Along with salary and wages, many employers offer added incentives in what is known as a compensation package. This package is simply the additional perks and benefits that are extended to the employee as part of his or her compensation for performing job related tasks efficiently and correctly. There are a number of different benefits that can be included in a package of this type, even when the employer is a small business.
One of the most basic elements in any compensation package is health insurance. Even when the employer offers nothing more than salary or wages, there is a good chance that health coverage will be offered in some form. Many employers pay the entire premium, while others share the cost with the employee through a payroll deduction each pay period. In most cases, the coverage provided by the group insurance plan carries lower deductibles and a wider scope of coverage than the employee could obtain individually for the same premium.
Sick, bereavement, and vacation pay are also normally included in a compensation package. It is not unusual for employers to extend several days of time off with pay to employees who have recently lost a close loved one to death. Many companies limit this to familial relationships such as a parent, child, and spouse. In some cases, grandparents, aunts and uncles, and sometimes cousins are also considered close family members for the purposes of granting bereavement pay. In general, this benefit is limited to a certain number of days each calendar year.
With vacation and sick pay, many companies allow employees to accumulate time off for each of these functions over the course of the year. For example, an employee may earn one vacation day for each sixty days of continuous employment. For employees who have been with the company for several years, they may accrue sick and vacation days more quickly. However, many companies are choosing to simplify this process by granting employees a bank of sick and vacation days on the first work day of the year, with the provision that the days must be used at some point during the current year or be lost.
Along with health coverage, many employers also offer their employees disability insurance coverage along with some type of basic life insurance policy. The employer may cover all the costs associated with each of these types of insurance or allow the employee to pay for them via payroll deduction each pay period. As with any type of coverage, there are usually some exceptions and limitations that apply.
Retirement plans are another integral part of the compensation package offered by many employers. At times, this is a simple pension plan. However, a retirement package may also be based on the issuance of stock options via a money market, or the accumulation of shares of company stock over the years. When stock options are involved, the employer often bases the number of shares issued annually on several factors, including the salary classification of the employee. The employee may also participate in a plan that involves company ownership, such as an ESOP or Employee Stock Ownership Plan.
The exact compensation offered will vary from one employer to another. Factors such as the size and profitability of the business will often influence the type of package that is offered. In addition, employees normally must be classified as full time in order to receive a package, and may be limited on the type of benefits included based on whether the employee is considered salaried or hourly. The best way to determine what type of compensation package is offered along with the offer of employment is to meet with a member of the Human Resources team and go over each benefit.