Key Takeaways
1. We exist in a fragile post-pandemic environment where resignation rates are at record highs and employers must work harder than ever to attract and retain staff.
2. Non-mandatory health care benefits have virtually become the norm, are now provided by nearly 8 out of 10 US employers, and have taken on greater importance post-pandemic.
3. During the pandemic, home-working has become and continues to be one of the world’s most desired non-mandatory benefits amongst employees.
4. Non-mandatory benefits can be the difference between securing or losing top candidates.
Properly compensating employees was at one time all about the money. It’s changed now, we are in a world of total reward where salary, benefits, and even the working conditions, form part of the employer’s value proposition. Paid sick leave, paid vacations and health care benefits have virtually become the norm, being provided by nearly 8 out of 10 US employers.
Firms that fail to offer these kinds of benefits are falling behind the market curve and may begin to find it harder to attract talent due to an unappealing employer value proposition.
In fact, in this fragile post-pandemic environment where resignation rates are at record highs, (around 48 million US workers quit their jobs over the last 12 months), some optional benefits have assumed elevated importance:
- Health benefits
- The World Economic forum (WEF) reviewed the US Bureau of Labor Statistics data and revealed that resignations were highest in frontline sectors like healthcare, hospitality and retail, suggesting that health and safety concerns are a factor. This implies that health related benefits may be more crucial than ever in attracting and retaining staff.
- Remote working
- The WEF report also suggested that a chief reason that people are quitting is that many workers, ‘are no longer willing to put up with the pay and/or working conditions they (perhaps grudgingly) accepted prior to the pandemic.’ With commuting costs being an even bigger burden now, (due to world events) firms that offer the ability for staff to work more cost-effectively from home via a hybrid/remote working policy will be in a better position to attract and retain staff
As we exit the pandemic employers cannot afford to ignore their workforce’s desire for hybrid working. They must get the balance right between office and home-based working by developing a win-win hybrid working benefit in tune with the needs of the workforce.
Definition of Non-Mandatory Benefits
Quite simply, non-mandatory benefits are those employer perks that an employer chooses to offer voluntarily, and which are not required by law.
In the US, it is important to distinguish between federal and state law as while some benefits and payroll deductions may not be federally mandated, they may still be required under certain state laws.
The most prominent legally required benefits in the US include Social Care, Medicare, Federal Insurance Contributions (FICA). Additional federal or state mandated benefits include Unemployment Insurance, Worker’s Compensation Insurance, Health Insurance (under the Affordable Care Act), Family and Medical Leave Act protections and Disability Insurance.
Once legal obligations are met employers should focus on developing an attractive program of non-mandatory benefits to help position themselves as an employer of choice. For example, while it is not always compulsory to provide overtime pay or ‘comp time off‘, this can be part of demonstrating a company’s brand as an employer.
We’ve set out a list of some popular optional benefits so you can easily benchmark your own offering and highlight any strategic improvements needed to bring you up to a competitive level.
- 1. Health
- This could include Medical Insurance, Dental Insurance, Life Insurance, Permanent Health Insurance. Note, in some jurisdictions (e.g., Germany), providing health insurance is a mandatory benefit.
- 2. Flexible working
- In the current climate flexible working, particularly remote working is a great way to both attract and retain talent and has global appeal. It is an especially appealing employee benefit in Canada where research shows a massive 74% of businesses plan to let employees continue remote working post-pandemic. Remote working can be at home or at a local co-working space, (sometimes with financial support from the employer). Hybrid working (where employees are free to work remotely or in the office), allows employees to balance the need for face-to-face interaction in the office and the practical benefits of working from home.
- 3. Paid sick leave
- Made available to nearly 8 out of 10 employers in the private sector in the US. Most workers who receive paid sick leave could earn or accrue additional sick leave based on years of service. Typical sick allowance starts at about 8 days a year and can go up to about 11 after 25 years’ service. Again these discretionary benefits allowances vary dramatically around the world.
- 4. Paid vacation leave
- Again, this optional benefit (in the US) is offered by most employers, and typically 13 days paid vacation are offered to workers per year, rising to around 22 days after 20 years of service typically, in state and government and 17 days in private companies. Allowances vary dramatically around the world.
- Some businesses even offered unlimited paid vacation leave, though this is still quite unusual.
- 5. Employee discounts
- Employers are often able to negotiate preferential rates and discounts on products and services with vendors either directly or through an intermediary provider.
- 6. Tuition reimbursement
- Typically offered by larger employers this class of optional benefits involves reimbursing some or all the tuition fees for education that is related to the employee’s vocation.
- 7. Free Meals and Drinks
- Popularized in Silicon Valley the offering of free meals and drinks is a welcome non mandatory benefit, but this is typically seen in big employers with onsite canteens.
- 8. Cycle-to-work-scheme
- Popularized in the UK this a government backed scheme where employees can save anywhere between 25% and 39% of the cost of a new bike for commuting to work.
- 9. Gym memberships
- This is an increasingly common fringe benefit where employers use their group purchasing power to secure and offer discounted or even free gym membership to staff.
- 10. Childcare
- Onsite creches or childcare discount vouchers can save employees with childcare responsibilities thousands of dollars a year.
- 11. Unlimited unpaid time off
- If employees meet their targets, they have the ability to take as much leave as they like.
- 12. Mental health
- This has been such a big issue during the pandemic and employee assistance programmes which offer counselling services and critical incident advice are proving a popular benefit.
Provide global benefits with Horizons EOR services.
How can a global PEO help with non-mandatory benefits?
A global PEO hires international workers around the world on behalf of client companies. Many ambitious employers embark on international resourcing projects only to become beset by unnecessary hiring delays as they attempt to organize important benefits before candidates will sign on the dotted line. These frustrating and costly delays can be avoided by using a PEO, such as Horizons, who have the expertise and pre-existing commercial relationships to quickly hire international talent and ensure they have the appropriate mandatory and non-mandatory benefits for their jurisdiction from day one in any part of the world.
If you need help with an international resourcing project requiring a smooth benefits implementation in multiple international jurisdictions, please call us today.
Frequently asked questions
Mandatory benefits are those that employers are legally required to give to employees
Mandatory benefits must be provided to employees by law, while discretionary benefits are voluntary, and employers may choose whether to provide them.
