What Is the Meaning Of Voluntary Benefits & Its Importance

Duration: 5-7 minutes

The Meaning of Voluntary Benefits

The term voluntary benefits is used for those employee-financed perks that the employee has to pay for instead of the employer. The employer pays for the administrative charges of the program, and usually, the funds are directly deducted from the salary of the employee, but it is not always the case.

Table of Content

• What are Voluntary Benefits
• Advantages and Disadvantages of Voluntary Benefits
• Voluntary Benefits Plan
• Difference between Voluntary and Mandatory Benefits
• FAQs

Advantages and Disadvantages of Voluntary Benefits

Advantages of Voluntary Benefits in HRM:

• Happy Employees: Employees feel happier and more content with their jobs when they have extra perks that make work enjoyable.
• Customised Options: Employees can select benefits they would want to be provided with, such as discounts on various products and services, wellness programs, or even pet insurance—whatever works best for them.
• Talent Retention: These special benefits would not only attract new employees but also keep the old ones interested in the company.
• Many Options: These options include everything from staying healthy to managing one''s money, covering all types of requirements.
• Tax Benefits: Some of these benefits come with tax benefits, so employees can save money and enjoy additional perks at the same time.

Disadvantages of Voluntary Benefits in HRM:

• Not for Everybody: Some employees might choose not to join, so not everybody gets the benefits, and it may not have that much effect.
• Communication Hiccups: Sometimes not everybody gets to hear about the benefits or understand them well enough, leading to confusion or missing out.
• Admin Challenges: Managing too many benefits can be challenging for the HR team. It''s hard to keep track of everything with so many different benefits.
• Cost Worries: The money spent on these additional benefits could become a budget issue for the company, and they may question whether it''s worth providing those benefits.
• Fairness Issues: Different benefits that people like may make some employees think that others have more perks; this may create feelings of unfairness towards other people.

Voluntary Benefits Plan

A voluntary benefits plan through a workplace can provide a wide range of offerings relevant to employees'' needs. Some common voluntary benefits include:

• Wellness Programs: Gym memberships, wellness workshops, health screenings
• Financial Planning: Financial planning assistance, investment advice, or financial education resources
• Flexible Work Arrangements: Flexible schedules or working remotely, compressed workweeks
• Pet Insurance: Veterinary bills coverage for employees'' pets
• Legal Assistance: Legal services or consultation access
• Employee Assistance Programs: Counseling on mental health and work-life balance
• Discount Programs: Employee discounts on products, services, or entertainment
• Education Assistance: Reimbursement for or help with continuing education and professional development
• Identity Theft Protection: Identity theft protection services
• Volunteer Time Off: Paid time off for volunteering activities

Difference between Voluntary and Mandatory Benefits

Voluntary Benefits:

• Nature: These benefits are chosen by the employees according to their personal preferences and needs.
• Enrollment: Participation is voluntary, and the employee may or may not choose to enroll.
• Examples: Wellness programs, pet insurance, and additional life insurance are common examples of voluntary benefits.

Mandatory Benefits:

• Nature: Benefits that the employer is compelled by law or company policy to offer.
• Enrollment: All eligible employees are compulsorily enrolled, and the benefits are usually standardized.
• Examples: Social Security, workers'' compensation, and some health and safety requirements are compulsory benefits.

Conclusion

Voluntary benefits are additional to the core compensation package and, therefore, allow employees to design their own benefit packages based on their needs. These vary from wellness programs to financial services and many others for maximum work satisfaction, attracting good talent, and creating a positive work culture.

This strategic plan ensures implementation succeeds, whether it faces communication gaps or limited participation. Overall, voluntary benefits empower employees with choice and thus promote personalization and a fulfilling work experience.

FAQs