”

Health Insurance Is One Of The Most Important Employee Benefits

Health insurance is one of the most important employee benefits you can offer to your employees. This is especially true if you have a small business and youre not able to offer a retirement plan. Even if youre small, you should offer health insurance because its the right thing to do. By offering health insurance, you are not just paying for the claim, but youre also providing other benefits to your employees, such as medical and prescription coverage.

Employee benefits not only cover your employees health coverage, but they also could affect your own bottom line. Some benefits may cost you nothing, but others could cost you a lot of money.

If you dont want employees to be wary of your health insurance plan, set it up so they only receive the benefits they need. This could mean your employees only receive preventive care, or they receive no choice but to pay for a certain visit. You can set up this type of benefit in your health insurance plan or in a separate supplemental health insurance policy.

If you have a large business and you dont have the resources to offer supplemental health insurance, make sure you provide health insurance for everyone who needs it.

The workplace isnt just a place to work. If you want your employees to feel appreciated and respected at work, then its important to make sure your company is providing them with benefits. Employees depend on you to help them manage their time and work-life balance.

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