What are financial benefits? (Paid time off, Canada Pension Plan, Supplemental insurance)
Financial benefits refer to employee benefits that are tied to an employee’s overall income. Employee benefit programs will provide particular benefits that are meant to either ease the financial obligations of the employee or give direct payment to the employee via investments or pension plans. Financial benefits include:
- Comprehensive health insurance plans
- Pension plans or retirement savings plans
- Employment Insurance (EI) “Top-Up” programs
- Paid time off
To have a better understanding of these different financial benefits and how they work, we will take a closer look at each category.
Comprehensive health insurance plans
Comprehensive health insurance plans refer to private health insurance that helps Canadian employees pay for healthcare costs that are not covered by their provincial/territorial plan. Each province or territory in Canada has its own provincial or territorial health insurance plan that all Canadians and residents of Canada qualify for. This provincial/territorial health care plan should pay for almost all medical appointments or procedures. For example, seeing a doctor is always free, be they a general practitioner or specialist. Provincial/territorial health insurance makes it easy for Canadians to access basic health care that they do not have to pay for, meaning any private health insurance is considered an employee benefit. Comprehensive health insurance plans will pay for anything that is not covered by provincial/territorial plans. Some of the common healthcare services that may be paid for by these benefits are:
- alternative healthcare, including chiropractic care, physiotherapy, massage therapy, and acupuncture
- mental health services, such as psychology or counselling
- prescription medicine
- eye care
- dental care
Health insurance plans usually cover the cost of these different health care services, either by reimbursing the employee after payment or accepting direct billing from the practitioner. This type of health insurance is the most common part of an employee benefit program and is in place to help offset the added expenses of everyday living.
Canada Pension Plan or Retirement Savings Plan
Both the Canada pension plan and retirement savings plans can be considered part of an employee’s income, as they will be able to access the money once they retire. For both, the idea is that the employer will contribute a certain amount of money to the plan each year, which is usually paid as a percentage of the employee’s income. There are a few ways in which a pension plan can be set up. The most common pension plan is the Canada Pension Plan (CPP), which is a mandatory plan that employers are obligated to contribute to. This is a government of Canada pension plan and has many rules to follow, but the basic principle is the same—once you reach retirement age (60-65), you are eligible to start collecting CPP if you retire. Again, the idea of CPP is to help retirees pay for their basic needs and would be considered part of a person’s income. The Canadian Pension Plan is limited, however, which is why some companies choose to either use private pension plans or retirement savings plans. Companies that use Registered Retirement Saving Plans (RRSPs) to help compensate their employees for their eventual retirement will pay a certain amount into the plan each year and can claim this payment as part of the income they pay to the employee. This type of program allows for more contributions by the employee, which is why some companies prefer this system rather than CPP. The point of this plan is that an employee is given extra money that will be used at some point in the future for their retirement and is a huge financial benefit when set up for the employee. Companies who provide these types of financial benefits to their employees often have an easy time recruiting new workers, as this would be a good incentive to work at that business.
Employment Insurance (EI) “top-up” programs
Employment Insurance is paid by the employer and can be used as supplemental insurance if an employee needs to take long-term leave (or if they have been fired, but this article will not be speaking to that part of the program). Long-term leave could include maternity leave or leave due to injury or health issues. While this is a government-sanctioned plan, some companies choose to add what is called a “Top-up” to a certain percentage of the employee’s income. Since EI only pays a small amount of an employee’s total income, companies that offer a top-up program may then pay a certain percentage to allow an employee to have long-term leave without losing a significant part of their income. For example, some companies will top up EI by 60%, meaning, along with EI payments, an employee will also get 60% of their regular income from their employer. These types of programs mean that people taking time off for periods like parental leave may not lose too much income and may be financially stable during their time off. Top-up programs are a type of employee benefit that can draw good employees to your company. Since not all companies offer this type of compensation program, it can be a huge draw when great candidates are deciding between businesses. The top-up programs also allow for higher employee satisfaction, as they do not have to worry about a possible illness or injury placing a huge financial burden on them. People want peace of mind when working, and knowing you would be financially taken care of if something unexpected were to happen allows for lower stress levels. Top-up programs are also a huge draw to people who may be taking maternity, paternity, or parental leave in the future. Having a baby can be very expensive, and though Canadians are guaranteed time off to take care of their children, this time off does not have to be paid. Companies that are able to offer compensation as well as Employment Insurance have higher employee satisfaction due to these financial benefits options.
Paid time off
Though all Canadians get a few days of paid time off, there are some companies that will give their employees more than that allotted by the government. This type of financial compensation for time off is a huge benefit for employees, as it means they can have a good life-work balance. By allowing workers to take more time off than the customary few days (differs by province and territory), they are able to feel more relaxed at work, which increases productivity and employee retention. This can also be achieved by following all the civic holidays as well as the regular holidays. There are certain holidays during the year that are considered statutory, meaning all businesses take them off unless they fall under a particular industry that is exempt. Some other days are considered civic holidays, and companies can decide whether or not to have the holiday. By including these holidays in their calendar, companies provide extra job satisfaction to their employees. The civic holidays that may be added to the statutory holidays are:
- Civic Holiday (August)
- National Day of Truth and Reconciliation (September 30)
- Easter Monday (Monday after Easter)
- Remembrance Day (November 11)
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