Employee Benefits Strategies

Payment for Time Not Worked

Payment for time not worked is a benefit that includes a number of situations in which the employee is paid but isn't actually working.

We'll take a look at several forms of pay for time not worked:

Vacation

The purpose of vacation is to give employees time away from the job for rest and recreation. In the past, employers granted employees more and more vacation time as length of service grew. This trend, if not being reversed, is clearly on hold. The current practice is to offer two weeks of vacation to new employees and increase this in increments up to four weeks at 10 or more years of service.

Your organization must make decisions about some major vacation policy issues, including:

• whether the vacation time can be carried over
• if the vacation time can be carried over, how much
• whether or not to reimburse the employee if vacation time is not used

Allowing employees to build up a bank of vacation time creates a large potential liability to the organization and destroys the purpose of vacation — letting the employee get away from the job. So, most companies have a policy that limits the amount of vacation time that can be saved.

When vacation time is given, carry over and payouts may be governed by state law.

Holidays

The common number of paid holidays per year ranges from 8 to 12. Some of these are legally defined and others are the result of tradition or collective bargaining agreements.

Sick leave

The most common amount of sick leave granted is one day per month, totaling 12 days per year.

There are two opposing concerns with sick leave:

• Some employees abuse sick leave by taking it when they are not really ill. Then they have no sick leave available when it's really needed.
• Other employees take no sick leave and thereby build up a large potential cost to the organization. This can be quite expensive, since employees could build up their reserve while their pay rates are low and then use them when their pay rates are much higher.

Each time the salary structure is adjusted, it affects the total potential cost of sick leave. To get around this problem, organizations often limit the buildup of sick leave just as they do vacations.

Maternity leave

Employer provision of maternity leave plays an important role in any benefits plan, especially since more and more women of childbearing age participate in the workforce.

Personal leave

This is a grab bag of time off for various reasons, which can include personal business, death in the family, military leave, and jury duty. Many organizations establish a general category of personal leave rather than having a series of special circumstances that lead to different interpretations throughout the organization. In fact, one growing trend is to combine all the time-off categories just discussed and grant a certain number of days off per year for paid time off the job. This is called a PTO (Paid Time Off) plan. It is really a "bank" of time that lets the employee decide how these days are to be distributed. Some organizations give unlimited PTO and it’s up to the employee to exercise good judgement and decide how many days to take off.

Perquisites and services

Employers frequently pick up the tab for benefits other than health care. Benefit programs can be tailored to the needs of employees. The possible list of benefits is extremely long but here are some of the more popular benefits ranging from financial planning to travel insurance:

• Financial planning
• Vision insurance
• Childcare or elder care
• Legal aid
• Health club memberships or reimbursement
• Educational assistance
• Employee counseling
• Parking
• Transportation subsidies
• Dental insurance
• Flexible work schedules
• Telecommuting privileges
• Travel and accident insurance