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The world of work has changed over the years. Changes in technology, skill requirements, overseas employment, immigration and globalization have also changed the nature and type of benefits and compensation given to employees. Employee benefits have gone a long way from being perceived as privileges to necessities because of the stiff competition for labor. Proper hiring and selection of employees must be practised by the organisation. Employees must have a better understanding of all rules and regulations including their rights as employees. When employees are hired to work for the company, a probationary period is given to them. The probationary period provides an opportunity for the employer to evaluate the performance of the employee and his attitude towards his job (Garuth & Handlogten 102). The employee contract can only be terminated when the employee is resigning from the company. When the employee has completed the term of his fixed contract, the contract can be terminated. The employee contract can also be terminated when the employee becomes redundant to the operations of the company.
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Retirement happens in the organisation when an employee makes the decision to formally end his or her career and live on pension from government, savings or any combination of the two. An employee needs to retire when he or she reaches the age of 65. This rule is no longer applicable because of the enactment of the anti-discrimination law. According to the law, employees may decide to continue working beyond the age of 65 provided that they are still capable. When the employee decides to retire, he or she is entitled to pay the accumulated benefits and entitlements such as long-service leaves, holiday pay and superannuation.
In the United Kingdom, another employee benefit added is redundancy pay. Redundancy occurs when an employer will decide that the current job of the employee does not need to be done anymore. It is the job that becomes redundant and not the employee. Redundancy happens whe the job of an employee can be automated or performed by a machine. The operations of the business will slow down because of the low production rate resulting to low sales. Redundancy also happens when the business is in the process of relocation, involved in a merger or takeover and other economic factors. If the job of the employee is found to be redundant, the employee is entitled to redundancy pay provided that certain conditions are met. The notional agreement preserving state awards (NAPSA) or the workplace agreement contains provisions that the employee is entitled to redundancy pay (Workplace Authority 2009). Redundancy pay is given to employees in an organization where there are a minimum of 15 or more members. When the job of the permanent employees is found to be redundant and he has worked for the company for 12 months, he or she is entitled to redundancy pay. If the employer can find the employee another job, the employer will not give the employee redundancy pay. The payments for redundancy differ depending on the provisions contained in the award or agreement. The redundancy payment is based on the work duration of the employee.
The General Employee Entitlements and Redundancy Scheme (GEERS) is a plan provided by government to help employees who have lost their jobs because of redundancy and are waiting for payment. The employees can ask for assistance from GEERS when their employers are unable to pay them because of bankruptcy. GEERS can assist employees claim all unpaid annual and long-service leave. The claims can also include the unpaid wages from the time the employee first performed the job. Employees can also claim under GEERS, a maximum of redundancy payment worth 16 weeks (Workplace Authority 2009).
In the United States, defined contribution plans are most preferred by companies because these provide better funding by defining the costs to the employer with accuracy and great predictability. The employees of the company will also benefit from this type of plan because they will also be able to predict the amount of ttheir contributions. Defined contribution plans also have reduced degree of risks and funding. The defined contribution plans also have unlimited benefits based on the returns on investment. The employees of the company would have more participation and control of their contributions.
The reporting of the defined contribution by accountant of the company will include their assessment of the contribution that the employer will need to make in the plan. It will be recorded as payable in a short term. The company will then pay the contribution collected to the pension plan. This will be recorded as a cash outflow and is deducted from the short-term payable. The significance of this is that the company will not incur a long-term liability of the amount the retired personnel expects because the company has not made such an expense.
The defined benefit plan is a pension plan wherein the employer will make a promise to pay a specific amount so that when the time comes that the employee will retire, the specific amount will be determined based on the arrangement that was made by the employee and the employer (Macklin, Pinnington & Campbell 112). The employer has a certain flexibility in deciding what amount to contribute and when to the pension plan. Defined benefit plans differ from defined contribution plans because they burden the employers with payables in the long-term because they made a promise to pay their employees guaranteed amount of money.
There are many additional benefits that are enjoyed by employees today. Employees in countries with a universal healthcare insurance system enjoy affordable insurance because it is run by the government. Pension and retirement plans have been enhanced to become more attractive to employees. They are also used by management for employee retention. The world of employee benefits will continue to change as long as human resource and business needs evolve.