Payroll benefits are the various compensation and perks provided to employees in addition to their regular pay. These benefits include health insurance, retirement plans, paid time off, and more. Payroll benefits are funded through a combination of employer contributions and employee deductions. Some payroll benefits, like unemployment insurance, are required by law, while others, like car and WFH (working from home) allowances, are offered by employers to attract and retain top talent.
Which payroll benefits are required by law?
The laws regarding payroll benefits vary from country to country. That being said, some payroll benefits are required by law in many countries. These benefits include:
- Health insurance: a number of countries have laws requiring employers to provide health insurance coverage to their employees through a national health insurance system or contribute to the cost of their private insurance.
- Retirement plans: in several countries, such as France, Germany, Australia, and Japan, employers are required to contribute to national pension plans or retirement savings plans as a benefit for their employees. The purpose of these retirement plans is to ensure that employees have a source of income after retirement.
- Unemployment insurance: a common benefit many countries offer to provide financial support to workers who have lost their jobs. Unemployment insurance is subject to specific eligibility requirements that vary from country to country.
- Paid time off: also known as vacation time or annual leave, this benefit allows employees to take time off from work and receive their regular pay while they are away. Paid time off is mandated by law in many countries. For example, in the European Union, employees are entitled to a minimum of 20 days of paid vacation per year, in addition to national holidays.
- Parental leave: a type of leave taken by parents following the birth or adoption of a child. Parental leave is often available to both mothers (also known as maternity leave) and fathers and may be taken at once or in increments over an extended period. Some countries have laws that entitle parents to a certain amount of paid or unpaid parental leave, while in other countries, it is up to employers to decide whether to offer this benefit.
Which payroll benefits are commonly provided by employers voluntarily?
Common examples of benefits that may be offered voluntarily by employers include:
- Life insurance: Some employers offer life insurance policies to their employees as a benefit. These policies provide a financial payout to the employee’s beneficiaries in the event of the employee’s death.
- Flexible work arrangements: alternative work arrangements that allow employees to have some flexibility in when, where, and how they work.
- Employee assistance programs: these programs offer support and resources to employees who may be facing personal or professional challenges. They may include counselling services, financial planning resources, and legal assistance.
- Professional development opportunities: benefits that help employees gain new skills or advance their careers, such as training programs, attendance in conferences and seminars, or tuition reimbursement for education and degree programs.