Professional Documents
Culture Documents
analyze and control benefit costs have become increasingly important. Give the
enormou cost to an organization of benefit pakages, anagers must carefully assess
the benefit that accrues to the organization from those packages. On the other
hand, the organization is required to provide appropriate benefts to employees. On
the other hand, the best interest of stockholders and other constituents of the
organization require the firm to manage its resources wisely. Thus, it is important to
periiodicall assess the extent to which cost are in line.
Four Methods to Analyze Benefit Costs (Roger Thompson. Benefits Costs
surge Again. Nations Business St. Feb. 19930 :
1. Annual Cost Method. simply repots the total annual cost for eacch benefit.
2. Cost per employee per year. computed by dividing the total cost of each
benefit by the number of employess receiving the benefit the result, showing
the total cost per employee, is especially meaningful when communicating
with employees because most employees do not appreciate how much
employers spend o benefits for each employee.
3. Percenr of Payroll. shows tho cost of benefits relative to the amount spent
for wages and salary. The result is specially useful in making comparsons
between the benefit costs of different companies. It is calculated dividing the
total annual cost of benefits by the total payroll cost.
4. Cost per hour figure. Shows the cost of benefits per employee per hour.
The reslt of frequently used in expressing the cost of benefits especially
during the contract negotiation between unions and employers.
PhilHealth, the premiums of which are shared by the employer and the employee.
The program has the folloewing provisions :
a. An employee and his legal dependence can avail of the PhilHealth
hospitalization, surical and medical benefits.
b. It provides 45 days of hospital comfinement in a year provided 3 monthly
contributions have been paid with immediate 12 months prior to first day of
confinemen.
c. It shoulders a portion of the hospital expenses.
8. Paternity leave. The newest legally mandated benefit in the Philipines is the
paternity leave which became effective last July 5, 1996. It provide 7 days of leave
with full pay to all married men and employees in the private and the public sectors
of the first four deliveries of the legitimate spouse with whom he is cohabiting.
9. Retirement Income. Employee retirement income comes from four sources:
a. Assess Income. Generated by personal savingss and investment. There are a
wide variety of employer assissted savings or capital accumulation plans. The
strategy is to shift insome to the post retirement years.
b. Private Pensios. Many employers provide pension funds to retired employess
which the amount usually based on yers of service and income level while
employed. Employers may choose from two types of pension plan the defined
benefits plans or define contribution plan. If a defined benefit plan is chosen, an
employer commiting itself to an unknown cost that can be affected by rates of
return of investments,changes in regulations, a future pay levels. Consequently
more employerss have adopted defined contribution plans since it specify the rate
of the employer and employee cotribution. (Stanton M. Beyond paycheck an
employee benefits primer, occupational outlook quarterly fall 1990 de)
c. Social security benefits
d. earnings
That are much list costly than the benefits workers could purchase on their own
with after task. Today, benefits contribute a major portion of a labor cost.
Non Taxable Benefits under the code
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