The 5 employee benefits that are required by law
When a business begins, the owner of the business is the one who usually spends the time getting things going. As soon as the business becomes successful, things begin to change because the owner has to consider the human resource aspect of the business.
This is a process that can be tricky because when it comes to hiring staff, there are legalities in place that have acknowledged. More importantly, it is important to understand what benefits are required by employment law and what can be offered voluntarily.
In an attempt to make employees feel like they are appreciated, many businesses offer benefits, these are benefits that can also be offered as part of recruitment and retaining staff.
When the time comes to put together a benefits package it is vital to understand that there are specific laws that govern certain benefits that are available to employees. Therefore, a clear understanding is required before negotiating with sellers to find the cheapest and most effective product.
It is simple to become confused about what benefits have to be provided and those that are part of the company compensation package.
Employee benefits required by law
Unemployment insurance offers a form of compensation to those employees who find themselves out of work for a reason that is not their fault. This is a law that is different for different areas of the country. However, businesses have to take the first step by registering with the state’s workforce agency at which point it will become clear as to what is required.
There is a requirement for social security taxes to be paid for each employee. Currently, the rate is 6.2% and this is paid by the employee as well as the employer, although the employer does have to pay an extra 1.45% for Medicare tax.
One benefit that can cause difficulties for employees is Family and Medical Leave. This requires the employer to give employees up to 12 weeks of unpaid leave over the course of a 12 month period. This has been implemented as a form of protection or employees that can be used to care for themselves of family members along with the birth of a child without worrying about losing their job.
If employees become ill or are injured whilst working, the Workers Compensation is available as a form of insurance. This can change across different areas of the country and some employers may be expected to purchase disability insurance.
For those businesses that have more than 20 employees and are expect to align themselves with the Consolidated Omnibus Budget Reconciliation Act of 1985, they will be required to have COBRA benefits. This makes it possible for employees to have insurance in place at the employer’s group rates for a maximum of 18 months. This also stands for former employees as well as their spouses, dependent children and those who have retired.
There are a number of benefits that are not required by law although employers may choose to offer them as part of a compensation package. The most common benefits are Retirement Plans, Life Insurance, Health Insurance, Dental Insurance and Paid Leave.
However, employers must understand the difference between what is required by law and what benefits they can offer as a way of enhancing the compensation package.
Fletcher Day are a Commercial Law Firm who have a main head office in Mayfair, Central London. They have provided their services for UK and International clients in countries such as Brazil, China, Malaysia, and Russia. We advise many different clients from large organisations, well-...