Human Resources Management in Canada PDF

Human Resources Management in Canada Fifteenth Canadian Edition Chapter 13 Employee Benefits and Services Copyright © 2023 Pearson Canada Inc. 13 - 1 Learning Outcomes 13.1 Explain the...

Human Resources Management in Canada Fifteenth Canadian Edition Chapter 13 Employee Benefits and Services Copyright © 2023 Pearson Canada Inc. 13 - 1 Learning Outcomes 13.1 Explain the strategic role of employee benefits. 13.2 Describe five government-mandated benefits. 13.3 Discuss five types of voluntary healthcare-related employee services or benefits offered to employees. 13.4 Describe the two categories of pension plans and legal considerations in the development of pension plans. 13.5 Discuss five types of employee-specific benefits and identify the impact of these benefits on the employee– employer relationship. 13.6 Explain how to set up a flexible benefits program and the cost considerations in benefits plan management. Copyright © 2023 Pearson Canada Inc. 13 - 2 Where Are We Now … Ellipsis The main purpose of this chapter is to explain the third major pay component: employee benefits. Copyright © 2023 Pearson Canada Inc. 13 - 3 The Strategic Role of Employee Benefits (1 of 4) Employee benefits are indirect financial payments given to employees. They may include supplementary health and life insurance, vacation, pension plans, education plans, and discounts on company products. – Employee services are growing in importance as part of the total compensation. – Benefits matter to employees. – Benefits aligned with business strategy help attract and retain the right people to achieve business objectives. – Benefits administration is an increasingly specialized task. – Benefits must comply with a wide variety of laws in Canada. Copyright © 2023 Pearson Canada Inc. 13 - 4 The Strategic Role of Employee Benefits (2 of 4) Table 13.1 Long-Term Priorities of a Firm’s Benefits Strategy (2019) Percent of Organizations That Rated the Concern Concern within Their Top 3 Concerns Containing benefits costs 59 Ensuring benefits maintain the company’s 43 competitive position Aligning benefits with business strategy 34 Improving employee health 33 Helping employees understand the benefits 29 plan and the value it has for them Source: Based on M. Haberl and N. Stewart, Benefits Benchmarking 2019: Innovation and Flexibility Lead the Way (Ottawa, ON: The Conference Board of Canada, 2019). Copyright © 2023 Pearson Canada Inc. 13 - 5 The Strategic Role of Employee Benefits (3 of 4) Employers often offer employee benefits beyond those required by the law because the company values and prioritizes employee health and wellness. Companies use benefits to support their local community, building ties between employees and their communities. Most organizations offer multiple benefits. Copyright © 2023 Pearson Canada Inc. 13 - 6 The Strategic Role of Employee Benefits (4 of 4) Figure 13.1 Top Benefits Choices among Canadians Source: Reprinted by permission of Canadian H R Reporter. © Copyright Thomson Reuters Canada Ltd., 2013, Toronto, Ontario. Copyright © 2023 Pearson Canada Inc. 13 - 7 Government-Mandated Benefits (1 of 9) Employment Insurance Employment Insurance (E I) is a federal program intended to provide temporary financial assistance to eligible persons who experience interruption to their work through no fault of their own. – Funded by contributions from employees and employers. – E I benefits are not payable when an employee is terminated for just cause or when an employee quits for no good reason. – Eligibility is restricted to persons who have paid into the account, are willing and able to work, and have worked a minimum number of hours in a specified time (called a qualifying period). Copyright © 2023 Pearson Canada Inc. 13 - 8 Government-Mandated Benefits (2 of 9) Canada/Quebec Pension Plan (C/Q P P) Canada/Quebec Pension Plans (CP P/Q P P) are programs that provide three types of benefits: retirement income, survivor or death benefits payable to the employee’s dependants regardless of age at the time of death, and disability benefits payable to employees with disabilities and their dependants. Benefits are payable only to those individuals who make contributions to the plans or to their surviving family members. Types of benefits include retirement pensions, disability benefits, and survivor benefits. Copyright © 2023 Pearson Canada Inc. 13 - 9 Government-Mandated Benefits (3 of 9) Workers’ Compensation Workers’ compensation provides income and medical benefits to victims of work-related accidents or illnesses or their dependants, regardless of fault. Benefits are non-taxable. Controlling costs: – Focus on accident prevention, safety and health programs. – Rehabilitation and modified return to work programs. – Workers are required to co-operate with initiatives. Copyright © 2023 Pearson Canada Inc. 13 - 10 Government-Mandated Benefits (4 of 9) Paid Time Off Maternity/paternity leave: – Guarantee of old or similar job on return to work. Supplemental Unemployment Benefit (SU B): – An agreement between an employer and the employees (often the result of collective bargaining) for a plan that enables employees who are eligible for E I benefits to receive additional benefits from a SU B fund created by the employer. Copyright © 2023 Pearson Canada Inc. 13 - 11 Government-Mandated Benefits (5 of 9) Paid Time Off Vacations: – Labour/employment standards legislation sets out minimum amount of paid vacation that must be provided to employees. Legislated holidays: – Number of paid holidays varies from one jurisdiction to another. Most common: New Year’s Day, Good Friday, Canada Day, Labour Day, Christmas and Boxing Day. Copyright © 2023 Pearson Canada Inc. 13 - 12 Government-Mandated Benefits (6 of 9) Paid Time Off Paid breaks: – Mandated paid and unpaid time off. – Some jobs (shift work) required an uninterrupted break after set number of hours. – If employee is under direct control of employer and expected to be available for work during this time, the break must be paid. – Otherwise it is unpaid (coffee and eating breaks). Copyright © 2023 Pearson Canada Inc. 13 - 13 Government-Mandated Benefits (7 of 9) Paid Time Off Bereavement leave: – Bereavement leave on the death of a family member is provided for employees in some but not all jurisdictions. – The amount of time off varies by jurisdiction and depends on the closeness of the relationship between the employee and the deceased. – Bereavement leave is usually unpaid, but it can be partially or fully paid in some companies. – All jurisdictions provide compassionate care leave for employees who are caring for a critically or terminally ill relative (six weeks of E I is payable during these leaves). Copyright © 2023 Pearson Canada Inc. 13 - 14 Government-Mandated Benefits (8 of 9) Pay on Termination of Employment Employment/labour standards legislation requires that when employment is being terminated by the employer, the employee must be provided with termination pay. Advance/reasonable notice is advance written notice required if the employer will terminate the employment of a worker without cause. Pay in lieu of reasonable notice is a lump sum equal to an employee’s pay for the notice period provided to employees who cease working immediately. Copyright © 2023 Pearson Canada Inc. 13 - 15 Government-Mandated Benefits (9 of 9) Pay on Termination of Employment Advance notice for mass layoffs. – Some provinces require additional pay when layoff of more than 50 employees occurs. Severance pay is an additional payout on top of the minimum notice period requirements; only applies if the specific conditions in the applicable jurisdiction are met. Copyright © 2023 Pearson Canada Inc. 13 - 16 Voluntary Employer-Sponsored Healthcare Benefits (1 of 5) Life Insurance Group life insurance is life insurance provided at lower rates for all employees, including new employees, regardless of health or physical condition. Accidental death and dismemberment coverage is an employer-paid benefit that provides a fixed lump-sum benefit in addition to life insurance benefits when death is accidental or a range of benefits in case of accidental loss of limbs or sight. Critical illness insurance is a benefit that provides financial support to an employee who is diagnosed with a life-threatening or serious illness. Copyright © 2023 Pearson Canada Inc. 13 - 17 Voluntary Employer-Sponsored Healthcare Benefits (2 of 5) Supplementary Healthcare/Medical Insurance Most employers provide plans that cover medical expenses not covered by government health plans. Deductible is the annual amount of health/dental expenses that an employee must pay before insurance benefits will be paid. Copyright © 2023 Pearson Canada Inc. 13 - 18 Voluntary Employer-Sponsored Healthcare Benefits (3 of 5) Short-Term Disability Plans and Sick Leave Plans Short-term disability plans are plans that provide pay to an employee when an employee is unable to work because of a non-work-related illness or injury. Sick leave provides pay to an employee when an employee is out of work because of illness. – Full pay for specific number of permissible sick days. Many employers use “pooled” paid leave plans which combine sick leave, vacation, and personal days. Employees use accrued days as they see fit. Copyright © 2023 Pearson Canada Inc. 13 - 19 Voluntary Employer-Sponsored Healthcare Benefits (4 of 5) Long-Term Disability Plans Insurance that provides income protection or compensation for long-term illness or injury that is not work related. These start when sick leave and/or short- term disability is used up. Disability management is proactive, employer-centered process that coordinates the activities of the employer, the insurance company, and healthcare providers in an effort to minimize the impact of injury, disability, or disease on a worker’s capacity to perform their job successfully. – Prevention, early assessment and intervention, early and safe return-to-work policies etc. Copyright © 2023 Pearson Canada Inc. 13 - 20 Voluntary Employer-Sponsored Healthcare Benefits (5 of 5) Mental Health Benefits Mental health issues continue to be the leading cause of Canada’s short- and long-term disability claims. Psychiatric disabilities are the fastest growing of all occupational disabilities, with depression being the most common. If all employees living with depression or anxiety had access to better treatments and supports, workplace functioning would improve significantly. Mental illness can also prevent some people from entering the workforce. Copyright © 2023 Pearson Canada Inc. 13 - 21 Retirement Benefits (1 of 7) Pension plans are plans that provide income when employees reach a predetermined retirement age. Pre-funded employer-sponsored pension plans are intended to supplement and employee’s government- sponsored retirement benefits. Copyright © 2023 Pearson Canada Inc. 13 - 22 Retirement Benefits (2 of 7) Two Categories of Pension Plans Defined benefit pension plan is a plan that contains a formula for determining retirement benefits so that the actual benefits to be received are defined ahead of time. Defined contribution pension plan is a plan that does not specify the eventual benefit amount, only the employee’s periodic benefits depend on the amounts employees (and employers) contribute to the plan; and the fund’s investment earning. Copyright © 2023 Pearson Canada Inc. 13 - 23 Retirement Benefits (3 of 7) Two Categories of Pension Plans Group registered retirement savings plan (group RRS P) is a plan in which employees can have a portion of the compensation put into an RRS P by the employer, and the employee is not taxed on employer contributions (matched funding) until they retire or remove money from the plan. Deferred profit-sharing plan (DPS P) is a plan in which a certain amount of company profits is credited to each employee’s account, payable at retirement, termination, or death. Copyright © 2023 Pearson Canada Inc. 13 - 24 Retirement Benefits (4 of 7) Table 13.2 Registered Pension Plans by Type, 2019 Plan Type Blank Defined benefit plans 56.2% Defined contribution plans 38.0% Composite or combination plans(1) Plans super open parenthesis 1 close parenthesis 1.0% Defined benefit and contribution plans 4.5% Other types of plans(2) plans open parenthesis 2 close parenthesis 0.1% Note 1: In composite or combination plans, the pension has both defined benefit and defined contribution characteristics. Note 2: These plans may be for different classes of employees, or one benefit type may be for current employees and the other for new employees. Source: Based on Statistics Canada, “Registered Pension Plans (R P Ps) and Members, by Type of Plan and Sector, (Total Public and Private Sectors),” C A N S I M Table 280-0016, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110010602. Copyright © 2023 Pearson Canada Inc. 13 - 25 Retirement Benefits (5 of 7) Designing Pension Plans Legal and policy issues in pension plan design: – Membership requirements – minimum number of years of service. – Benefit formula – final or average earning. – Retirement age – mandatory retirement age is prohibited under human rights legislation. – Funding – contributions by employer, employee, or both. Copyright © 2023 Pearson Canada Inc. 13 - 26 Retirement Benefits (6 of 7) Designing Pension Plans Legal and policy issues in pension plan design (continued): – Vesting – a provision that employer money placed in a pension fund cannot be forfeited for any reason. – Portability – if employee leaves the pension can be transferred. Copyright © 2023 Pearson Canada Inc. 13 - 27 Retirement Benefits (7 of 7) Designing Pension Plans Phased retirement is an arrangement whereby employees gradually ease into retirement by using reduced workdays or shortened workweeks. Supplemental employee retirement plans (SER Ps) are plans that provide the additional pension benefit required for employees to receive their full pension benefit in cases where their full pension benefit exceeds the maximum allowable benefit under the Income Tax Act. Copyright © 2023 Pearson Canada Inc. 13 - 28 Employee-Specific Services (1 of 7) Family-Friendly Benefits Subsidized childcare: – Company sponsored facilities; or local community childcare facilities. – Help attract young parents to the payroll, reduce absenteeism and turnover; increases job satisfaction and productivity. Eldercare: – Employers are establishing support initiatives such as flextime, support groups, counselling, adult daycare programs, education, and compassionate care leave. Copyright © 2023 Pearson Canada Inc. 13 - 29 Employee-Specific Services (2 of 7) Flexible Work Schedules Flextime is a work schedule in which employees’ workdays are built around a core of midday hours and employees determine, within limits, what other hours they will work. Telecommuting – work away from the office. Compressed work week is a schedule in which an employee works fewer but longer days each week. Copyright © 2023 Pearson Canada Inc. 13 - 30 Employee-Specific Services (3 of 7) Flexible Work Schedules Job sharing is a strategy that involves dividing the duties of a single position between two or more employees. Work sharing is where employees work less than five days a week and receive E I benefits on their non-workday(s). Copyright © 2023 Pearson Canada Inc. 13 - 31 Employee-Specific Services (4 of 7) Voluntary Job-Related Services Educational subsidies – upgrade educational qualifications, job related or not. Paid time off for volunteering – help brand the company. Transportation – carpooling, public transit subsidies. Food services – full service cafeterias on-site, or subsidies. Sabbaticals – leaves of absence to pursue personal goals. Usually unpaid. Copyright © 2023 Pearson Canada Inc. 13 - 32 Employee-Specific Services (5 of 7) Personal Services Credit unions – separate business established with assistance of employer. Counselling services – financial, family, career, job placement, preretirement, and legal. Employee assistance plan (EA P) is a company- sponsored program to help employees cope with personal problems that are interfering with or have the potential to interfere with their job performance, as well as issues affecting their well-being or the well-being of their families. – Confidential; in-house or with an external provider. Copyright © 2023 Pearson Canada Inc. 13 - 33 Employee-Specific Services (6 of 7) Personal Services Other personal services – various social and recreational opportunities such as company-sponsored athletic events, dances, picnics, craft activities, parties and on-site gyms. Copyright © 2023 Pearson Canada Inc. 13 - 34 Employee-Specific Services (7 of 7) Executive Perquisites Can range from substantial to the almost insignificant. May include: – Management loans. – Salary guarantees (golden parachutes). – Financial counselling. – Relocation benefits. – Others may include outplace assistance, security systems, company cars/planes/yachts, executive dining rooms, legal services, tax assistance, liberal expense accounts, club memberships, season tickets, credit cards and education for dependents. Copyright © 2023 Pearson Canada Inc. 13 - 35 Emergent Issues in Employee Benefits (1 of 5) Pros and Cons of Flexible Benefits Programs Flexible benefits programs are individualized plans to accommodate employee needs and preferences. Benefits to employers: – Cost containment – place limits on costs. – Ability to meet needs of a diverse workforce. Benefits to employees: – Put together own benefits package. – Main advantage is flexibility. Biggest challenge is communicating options available. Copyright © 2023 Pearson Canada Inc. 13 - 36 Emergent Issues in Employee Benefits (2 of 5) Benefits Administration Challenge for all firms. – Keeping track of benefits status of each employee is time-consuming. Keeping Employees Informed Provide correct information in a timely, clear manner. Technology aids. Copyright © 2023 Pearson Canada Inc. 13 - 37 Emergent Issues in Employee Benefits (3 of 5) Reducing Health-Benefit Costs Increased costs are the biggest issue facing firms: – Aging population. – Increased use of expensive new drugs. Reducing costs: – Increase coinsurance paid by employees. – Publish list of drugs restricted under the plan. – Increase health promotion in-house. – Implement risk-assessment programs. – Establish healthcare spending accounts. Copyright © 2023 Pearson Canada Inc. 13 - 38 Emergent Issues in Employee Benefits (4 of 5) Benefits Fraud Audit online benefit claims forms; monitor all claims. Sick days are often abused. Copyright © 2023 Pearson Canada Inc. 13 - 39 Emergent Issues in Employee Benefits (5 of 5) Retiree Health Benefits Costs are exceeding the costs for active employees. – Cut costs by increasing retiree contributions. – Increase deductibles. – Tighten eligibility requirements. – Reduce maximum payouts. Trend is away from employer-provided retiree health benefits. Copyright © 2023 Pearson Canada Inc. 13 - 40