Employee Benefits

What Are Employee Benefits?

Employee benefits (sometimes referred to as fringe benefits) are any type of perks or non-paycheck compensation an employee receives in exchange for performing a service.

The specific benefits offered to employees vary by employer and depend on many factors, including budget allocation and company values. They may be affected by job market sentiment, as benefits are often used to attract and retain top talent.

Employee benefits come in different forms (such as group insurance or in-office perks) and are often offered as a package deal. This means most employees in certain positions or levels of seniority are offered the same set of benefits.

Employee benefits are generally considered part of an employee’s compensation package. Consequently, part of calculating total remuneration (compensation) involves adding the value of the benefits package to the employee’s base salary. Employers need to explain this to candidates when extending an offer of employment.

What Are Typical Employee Benefits?

While what’s included in employee benefit programs tends to vary according to employers’ choices, there are some fairly common features. Here’s a list of eight employee benefits you may want to consider adding to your package.

Paid time off (PTO) gives employees the freedom to take time off work for any reason while still getting paid their normal wage or salary. These hours or days may be granted all at once or accrued over time.

In some cases, paid vacation time must be approved before the employee uses it.

Some employers allow employees to take as much vacation time as they want or take off work whenever they desire, while others limit the days employees can take off.

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Health Insurance

Health insurance benefits may include access to a variety of group health, dental, and vision plans. These options generally require employers to pay a portion of the premium while charging the rest to the employee.

Depending on the plans offered, some employees may be able to get coverage for their spouses and children through these plans.

Note that under the Affordable Care Act (ACA), employers with at least 50 full-time (or full-time equivalent) employees must provide access to health insurance for those employees. This health insurance must be affordable and provide what the US government deems “minimum essential coverage.”

Disability Insurance

Disability insurance ensures that an employee maintains at least some of their income should they ever be unable to work due to injury or illness.

Statistically speaking, about one in four 20-year-olds will become disabled before the age of 67. This makes disability insurance a highly attractive benefit and a great option for ensuring employee wellbeing.

Life Insurance

Life insurance ensures an employee’s beneficiaries have financial protection if the employee passes away. This can pay for funeral arrangements, settle the estate, and cover everyday expenses.

Some employers offer basic life insurance policies at no cost to the employee, while others offer plans that require a small monthly premium.

Paid sick leave allows employees to take paid time away from work when they’re not feeling well enough to do their jobs. Currently, more than 80% of private sector employers with 100 or more employees provide paid leave access.

While federal law does not entitle employees to any time off (paid or unpaid), some states have their own laws requiring employers to provide paid sick time to employees.

Under the Family and Medical Leave Act, public agencies, schools, and businesses with 50 or more employees are required to provide employees with at least 12 weeks of unpaid job-protected leave each year to care for themselves or a family member.

However, some employers go the extra mile by paying employees their regular salary (or a portion of it) during this time to help minimize financial hardship.

Retirement Benefits

Retirement benefits like 401(k) plans, deferred compensation plans, pension plans, and stock ownership allow employees to have peace of mind that they’ll still have an income when they retire.

Some employers choose to match what employees contribute yearly (up to a specified amount), while others simply provide access to the plan so employees can contribute themselves.

Note that some employers, such as school systems, require employees to contribute a portion of their pay to a pension plan. In these cases, the employee’s contribution is made before they receive their regular paycheck.

Some employers close for federal holidays and pay their employees for a full day. Others give employees a choice about whether to work holidays and allow them to use their PTO to receive compensation for the day.

Either way, paid holidays provide employees with much-needed breaks throughout the year to relax, enjoy time with family, or engage in activities of their choosing.

Creative Benefits

Companies may also find creative ways to attract potential candidates by offering more inclusive and generous employee benefits, such as:

These employee benefits examples focus on comfort and wellbeing. Offering them helps position your organization as one that cares deeply about the people who work there.

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What Benefits Do Employees Value Most?

More than half of employees (56%) report that their employers have recently introduced new or improved benefits. Much of this change is in response to shifting expectations around employee benefits packages.

Sixty-nine percent of surveyed employees say that office work sacrifices their work flexibility. Consequently, employers should consider offering flexible work schedules and remote or hybrid options to help employees maintain work-life balance.

Further research confirms this—89% of Gen Z graduates entering the workforce see flexible working options as important, while 37% see them as absolutely essential. More than 1 in 4 employees (28%) would even be willing to take a salary cut to have a more flexible working location.

There are other benefits that today’s employees deem essential:

Adding these benefits can make you attractive to potential candidates and help you retain your current employees.

Do Benefits Come Out of Employee Salaries?

Certain benefits require deducting a portion of an employee’s salary. This is the case for many health insurance packages and retirement benefits.

This is not the same as an employer charging an employee for benefits and taking the money from their salary. It simply means that payroll administrators must ensure that healthcare premiums, 401(k) contributions, and other benefits deductions are taken out of your paycheck before you receive it.

Though your gross pay will still be the same, the amount of money you actually receive will be reduced because of these deductions.

What Are Non-Salary Benefits?

Non-salary benefits are employee benefits that employees enjoy in addition to their own salaries. There are many options for employers wanting to offer these benefits:

Non-salary benefits may still take the form of cash, such as monthly bonuses or financial rewards for outstanding performance. However, these benefits are always in addition to salaries—employees shouldn’t be paid less than their salaries if they receive a monetary benefit.

Why Should Employers Offer Benefits?

Employers that offer competitive employee benefits show that they care about the physical and mental wellbeing of their employees, which can result in happier and more productive employees. A high-quality benefits package can also help attract and retain employees.


When potential job candidates look for jobs to apply to, they will often look for two things in a listing: job responsibilities and employee benefits. If your benefits package offers a robust array of perks, it may sway job candidates to apply for your company.


To keep employees satisfied at their jobs, employers must offer a competitive total compensation package. Employees not only need to receive a competitive wage, but are increasingly interested in benefits that help them maintain a strong work-life balance and a high quality of life.


Studies show that employers with high employee engagement tend to offer a wide variety of employee benefits and perks, including healthcare options that cover unmarried domestic partners, financial and retirement planning benefits, paid leave, on-site fitness centers (or gym memberships), on-site meals, and more.

Fifty percent of organizations with high engagement offer their employees flexible work hours.


Work-life balance benefits (such as remote work and flexible scheduling) have the potential to increase employee wellbeing. It can even reduce employees’ risk of cardiovascular disease and prevent the equivalent of five to ten years’ worth of negative cardiometabolic changes.

This can, in turn, result in lower healthcare costs, reduced absenteeism due to illness, and increased productivity for the employee and business.

Best Practices for Offering Employee Benefits

Although offering the right benefits is crucial, how you handle those benefits matters in the eyes of employees. Make sure you’re executing the right strategy by following best practices:

With the right approach to employee benefit services, you’ll likely have a much easier time attracting and retaining top talent.

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