7.7 Mandatory and Voluntary Benefits

Mandatory Benefits

Some of the benefits are mandatory, and they are provided by the employer due to the laws and the provincial regulations. These include Canada and Quebec pension plans, Employment Insurance, leaves without pay (Compassion leave or other) as well as those that are governed by the Employment Standards (ex. holidays and vacation). Other benefits are Workers’ Compensation that compensates employees who have been injured on the job. These can be seen by direct deductions on your paycheque. Every pay has a deduction that is taken for the pension plans and for employment insurance. These deductions are there to protect the employee in the future during retirement or any loss income due to loss of job. By contributing to Employment Insurance if the employee would unfortunately lose their job, they would be entitled to unemployment benefits.

Voluntary Benefits

Other benefits are voluntary and are at the discretion of the employer. Many different benefits can be offered by the employer. The most common ones will be highlighted here. Most employers will offer health benefits, such as extended medical plans life insurance, health-related insurance (provincial health care programs), employment income security laid off and employment insurance is supplemented up to 100% of regular wages), retirement plans, Registered Retirement Plans, paid time off, and more. Other plans can include private medical consultations, eye doctor examinations, private professional consultations, dental consultations and procedures, etc. A more in-depth look at these benefits is below.

• Life Insurance:  Most companies offer some type of life insurance to employers in a lump sum upon the employee’s death. Other employee’s may offer a survivor’s pension payable upon death of the employee. It is generally offered based on the employee’s annual pay.
• Extended Health Insurance: This insurance helps pay for expenses that are not covered by any government plans. These may be costs for dental care or paramedical services. A premium is charged and shared by the employee and the employer.
• Employment Income: When employees are laid off from their work, it is a financial burden for themselves and their families. Employees are entitled to severance pay or 2 days pay for every year worked according to the Canada Labour Code and with a minimum benefit of five days wages (Government of Canada, 2002).
• Disability Insurance: When an employee is injured on the job and must be off work for a period of time, the employee is paid their wage, or a portion of their wage while off work. Some employers offer short term disability where an employee remains off work for a period of time deemed by the employment contract.  If an employee needs to be off work for an extended period of time, they are awarded long term disability.
• Retirement Benefits: Retirement benefits are offered to employees who have been employed with the company for long-time service. Defined Benefits (DB) Plans are traditional in nature. They provide a specific and predictable benefit when a person retires. It is guaranteed income for life. They include an employee’s salary, years of service, and the employee’s age of retirement. Projections are made into the future on how much money the employee will need to retire at a certain age. They are often offered in the public sector as the private sector finds them expensive. Defined Contribution (DC) Plans is when the employer and the employee make contributions toward the retirement plan. These contributions are invested over a period of time and the employee receives a pay out when they retire. They amount is unknown as it is in the future, and depends on the amount of contribution and the growth of the investment (Smith, 2021).
• RRSP: Group Registered Retirement Plans (RRSP) serve as a different option to a pension plan. The company and employee contribute to an RRSP as a means of providing the employee a retirement plan. The plan is administered by an investment company.
• Tax-Free Savings Accounts: Tax-Free Savings Accounts can be set up by the employee and the employer gives them money to contribute to the plan. The money is tax free until the employee decides to withdraw the money.
• Paid Time Off:  These include breaks from work, meal breaks, and rest periods.
• Sick Leave:  Most employers pay their employees is they are sick and away from work. The employee is paid their regular wage.
• Holidays and Vacations: Most employers offer vacation days based on years served within the company. This is in addition to the mandatory federal and provincial paid holidays. There are various methods applied for vacations. Some employers want employees to take all their holidays within a year, while others will allow employees to accumulate their vacation time over time. Some employers close for a period of time and require their employees to take their vacations during this period of time.
• Employee Assistance Plans:  Some employers provide educational, financial and social programs for employees. Educational opportunities are offered to the employee and a portion or the entire education fees are paid by the company upon completion of the program. Financial Services allow employees to buy services or products from the company at a discount. Other financial services may be paying for monthly expenses on cell phones, or buying a laptop for the employee. Social services are called employee assistance programs that may help with elder care or child care, counselling services, providing mental health services, and help with substance abuse. Other programs may be sponsoring a baseball team or golf events.
• Relocation: Some companies who transfer their employees provide relocation services to the employee and family. The employee’s costs are covered to move such as moving expenses, help with finding a new home, family counselling, and helping out with new mortgages.
• Caregiving: Some companies provide supports for child care and elder care allowing employees to take time away from work to care for children or elders. Other companies provide onsite child care programs for free or a nominal fee.

“7.7 Mandatory and Voluntary Benefits” from Human Resources Management – 3rd Edition by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.