Chapter 13 - Benefits

Question 1

Explain the strategic role of employee benefits.

Answer 1

The strategic importance of employee benefits is increasing in the post–job-security era. When benefits are aligned with business strategy, they can help to attract and retain the right people to achieve business objectives.

Question 2

** Describe five government-mandated benefits.

Answer 2

Government-mandated benefits include:
 employment insurance (EI), 
pension plans, 
workers’ compensation, 
paid time off (including maternity and paternity leave, breaks, and vacations), 
and pay on employment termination. 

Employees and employers must abide by the rules associated with the benefits. Employers deduct EI and pension contributions at the source of payment.

Question 3

** Discuss five types of voluntary healthcare-related employee services or benefits offered to employees.

Answer 3

Employers assist with ensuring that employees’ basic short- and long-term healthcare needs are met by offering additional healthcare benefits.

There can be shared costs, or the costs can be transferred directly to the employee. These include life insurance, short-term disability or sick leave plans, long-term disability, and mental health benefits.

Question 4

** Describe the two categories of pension plans and the shift that is occurring in their relative popularity.

Answer 4

The two categories of pension plans are defined benefit plans and defined contribution plans.

Defined benefit plans provide a benefit based on a formula related to years of service, and the employer assumes the investment risk associated with the pension fund assets.

Defined contribution plans provide for specified contributions to a pension fund by the employer, and the benefit will vary depending on the rate of return on the pension fund assets (employees assume the investment risk).

Question 5

flextime

Answer 5

A work schedule in which employees’ workdays are built around a core of midday hours and employees determine, within limits, what other hours they will work.

Question 6

pay in lieu of reasonable notice

Answer 6

A lump-sum equal to an employee’s pay for the notice period provided to employees who cease working immediately.

Question 7

advance/reasonable notice

Answer 7

Advance written notice required if the employer is going to terminate employment of a worker without cause.

Question 8

pension plans

Answer 8

Plans that provide income when employees reach a predetermined retirement age.

Question 9

short-term disability plans

Answer 9

Plans that provide pay to an employee when he or she is unable to work because of a non-work-related illness or injury.

Question 10

accidental death and dismemberment coverage

Answer 10

Employer-paid benefit that provides a fixed lump-sum benefit in addition to life insurance benefits when death is accidental or a range of benefits in case of accidental loss of limbs or sight.

Question 11

supplemental employee retirement plans (SERPs)

Answer 11

Plans that provide the additional pension benefit required for employees to receive their full pension benefit in cases where their full pension benefit exceeds the maximum allowable benefit under the Income Tax Act.

Question 12

employment insurance (EI)

Answer 12

A federal program intended to provide temporary financial assistance to eligible persons who experience interruption to their work through no fault of their own.

Question 13

compressed workweek

Answer 13

Schedule in which an employee works fewer but longer days each week.

Question 14

workers’ compensation

Answer 14

Workers’ compensation provides income and medical benefits to victims of work-related accidents or illnesses or their dependants, regardless of fault.

Question 15

deductible

Answer 15

The annual amount of health/dental expenses that an employee must pay before insurance benefits will be paid.

Question 16

coinsurance

Answer 16

The percentage of expenses (in excess of the deductible) that are paid for by the insurance plan.

Question 17

deferred profit-sharing plan (DPSP)

Answer 17

A plan in which a certain amount of company profits is credited to each employee’s account, payable at retirement, termination, or death.

Question 18

group life insurance

Answer 18

Life insurance provided at lower rates for all employees, including new employees, regardless of health or physical condition.

Question 19

vesting

Answer 19

A provision that employer money placed in a pension fund cannot be forfeited for any reason.

Question 20

disability management

Answer 20

A proactive, employer-centred process that coordinates the activities of the employer, the insurance company, and healthcare providers in an effort to minimize the impact of injury, disability, or disease on a worker’s capacity to successfully perform his or her job.

Question 21

employee benefits

Answer 21

Indirect financial payments given to employees. They may include supplementary health and life insurance, vacation, pension plans, education plans, and discounts on company products.

Question 22

critical illness insurance

Answer 22

The benefit that provides a lump-sum benefit to an employee who is diagnosed with and survives a life-threatening illness.