What Are Employee Benefits and 17 Types of Employee Benefits

By Indeed Editorial Team

Published 20 July 2021

When applying for jobs, it's important to consider additional benefits, since they form a huge part of your compensation. Employee benefits can help augment your main salary, increase job satisfaction, and help you stay committed to your employer. Knowing the types of employee benefits available to you and how to get them can help you get a fairer compensation for your contribution to an organisation. In this article, we explain employee benefits, explore the types of benefits, and evaluate benefits that employees value the most.

What are employee benefits?

Employee benefits represent the non-financial rewards offered to company employees as part of their employment agreement. Benefits may be performance-based or included in the employment contract from the start. Companies offer benefits as a way to attract top talent, reward hard work, and motivate employees.

There are different types of employee benefits, including insurance coverage, vacations, financial bonuses and college tuition reimbursement. While full-time employees are usually the biggest beneficiaries of these perks, some companies offer them to freelance and temporary employees.

Related: What Is an Employment Contract?

What are the common types of employee benefits?

Here are the 17 most popular types of employee benefits:

1. Life insurance

Some companies offer employees life insurance policies as a bonus for agreeing to work with them. This means that the families of such individuals would receive a sum of money if the insured employee dies. Life insurance policies are popular among employers with risky work environments. With life insurance coverage, employees have the assurance that their families can receive adequate financial support in the event of their death.

2. Dental insurance

Dental insurance is another type of popular employee benefit. Most dental insurance policies cover routine dental procedures, such as fillings, dental examinations, annual cleanings, and other costs related to dental care. Companies may offer dental insurance as a standalone benefit or include it under a healthcare insurance plan.

3. Pension packages

Pension packages are common employee benefits available to members of staff in many organisations. Income security is important for many employees, so knowing that an employer can contribute to their pension plan may have a huge appeal for them. Pension plans vary, depending on the company and their policy around pension payments. However, the most popular pension plan is one where employers contribute to a retirement fund and release the money to employees when they retire.

4. Disability insurance

Disability insurance policies ensure employees receive compensation if an injury or illness prevents them from working. Under this policy, an employer promises to reimburse a part of your monthly income should a disability limit your productivity at work. Disability benefits are also called income protection plans and provide financial security for employees. The details of disability benefit packages vary among employers. For example, certain companies provide insurance for injuries or illnesses related to the job, while others cover out-of-work disabilities.

5. Student tuition reimbursement

If you have outstanding student loans, a student tuition reimbursement benefit package can alleviate the financial burden. Companies that offer this benefit agree to cover a portion of an employee's student loan debt, with the frequency and amount paid depending on various factors. To get this benefit, you may wish to negotiate for it during the recruitment process before signing an employment agreement.

6. Professional development

Organisations also provide professional development as employee benefits. Companies that want to attract top talent may promise to sponsor an individual's professional development if they sign an employment contract. Professional development benefits have become popular, as more employees make moves to learn new skills and advance in their fields.

7. Financial bonuses

Financial bonuses are monies paid to an employee outside their regular monthly salary, usually as a reward for excellent performance. Examples of financial bonuses include salary increases, commissions, and performance-related financial rewards. For example, some organisations pay teams bonuses if they deliver projects ahead of schedule.

8. Flexible work benefits

Flexible work benefits allow employees to determine their hours and place of work. Remote work is a good example of a popular flexible work benefit that employees value. Employers can offer a flexible work structure as a benefit, especially to persuade employees concerned about work-life balance to work for them. They can also include additional details to enhance work flexibility, including permission to take extended leaves and paid time off.

Related: Starting Your Career Virtually: Tips for Gen Z in the Workplace

9. Investment opportunities

Startups and other new-generation organisations may offer employees equity in their company if they agree to work for them. This type of benefit covers shares, stock options, and other arrangements that allow employees to invest in their employer's business. Such investment opportunities provide staff with opportunities to benefit financially from their company's growth. Companies can also use this strategy to attract talent from competitors.

10. Paid sick leave

Paid sick leave is another type of employee benefit that can motivate people to work for companies. An employee covered under a paid sick leave policy can stop working for a specific number of days without losing their pay for that period. Employers calculate paid sick leave days available to employees based on the number of hours accrued on the job.

11. Parental leave

Parental leave benefit packages grant extended leave to employees so that they can spend time with their newborns. While some companies offer both paternal leave for fathers and maternity leave for mothers, others may only offer the latter. The availability of this benefit can make an organisation attractive to candidates who are parents and those who are planning to start a family.

12. Paid holiday breaks

If you love to travel, working for a company that offers paid holiday leave can be appealing to you. Under a paid holiday time package, an employer agrees to grant employees a break from work and still pay for those non-work days. As with sick leave, employers calculate the hours in a paid holiday package based on an employee's total work hours.

13. Wellness benefits

Wellness benefits include perks like free gym memberships, free lunches and breakfasts, and exercise breaks that improve employee health. These benefit programmes can help reduce stress in employees, prevent burnout, and increase overall productivity rates.

Other examples of wellness benefits include:

  • Yoga classes

  • Time for physical activities (hiking or bicycling)

  • Childcare facilities

  • Sleep breaks

14. Healthcare benefits

Healthcare benefits are among the most popular types of benefits among employees. Many employers offer just medical coverage that includes payment for things like routine checkups, hospital visits, and surgical procedures. Your healthcare benefits package may include dental and vision insurance. The medical issues a health insurance policy covers depend on the company itself.

Related: How To Negotiate Your Salary During COVID-19

15. Living stipends

You may also get living stipends as part of your employee benefits package. Employers typically offer this benefit if an employee needs to move to another location for their work. For example, moving from Singapore to Canada to fill a position. Living stipends can cover the air ticket, rent, office setup, food, and utilities, depending on the employer and the role.

16. Scholarships and grants

Some employers may also offer exceptional employees scholarships and grants to help them complete or further their education. Companies can do this on a case-by-case basis or have a programme dedicated to sponsoring employees' education. What you get from such programmes depends on the employer and their guidelines for financing employee education.

17. Travel and spending allowances

Some positions, such as sales representatives and managers of regional operations of companies, require extensive travelling. Companies often pay their employees travel and spending allowances when they go on business trips, in addition to their regular salaries. Such compensations may cover accommodation and other miscellaneous expenses.

What benefits do employees value most?

The most valued benefits among employees are usually those that promise improved health, financial security, work-life balance, and professional development. The following are the most popular benefits for employees in different age groups:

Senior employees

Older employees are often more appreciative of benefits like pension and wellness programmes. Most people in their old age want financial security and better health coverage as they approach retirement. Another benefit preferred by older employees can be flexible work benefits that allow them to decide how they want to work.

Related: Q&A: What Is Remote Work?

Young employees

Flexible work benefits remain one of the most valued perks among younger employees. Such employees are often starting their family and want more work-life balance, which explains the need for flexible work. While financial security is important to this group, it's not a driving factor at this point, which is why pension plans receive less attention from this group.