Difference Between Employee Compensation And Benefits
A business without employees is like a car without wheels; it’s still a car but will not move. Hiring suitable employees are crucial to growing and moving forward. However, first one must attract them to the business. Employees won’t work for you without pay, and asking them to work for you for free is illegal. A company must provide employees with an attractive package matching their skills and role.
There must be a contract between the employer and employee, where the employer explains everything about the job and what the employer will provide. One of the main things an employer provides is employee compensation regarding work injuries.
Most companies provide employee compensation with benefits, but what is the difference, and do they overlap? And as an employee, what should you expect?
The article will explain in detail the difference between the two, which one is a must, and which is a great motivator.
What Is Employee Compensation?
Employee compensation is the expected duty of an employer when dealing with work injuries. Work injuries can happen in any industry, and an employer must financially cover the medical cost and salary when an employee is recovering.
The compensation provides an employee sense of care and feels motivated to perform their job to their best. No employee should be paying for their own medical care when the cause of injury is their job.
What is Work Injury Employee Compensation?
Work injury compensation is mandatory in most countries and cities. Their duties during a work injury include providing their salary as they recover, medical expenses and possible medical compensation costs. A company can be fined and sued if they do not provide these costs.
Fortunately, business owners can purchase employee compensation insurance to assist them with these expenses.
What Does Employee Compensation Insurance Cover?
Employee compensation insurance covers the employer’s liability if one of the employees gets injured, contracts a disease, or dies during or on the way to work. The insurance will cover any type of work accident. It helps a company and employees have fair treatment, as it is governed by the labour department- which avoids possible fraud.
Examples Of Employee Compensation Insurance Claims?
For example, mainly outdoor employees in Hong Kong have recently suffered heat stroke. Experts suggest thatcomplete recovery from heat stroke and its effects on the internal organs may take two months to a year.
There can also be injuries in office jobs where employeesfrequently meet clients. An employee may be injured on their way to a client meeting, for example, a simple slip and fall or accident.
In both cases, the companies will have to pay for their recovery and provide them salaries till they fully recover. The insurance will reimburse the company after the employee has recovered. Although the company must inform the labour department and insurance firm as soon as possible.
What Are Employee Benefits?
Employee benefits are any benefits offered to employees on top of their base salaries and compensation arrangement. The company decides most employee benefits- except minimum paid leave and retirement plans determined by law. Each company, city, and country provide different employee benefits, and some companies don’t offer any.
Employee benefits motivate an employee and attract them to the company. It also shows the company truly cares for its employee’s welfare, mental health and future. Providing employee benefits at first may be a bit expensive, but over time pay off and actually benefit the company.
Common Employee Benefits
These are just the top few benefits, but there are many more that companies offer.
Annual leave is a certain amount of paid time off, generally in days (not including public holidays). Everyone needs a break from work, even if they love their job. A good amount of annual leave helps reduce stress and avoids an employee burning out. The benefit also increases employee retention, productivity, and motivation. We work to live, and it’s essential employers understand that.
Flexible Working Hours
In the new working generation, flexible hours and location have become a big deal. Flexible hours include being able to choose your hours. Flexible hours don’t mean an employee can work only two hours daily. But it means some companies allow you to work 8 hours from any point to another. For example, an employee can work 8 am-5 pm, 9 am-6 pm, or 10 am-7 pm.
Additionally, a new employee benefit that is getting more common is the option to work from home on certain days. Flexible hours and working from home give employees control over their day, as long as the required work is completed.
A company can include medical insurance in an employee’s contract to cover simple or serious medical bills, even if unrelated to work. For example, medical insurance may include clinics, dental, vision and serious hospital care costs. It is a great employee benefit that makes sure the employee is taken care of, even during a simple cold.
What Does Company Medical Insurance Provide?
Medical insurance provided by the company is a policy covering employees’ health and medical expenses. The insurance differs depending on the insurance package, but most cover some or all the costs of routine care, emergency care, and treatment for chronic illnesses.
For example, some medical insurance will cover dental, but many may not. Additionally, some policies cover only inpatient expenses unless your company specifically asks for both outpatient and inpatient. Even though the company buys the insurance, it will belong to the employee and be under their name.
Examples of Medical Insurance Claims?
There are various medical insurance claims, from chronic illnesses like cancer to common surgeries like a burst appendix. Thankfully medical insurance will cover both sides, and the employee will just need to focus on the treatment and recovery, not the cost. The cover will include the cost of treatment, medicine, and hospital accommodation.
However, as an employee, you must understand the insurance cover, exclusions, claiming process and get the proper documents from your doctor and employer.
Why Is It Crucial for A Company to Provide Both Employee Compensation and Benefits?
Employee compensation with employee benefits keeps the employee happy and motivated long term. The main difference between employee compensation and medical employee benefits is – employee compensation will only cover work injuries, and medical benefits will cover any personal medical issues.
Hiring the right employee is complex but retaining great employees is more complicated. It is vital to care for your employee if they face a work injury or are dealing with personal medical problems. Employee compensation and medical insurance packages can help a company fulfil these duties.
Providing high-quality benefits can differentiate a company from its employers in the hiring market. The company will naturally attract talented people and employees who will strive to deserve what the company is providing.