HRM Chapter 14

Definitions of Employee Benefits

• all forms of value, other than payment, that are provided to the employee in return for their contribution to the organization

• all rewards and services offered by a company that are not directly tied to an employee’s work performance but aim to improve their overall life stability and quality

• indirect compensation provided by an employer to enhance the well-being and quality of life of their employees

Types of Employee Benefits

Statutory Benefits

Legally required benefits, such as social security, workers’ compensation, and family leave.

Non-Statutory Benefits

Optional benefits designed by companies to meet employee needs.

Statutory benefits are mandated by law and generally adhered to by most companies, as violations can result in fines and penalties. Non-statutory benefits vary widely between companies and can be designed to reflect the characteristics of the company and the needs of the employees.

Comprehensive Categorization of Benefits - Health and Wellness Benefits

• Medical, dental, and vision insurance

• Mental health services

• Wellness programs and disability insurance

Comprehensive Categorization of Benefits - Financial Benefits

• Retirement plans, bonuses, and equity compensation

• Life insurance and savings/investment plans

Comprehensive Categorization of Benefits - Work-life Balance Benefits

• Paid time off, parental leave, and flexible work arrangements

Comprehensive Categorization of Benefits - Professional Development Benefits

• Educational assistance, training programs, and career development

Comprehensive Categorization of Benefits - Employee Perks and Discounts

• Transportation benefits, employee discounts, and company-sponsored events

Comprehensive Categorization of Benefits - Dependent Care Benefits

• Childcare and elder care assistance

Comprehensive Categorization of Benefits - Health and Safety Benefits

• Occupational health services and safety programs

Comprehensive Categorization of Benefits - Lifestyle and Convenience Benefits

• Food and beverage services and concierge services

Comprehensive Categorization of Benefits - Recognition and Reward Programs

• Employee recognition and incentive programs

Comprehensive Categorization of Benefits - Voluntary Benefits

• Supplemental insurance and legal services

Attraction, Retention, and Motivation of Employees

Attracting Top Talent

• Offering comprehensive employee benefits plays a crucial role in attracting top talent.

Retaining Valuable Employees

• Comprehensive benefits help retain valuable employees.

Motivating Employees

• Comprehensive benefits help motivate employees to perform at their best.

What MZ Job Seekers Value Most

• Work-Life Balance (66.5%)

• Fair Compensation (43.3%)

• Robust Welfare Systems (32.8%)

• Flexible Corporate Culture (25.9%)

• Job Security (14%)

• Company Brand Name (3.3%)

Preference for Salary vs. Benefits by Age Group

Overall

• Prefer Salary (%) 53.9

• Prefer Benefits (%) 46.1

20s

• Prefer Salary (%) 44.8

• Prefer Benefits (%) 55.2

30s

• Prefer Salary (%) 52.4

• Prefer Benefits (%) 47.6

40s

• Prefer Salary (%) 55.6

• Prefer Benefits (%) 44.4

50s

• Prefer Salary (%) 62.8

• Prefer Benefits (%) 37.2

Meeting Diverse Needs of Employees

A well-rounded benefits package helps meet the diverse needs of employees, accommodating different life stages and personal circumstance.

Health Benefits

• Comprehensive health coverage to meet diverse medical needs.

Retirement Plans

• Robust retirement savings options to support financial security.

Work-Life Balance

• Flexible policies and benefits to promote a healthy work-life balance.

Professional Development

• Opportunities for career growth and skill enhancement.

Enhancing Employee Well-Being and Job Satisfaction

Providing robust benefits significantly enhances employee well-being and promotes a healthy work-life balance, thereby improving their overall quality of life and, consequently, their job satisfaction.

Improving Organizational Effectiveness and Employee Loyalty

Organizational Effectiveness

Investing in a comprehensive benefits package improves organizational effectiveness by fostering a motivated and productive workforce.

Employee Loyalty

Comprehensive benefits build strong employee loyalty, as workers are more likely to stay with an employer that supports their well-being and career growth.

Selecting Employee Benefits - The Organization’s Objectives

Decisions about benefits should take into account:

• Organization’s goals, objectives, and budget.

• Expectations of current employees and prospective recruits.

Selecting Employee Benefits - Employees’ Expectations and Values

• Employees expect to receive benefits that are legally required and widely available.

• They value benefits they are likely to use.

• Value differs from one employee to another.

• Benefits aid recruiting efforts.

• Organizations that do not offer expected benefits will have difficulty attracting and keeping employees.

Communicating Benefits to Emloyees

Communication is Essential

• Employees must be given information about benefits.

• It is difficult for employees and applicants to understand the value of benefits, so companies must help.

• Employers can use a variety of media to communicate.

Legally Required Employee Benefits in South Korea

In South Korea, employers are legally required to provide certain benefits to their employees. These benefits are designed to protect the rights and well-being of workers in the country.

Four Major Social Insurances

• National Pension

• Employment Insurance

• National Health Insurance

• Industrial Accident Compensation Insurance

National Pension

The purpose of the National Pension is to guarantee a minimum income by paying pensions when income decreases or disappears due to old age, disability, or death. Employers are required to contribute 4.5% of the employee’s monthly salary, which is matched by the employee.

National Health Insurance

• Purpose: To cover medical expenses for illness, injury, and preventive care.

• Employer’s Requirement:
  Contribute 3.43% of the employee’s monthly salary, matched by the employee.

Employment Insurance

• Purpose: To provide unemployment benefits, promote employment, and support job skills development.

• Employer’s Requirement: Contribute 0.65% to 1.85% of the employee’s monthly salary, depending on the company’s size and industry, The employee contribution is 0.65%.

Industrial Accident Compensation Insurance

• Purpose: To compensate workers for work-related injuries and diseases.

• Employer’s Requirement: Employer’s contribution rate varies by industry risk level, typically ranging from 0.6% to 18.5% of the employee’s monthly salary. Employees do not contrubute to this.

Paid Leave

Annual Leave

• To provide adequate rest for employees. Employees who have worked for one year are entitled to at least 15 days of paid annual leave. New employees earn one day leave per month worked, up to 11 days in the first year.

Weekly Holiday

• To ensure at least one day of rest per week. Employers must provide at least one paid day off per week, typically Sunday.

Public Holidays

• To ensure employees have time off during national holidays. Employers must provide paid leave on designated public holidays. If employees work on these days, they are entitled to additional compensation.

Mandatory Paid Public Holidays:

• New Year’s Day (January 1st)

• Lunar New Year (three days)

• Independence Movement Day (March 1st)

• Children’s Day (May 5th)

• Buddha’s Birthday (8th day of the 4th Lunar month)

• Memorial Day (June 6th)

• Liberation Day (August 15th)

• Chuseok

• National Foundation Day (October 3rd)

• Hangeul Day (October 9th)

• Christmas Day (December 25th)

• Election Days: Presidential and general election days (paid)

• Substitute Holidays

Maternity/Paternity/Family Care Leave

Pregnancy

• Infertility treatment leave

• Reduced working hours during pregnancy

• Allowance for fetal examination time

Childbirth

• Maternity leave

• Paternity leave

• Miscarriage/stillbirth leave

Childcare

• Nursing time

• Parental leave

• Reduced working hours during the childcare period

Family Care

• Family care leave

• Family care vacation

• Reduced working hours for family care

Standard Working Hours

• Purpose: To protect workers’ health and safety

• Employers’ Requirement: Standard working hours are 40 hours per week, not exceeding 8 hours per day. Overtime is allowed up to 12 hours per week.

Minimum Wage, Overtime Pay, Severance Pay

Minimum Wage

• To ensure a minimum standard of living for workers. Employers must pay at least the minimum wage, which is KRW 9,860 per hour as of 2024

Overtime Pay

• To fairly compensate for extra work hours. Employers must pay at least 1.5 times the normal hourly wage for overtime hours.

Severance Pay

• To provide financial support to employees upon termination of employment. Employers must provide severance pay to employees who have worked for at least one year, equivalent to one month’s average wages for each year of service.

Occupational Safety and Health

The purpose of Occupational Safety and Health regulations is to ensure the safety and health of employees in the workplace. Employers must comply with these regulations, provide necessary safety training, and ensure a safe working environment for their employees.