Research shows that companies which take care of their employees have low turnover ratios without losing anything from the bottom line. While the big numbers get negotiated when joining a firm, it is the little things that either delight or irritate. When you find that your share of the company’s mediclaim “perk” is actually three times more expensive than buying your own cover, the taste in the mouth is a little sour.
While the cost to the company (CTC) lays down the foundation for your total package, there are other benefits that come along. Decode those perks to see their real value and then decide whether the company really loves you as an employee.
Yours by right
All employers need to provide you some benefits by law. If yours doesn’t, there’s something wrong and you need to find out why or change jobs.
Employee Provident Fund (EPF): Legally, 12% of your basic, dearness allowance and retaining allowance is deducted from your salary every month and goes as EPF contribution. Your employer matches this amount. And both form a part of your total CTC. Though it hurts, you are already saving 24% of your basic in a tax-free long-term product. You can withdraw this money only under special circumstances, during a job change or when you retire. Remember that some companies may offer to cut less than 12% (legally they can since the 12% rule only applies up to a basic salary level of Rs6,500 per year) to increase your take-home. By accepting this, you would put your retirement corpus at risk.
Illustration by Jayachandran/Mint
Gratuity: This is a lump sum payment that every employee is entitled to when he retires or leaves service after five continuous years. If you’ve worked for four years in a company, you are entitled to two months of basic salary as gratuity. A maximum of Rs3.5 lakh can be claimed tax-free, though the full benefit is defined by a formula based on the number of years worked and the last salary drawn.
Maternity leave: All mothers-to-be are entitled to 12 weeks of maternity leave. A woman can’t be dismissed from her job just because she is pregnant. While six weeks are to be taken before delivery, the remaining is granted immediately after the child is born (this is applicable even in the event of miscarriage or medical termination of pregnancy).
An expecting mother can ask to be excused from any work which is arduous in nature or in anyway is likely to interfere with the pregnancy. She can even refuse work that could hamper the normal development of the foetus or cause a miscarriage or could adversely affect her health.
Nice to get without asking
Some benefits are usually not on the negotiating table, but are worth examining.
Group health insurance: This, typically, covers the employee as well as his dependants. Sneh Sharma, founder, Metis Outsourcing Solutions Pvt. Ltd, a company that provides human resource expertise to organizations, says, “One of the most important benefits a company can give its employees is a health insurance policy. And its even better if it’s not just an individual health policy, but one that extends the cover to the entire family, including parents and in-laws. In fact, some companies are sensitive enough to cover dependant disabled siblings.”
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You may have to pay for the cover, but remember that group covers are cheaper and don’t have many exclusions that an individual cover may have. For instance, it may cover maternity costs, pre-existing diseases and dental costs, which are not included by most individual plans.
Life insurance: Some companies offer a term cover. The company will fund your policy as long as you are employed. But, here’s the worry: when you quit, the policy gets automatically terminated. Some companies, however, allow you to continue the term policy even after you quit, provided you are willing to pay the premium. It is to your advantage to do this since term premiums get locked at the age you buy the policy—the younger you are the cheaper it is.
However, never entirely rely on insurance provided by your company as they would get terminated when you leave the job or retire. Use these as top-ups to your personal covers.
Loans: Anybody who has dialled accounts in the office during a financial emergency and found out that she is eligible for a zero-interest loan has experienced employee delight. Most companies will give loans at an interest rate much lower than the prevalent market rate or make it interest-free. Some give car loans and personal loans at a discounted rate as well.
Leave: Some companies let you encash your pending earned leave, while others let you carry forward to the next year. If your company doesn’t allow you to carry it over or encash it, stagger leave through the year to make the most of this benefit.
Training and higher education: A lot of companies nowadays are willing to fund their employee’s training and higher education opportunities.
Other benefits: New generation employers are looking for ways to attract and retain their workforce. Some try and take over mundane errands, such as paying utility bills and booking tickets. Some companies help with school admission when you are transferred. Providing laptops, Internet connection and a cellphone connection with cheaper tariffs has become fairly common. The list can go on.
Sharma says, “A new trend is providing discount coupons for retail outlets, theatres and restaurants.”
While many companies are looking at innovative ways to take care of their employees, there are companies that believe that the plain-vanilla CTC approach works best. K. Ramakumar, executive director, ICICI Bank Ltd, says, “We believe in the simple concept of reimbursement. Most of the so-called extra employee benefits usually come out of the CTC. What’s most important is that the employee gets the maximum disposable income in his hand.”
Different strokes for different folks. See what works for you.