Voluntary or Discretionary Benefits


(1) payment for time not worked, 
(2) health and security benefits, 
(3) employee services, and 
(4) premium pay. 
Generally speaking, such benefits are not legally required.

Although many companies continue to tighten their financial belts, when it comes to voluntary benefits, employers are much more employee focused, as opposed to cost driven.  Seventy-five percent of employers say their top reason for offering voluntary benefits is to expand the benefits options available to their employees, with 42% offering voluntary benefits to fulfill an employee need, and 30% offering them at their employees’ request, according to a study released yesterday by Prudential.

Voluntary benefits are optional programs that are made available at the workplace and 100% paid for by employees.  Eighty-five percent of employers say they offer one or more voluntary benefits including life insurance (63%), disability insurance (56%) and dental insurance (52%). Ranking lower on their priority list were critical illness insurance (35%) and long-term care insurance (33%).

a) Payment For Time Not Worked—In providing payment for time not worked, employers recognize that employees need time away from the job for many purposes, such as paid vacations, payment for holidays not worked, paid sick leave, jury duty, national guard or other military reserve duty, voting time, and bereavement time. Some payments are provided for time off taken during work hours, such as rest periods, coffee breaks, lunch periods, cleanup time, and travel time.
  • Paid Vacations: Payment for time not worked serves important compensation goals. Paid vacations provide workers with an opportunity to rest, become rejuvenated, and hopefully, become more productive.
Monster.com offers several tips to make a smooth return to work after a vacation. Leave a to-do list for teammates and colleagues; draft a to-do list for your first day back; set up appropriate phone and email messages; plan and send requests to be fulfilled while you are away; schedule an extra day off to use to prepare; keep expectations low for the first days back to work.

Italy, France, and Germany top the list of average number of vacation days per year, according to the World Tourism Organization. Italians receive an average of forty-two vacation days per year. Korea, Japan, and the U.S. are at the bottom of the list. Americans receive an average of thirteen vacation days per year.

  • Sick Leave: Each year many firms allocate, to each employee, a certain number of days of sick leave, which they can use when ill.
Facts [+]
Two of every three sick days used by U.S. workers were used for something other than illness, according to a survey by human resources information company CCH. The survey of more than 1.3 million workers found that family issues, personal needs, and stress were the rationale for taking more than half of all sick days. About 32% of sick days were actually used for personal illness

There is no federal law or mandate that requires an employer to give workers lunch breaks or rest periods, although most companies allow and encourage them. Studies have found up to 58% of American workers skip their lunch break. Health and workplace experts suggest that this practice ultimately leads to worker burnout and diminished productivity.


b) Health Benefits—
Health benefits are often included as part of an employee’s indirect financial compensation. Specific areas include health, dental, and vision care.

Most Americans who have health insurance through their employer (and many who are self-insured) are enrolled in some type of a managed care plan - either an HMO or PPO. The most common types of managed care plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs).

Facts [+]

Although most Americans still get their health coverage through their jobs, new research from the Employee Benefit Research Institute shows that fewer workers have access to this benefit. The report notes that the percentage of the population with employment-based health benefits is lower, most recently due to the recession, but also as part of a longer-term trend that has seen fewer workers with access to health coverage.
Fewer employers are offering health coverage to their workers. Between 1997 and 2010, the percentage of workers offered health benefits from their employers moved from 70.1% to 67.5%.


c) Security Benefits—Security benefits include retirement plans, disability insurance, life insurance,and supplemental unemployment benefits.


Feb 2012, WASHINGTON: The US House of Representatives passed a compromise bill on Friday extending a payroll tax cut and jobless benefits through 2012, measures aimed at boosting the US economy.

The bill passed by a vote of 293 to 132 and nine abstentions, with broad support from Democrats and Republicans, after a bipartisan deal was reached to end a long and bitter fight over a key proposal by President Barack Obama. The cost of the package has been estimated at $150 billion.

The plan is expected to extend a cut in the Social Security tax rate -- from 6.2 to 4.2 per cent -- for another 10 months, and extend unemployment benefits through the end of the year. It will mean a salaried worker making $50,000 a year will be getting about $1,000 more in take-home pay over the course of the year.
  • Retirement Plans: Private retirement plans provide income for employees who retire after reaching a certain age or having served the firm for a specific period of time. In a defined benefit plan,the employer agrees to provide a specific level of retirement income that is either a fixed dollar amount or a percentage of earnings. A defined contribution plan is a retirement plan that requires specific contributions by an employer to a retirement or savings fund established for the employee. A 401(k) plan is a defined contribution plan in which employees may defer income up to a maximum amount allowed. An employee stock ownership plan (ESOP) is a defined contribution plan in which a firm makes a tax-deductible contribution of stock shares or cash to a trust.
  • Disability Protection: Workers’ compensation protects employees from job-related accidents and illnesses. Some firms, however, provide additional protection that is more comprehensive.
  • Supplemental Unemployment Benefits (SUB): Supplemental unemployment benefits are designed to provide additional income for employees receiving unemployment benefits.
  • Life Insurance: Group life insurance is a benefit commonly provided to protect the employee’s family in the event of his or her death. Although the cost of group life insurance is relatively low, some plans call for the employee to pay part of the premium.
severance package is pay and benefits an employee receives when they leave employment at a company. Severance packages are most typically offered for employees who are laid off or retire. Severance pay was instituted to help protect the newly unemployed. Sometimes, they may be offered for people who resign, regardless of the circumstances; or are fired. Policies for severance packages are often found in a company's employee handbook, and in many countries are subject to strict government regulation. Typically, severance pay amounts to a week or two of pay for every year that the employee was with the company. Executives may receive a month's pay for each year of service and senior executives generally receive severance pay as outlined in the employment contract. In addition to pay, severance packages can include extended benefits, such as health insurance and outplacement assistance to help the employee secure a new position.        More >>

d) Employee Services—Organizations offer a variety of benefits that can be termed employee services. These benefits encompass a number of areas including relocation benefits, child care, educational assistance, food services/ subsidized cafeterias, and financial services.
  • Relocation Benefits: Include shipment of household goods and temporary living expenses, covering all or a portion of the real estate costs associated with buying a new home and selling the previously occupied home.
  • Child Care: Another benefit offered by some firms is subsidized child care. Here, the firm may provide an on-site child care center, support an off-site center, or subsidize the costs of child care.
Facts [+]

The employer trend of providing on-site childcare continues as more businesses discover the positive impact child care has in attracting and retaining quality workers. Eighty-five percent of employers report that providing child care services improved employee recruitment and almost two-thirds of employers found that providing child care services reduced turnover.

  • Educational Assistance: According to a recent benefits survey, 81 percent have educational benefits that reimburse employees for college tuition and books.
  • Food Services/ Subsidized Cafeterias: Most firms that offer free or subsidized lunches feel that they get a high payback in terms of employee relations.
  • Financial Services: One financial benefit that is growing in popularity permits employees to purchase different types of insurance policies through payroll deduction.
  • Unique Benefits: A tight labor market gives birth to creativity in providing benefits.

Domestic partnership benefits

A domestic partnership is a legal or personal relationship between two individuals who live together and share a common domestic life but are neither joined by marriage nor a civil union (legally recognized form of partnership similar to marriage.). In some jurisdictions, such as Australia, New Zealand, the American states of Oregon, Washington, Nevada, and California, a domestic partnership is almost equivalent to marriage, or to other legally recognized same-sex or different-sex unions, while in other jurisdictions, domestic partnerships may confer lesser relationship rights than other jurisdictions' civil unions and more than de-facto cohabitation.

More organizations are offering benefit coverage to domestic partners. According to a recent Human Rights Campaign report, the number of companies offering domestic partnership benefits increased by nearly 13%. This trend is driven by several factors, including changing demographics, the desire to be fair, the need to diversify the workplace, and to improve employee morale.

If an employer offers domestic partnership benefits, this allows an employee to obtain for his or her partner (and sometimes their children) benefits that typically have been limited to married spouses. These can include health insurance, family leave, bereavement, relocation, tuition waiver, etc., and vary from employer to employer. Such benefits are not transferable from job to job; if a given employer offers domestic partnership benefits, they are offered as specific terms of employment. If you leave your job, you also leave the benefits.


e) Voluntary retirement benefit 
When a company realizes that it needs to downsize its scale of operations, its first task is to examine alternatives to layoffs. One of the most popular of these methods is early or Voluntary retirement.
In case of voluntary retirement the normal retirement benefits are calculated and paid to all such employees who put in a
minimum qualifying service Sometimes the employer may encourage the employees to retire voluntarily with a view to reduce surplus staff and cut down labor costs. Attractive compensation benefits are generally in built in all such plans (referred to as golden handshake scheme). To reduce post retirement anxieties companies these days organize counseling sessions, and offer investment related services (e.g. Citibank , Bank of America) Some companies extend medical and insurance benefits to the retirees also e.g. Indian Oil corporation.     More >>

Facts [+]

To reduce its excess and non-performing employees, state-run Oil & Natural Gas Corp (ONGC) has come up with a sweetened separation package. ONGC's new voluntary retirement scheme (VRS) offers lucrative medical benefits without any cost to employees. It will be available until the first week of July. Its previous VRS scheme did not provide free medical support after retirement. In the past six years, barely 476 people opted for VRS.

ONGC's more than 33,200 employees produce 26.92 million tonnes of oil a year. In comparison, 1,450 employees at Cairn India produce 10 million tonnes a year. At Cairn India's level of productivity, ONGC would be able to do its job with less than 4,000 people, although the state-run firm says it is not a fair comparison because ONGC is an integrated energy company.



F) Premium PayCompensation paid to employees for working long periods of time or working under dangerous or undesirable conditions.
  • Hazard pay: Additional pay provided to employees who work under extremely dangerous conditions.
  • Shift differentials: Paid to employees for the inconvenience of working undesirable hours.

f) Benefits for Part-Time Employees—Recent studies indicate that employers are offering this group more benefits than ever. Growth in the number of part-timers is due to the aging of the workforce and also to an increased desire by more employees to balance their lives between work and home.