Cengage Canada Teaching Advantage
PowerPoint® Slides
to accompany
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CHAPTER 11
Employee Benefits
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Learning Outcomes
LO1 Describe key aspects of the strategic benefits
planning process.
LO2 Discuss the employee benefits required by law.
LO3 Describe key discretionary employee benefits.
LO4 Discuss the types of retirement programs and
the major factors involved in managing pension
plans.
LO5 Describe the types of work-life benefits
employers may provide.
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Managing Employee Benefits
Programs
• The COVID-19 pandemic has put employee benefits
in a new spotlight for Canadian employees.
• The crisis has highlighted gaps in employee benefits
and how employees perceive their value.
• Employers are looking for better employee benefits
such as paid time off, employee assistance
programs (EAPs), and mental health and wellness
benefits.
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Elements of an Effective Benefits
Program
• Employee benefits are a type of indirect compensation
designed to improve the quality of employees' work
and personal lives.
• Benefits account for a sizable portion of total payroll
costs.
• The effectiveness of a benefits program is determined
by two factors:
(1) the selection of benefits that address critical
employee needs while promoting strategic
organizational goals, and
(2) the effective administration of benefits programs.
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Strategic Benefits Planning – 1
• Key objectives of most benefits programs:
− improve employee work satisfaction
− meet employee health and security
requirements
− attract and motivate employees
− retain top-performing employees
− maintain a favourable competitive position
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Strategic Benefits Planning – 2
• Allowing for Employee Involvement
− Need should be determined through
consultation with employees (committees,
opinion surveys, focus groups, employee
participation, websites).
• Benefits for a Diverse Workforce
− Must reflect social changes, especially changes
in the diversity and lifestyles of the workforce;
must develop new types of benefits to meet
shifting needs.
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Strategic Benefits Planning – 3
• A basic or core benefits package of life and health
insurance, sick leave, and vacation ensures that
employees have a minimum level of coverage.
• Flexible benefits plans (cafeteria plans)
− Benefit plans that enable individual employees
to choose the benefits that are best suited to
their particular needs
• Employees use credits to “buy” whatever other
benefits they need.
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Figure 11.1
Flexible Benefits Plans: Advantages and
Disadvantages
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Communicating Employee
Benefits Information
• Methods to Communicate Benefits to Employees
− In-house publications (handbooks and
newsletters)
− Group meeting and training classes
− Online modules (self-service)
− Bulletin boards
− Payroll inserts and pay stub messages
− Specialty brochures hotlines
− Multiple media techniques
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Figure 11.2
Communicating Benefits a Part of Total
Rewards
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HRIS and Employee Benefits
• Benefits of an HRIS:
− Reduced costs
− Increased efficiencies
− Accuracy
• Once operational,
online systems are easy
and inexpensive to
adapt to employer and
employee demands.
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Concerns of Management
• Employers are concerned about the rising cost of
healthcare benefits, which must strike a balance
between providing quality benefits and keeping costs
under control.
• As a result of COVID-19, there has been a recent shift in
benefit planning.
• Cost Containment Strategies:
− Contribution changes (e.g., increase deductibles)
− Dollar limits
− Coverage changes
− Benefit caps
− Use of preferred providers
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Employee Benefits Required by Law
• Canada and Quebec Pension Plans (CPP/QPP)
− cover almost all Canadian employees between the
ages of 18 and 70
• Employment Insurance (EI)
− benefits are payable to claimants who are
unemployed and are actively seeking employment
• Workers’ Compensation Insurance
− Insurance provided to workers to defray the loss of
income and cost of treatment resulting from workrelated injuries or illness
• Provincial hospital and medical services
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Figure 11.3
Reducing Workers’ Compensation Costs:
Key Areas
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Discretionary Major
Employee Benefits
• Other benefits offered by
employers include:
− Healthcare
− Dental, optical,
mental health
benefits
− Payment for time not
worked
− Life insurance
− Retirement
− Pension plans
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Employee Benefits
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WCB



a mandatory, government-sponsored, employer-paid
no-fault insurance plan that provides compensation
for injuries and diseases that arise out of, and while
in the course of, employment
provides benefits for
 Lost earnings due to temporary/permanent
disability
 Health care expenses
 Survivor benefits after fatalities
compensation is 90 percent of net earnings in AB
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EI

a mandatory government-sponsored plan for all
employed Canadians that provides workers with
temporary income replacement as a result of
employment interruptions due to circumstances
beyond their control

funded by employer and employee contributions

basic benefit is 55 percent of average insurable
earnings
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Vacation and breaks
Vacation

minimum amount of paid vacation must be provided to employees

2 week at 4%

3 weeks at 6%
Holidays

how many general holidays in AB?
breaks

uninterrupted break within a work day

-if an employer makes you stay in the building during your break, they have to
pay you for the break

-if the employer does not make you stay or be available if something
comes up, it is an unpaid break

e.g. 30 minute or two 15 min breaks break on a shift over 5 hours
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Income security plans
 Sick
leave plans
 provide specified number of paid sick days per month
or per year
 Short-term disability plans e.g 15 weeks
 provide continuation of part or all of earnings during
absence due to non-work related illness or injury
 Long-term disability plans, starts after short-term or EI
medical
 provide continuation of part of earnings during longterm absence due to non-work related illness or injury
 claims and costs rising sharply
 psychiatric disabilities fastest-growing
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Healthcare Benefits
• Healthcare benefits are receiving the most
attention today, owing to sharply rising costs and
employee concerns.
• Previously, health insurance plans only covered
medical, surgical, and hospital expenses.
• Employers are under increasing pressure to include
prescription drugs, as well as dental, optical, and
mental health benefits, in the benefits packages.
• Drugs are now the second-largest source of healthcare spending, trailing only hospitalization.
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Figure 11.4
Cost Containment Strategies
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Payment for Time Not Worked – 1
• Includes statutory holiday pay and vacation pay; time
off for bereavement, jury duty, and military duty; rest
periods and coffee breaks; and maternity/paternity
benefits (which usually involve some form of salary
continuance).
• Vacations with pay
− eligibility varies by industry, locale, and size of the
organization
• Paid holidays
− hourly and salaried workers can expect to be paid
for statutory holidays as designated by each
province
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Payment for Time Not Worked – 2
• Sick leave
− employees who cannot
work because of illness
or injury are
compensated in various
ways
• Severance pay
− a lump-sum payment
given to terminated
employees by an
employer at the time of
an employer-initiated
termination
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Life Insurance
• Group life insurance is the benefit most commonly
provided by an employer.
• The purpose is to provide financial security to the
dependents of the employee in case of his or her
death.
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Retirement Programs
• Employers emphasize the retirement benefits that can
be expected after a certain number of years of
employment when persuading job applicants to work
for them.
• Retirement Policies
− To avoid making layoffs and to reduce salary and
benefits costs, employers often encourage early
retirement.
− silver handshake
• An early retirement incentive in the form of
increased pension benefits for several years or a
cash bonus
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Pension Plans – 1
• Types of Pension Plans
− Categorized in two ways:
1. according to contributions made by the employer
2. according to the amount of pension benefits to
be paid
• Contributory plan: contributions to a pension plan are
made jointly by employees and employers.
• Non-contributory plan: contributions are made solely by
the employer.
• Most plans in privately held organizations are
contributory.
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Pension Plans – 2
• Types of Pension Plans (concluded):
− When pension plans are classified by the amount of
pension benefits to be paid, there are two types:
• defined-benefit plan (DB)
• A pension plan in which the amount an
employee is to receive on retirement is
specifically set forth
• defined- contribution plan (DC)
• A pension plan that establishes the basis on
which an employer will contribute to the
pension fund
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Figure 11.5
Comparing Defined Benefit and Defined
Contribution Plans
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Pension Plans – 3
• Federal regulation of pension plans:
− Vesting
• A guarantee of accrued benefits to participants
at retirement age, regardless of their
employment status at the time
• Pension portability
− Unions encourage multi-employer plans.
− According to a collective agreement, these plans
cover the employees of two or more unrelated
organizations.
• Pension funds
− Can be administered through a trusted plan or
through an insured one.
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Employee Services:
Creating a Work–Life Setting
• Employee services, like other benefits, are paid for
by the employer.
• Creating a Family-Friendly Setting
− Employers are increasingly providing a variety of
services to make working life more enjoyable
and to improve employees' well-being.
− Employers benefit by attracting good workers
and by reducing the various interruptions that
affect workplace productivity.
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Employee Assistance Programs
• Organizations have developed employee assistance
programs (EAPs) to assist workers in dealing with a
wide range of issues that interfere with their job
performance.
− Services provided by employers to help workers
cope with a wide variety of problems that
interfere with the way they perform their jobs.
• An EAP typically provides alcohol or drug problems,
emotional problems, and financial or family crises
with diagnosis, counselling, and referral services.
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Pay equity

issue relating to the gender wage gap

gender wage gap is the amount by which the average pay for
female workers is less than the average pay for male workers

differences in occupational attainment; women historically
segregated in small number of occupations e.g., sales, nursing

differences in number of hours worked

differences in industries and firms

differences in union membership

presence of discrimination
• E.g. an administrative assistant's job (typically female job)
could have the same value as a machinist's job (typically
male job ).
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Childcare and Eldercare
• Eldercare
− Care provided to an
elderly relative by an
employee who
remains actively at
work
• About 32 percent of
Canadians have eldercare
responsibilities.
• Employees spend an
average of 23 hours each
month on eldercare.
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Employee Benefits as Employer
Branding
• Workplace benefits are emerging as a key
differentiator for job applicants as employers
compete for top talent.
• According to a recent survey, nearly half of all job
seekers say the most difficult barrier to changing
jobs was not knowing what it was like to work
somewhere.
− Salary and benefits are among the most
important factors to consider when considering
employment with an organization.
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Activity 1:
Choosing Benefits
• Some education institutions offer benefits to
students subsidized by a student levy.
− In groups, discuss what benefits students would
appreciate being offered by their institution.
− How have different generations focused their
attention on various benefit options?
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Activity 2:
Benefit Plans
• Small business owners cannot compete for
employees based on their benefits plans. Larger
companies offer more benefits.
− List the mandatory benefits that small
businesses must provide to employees.
• Discuss and rank order some other benefits that
would be most attractive to employees in order to
attract and retain them.
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