How can Flexi Benefits & Compensation help increase Employee Engagement?

How Flexi Benefits & Compensation help?

Modern reward strategies play a key role in employee engagement and help employees to feel valued. Benefits are forms of value other than a payment that is provided to employees in return for their contribution to the organization. Benefits could be thought of as tangible or intangible.

Types of Benefits 

Intangible benefits can be in the form of appreciation from the manager, being considered for promotion, being nominated for a study program, and so on. Tangible benefits on the other hand will typically refer to retirement plans, life insurance, disability insurance, health insurance, vacation, employee stock options, etc.

Benefits are becoming increasingly expensive for businesses hence many organizations are today opting for Flexible Benefit Plans. These benefits work as encouragement and appreciation for the hard work that an employee displays. These Flexi benefits were earlier referred to as fringe benefits or perks. 

Flexi Benefit Scheme Design 

The most important things to be borne in mind while designing the Flexi benefit scheme are as follows:

  • The benefits are extended to all employees and not restricted to any specific team
  • The benefits are meant to boost morale and make the employee feel valued

Importance of Flexi Benefits

While salary and bonus play a vital role in retaining talent, Flexi benefits have an important part to play too. The following points bring forth the importance of Flexi benefits:

Talent Retention

Providing Flexi benefits gives employees a sense of belonging and the awareness that the organization cares about them. This induces a feeling of importance thus retaining talent within the organization for longer periods.

Brand Loyalty

The various benefits offered by an organization is a foolproof way of earning loyalty from employees. A happy engaged employee is sure to stay and also recommend others towards any job openings that might arise in the organization.

Increased Focus on Work and Productivity

Matching the industry standards in compensation benefits packages ensures an increase in focus on productivity from an employee. If the employee’s financial needs are well taken care of most of the battle is won.

Talent Acquisition

When the compensation packages and other Flexi benefits in an organization are sound, the word automatically gets around in the market thereby inviting the best talent.

Beating Competition

Putting in place a customized Flexi employee benefits scheme can be advantageous to an organization for staying ahead of its peers.

Compensation Packages

The Indian rewards market is unique due to the complexity and distinctive nature of the payment system but implementing a HRMS software can help you to eliminate the difficulties of calculating diverse benefits for payday.

Types of Employee Benefits On the basis of Time taken for Claim Settlement 

Employee benefits can be classified into two major categories depending on the time taken for settlement of the claim. They are as follows:

1. Short Term Employee Benefits

These benefits refer to those benefits which need to be settled within 12 months post the end of the reporting time in which the employee has rendered the service. These include:

  • Salary, wages, and social security contributions mentioned in Cost to Company (CTC)
    An employee offering services to an organization is entitled to be paid a salary. The social security contributions in India are governed by the Employees Provident Fund and the Miscellaneous Provisions Act. The Employee Provident Fund and Employee Pension Scheme are schemes are discussed in the later section of this blog.
  • Annual and Sick Leave
    Many organizations provide annual leave, sick leave, maternity leave which can be carried forward or encashed.
  • Non-monetary benefits such as housing, company vehicle, Sodexo food passes, conveyance allowance.
  • Profit-Sharing and Bonus
    Several organizations offer the benefit of sharing the profit of the organization in the form of bonuses.

2. Long Term Employee Benefits

Long term benefits include the following:

  • Long service benefits
  • Long term disability benefits
  • Long service leave/sabbaticals
  • Benefits associated with termination such as gratuity

Besides these two major categories, there is also another major category which is the Post Employment Benefits which includes pension, lump-sum payment, life, and medical insurance post-retirement, and so on.

Other Employee Benefits

Some of the other employee benefits are as follows:

Retirement Benefits

The retirement benefits include the following components

  • Employees Provident Fund (EPF)
    According to law, the organizations which participate in this scheme need to contribute 12% of the basic salary of the employee while the employee contributes another 12% to the EPF Fund. 
  • Voluntary Provident Fund (VPF)
    This is similar to the PF scheme wherein the employee determines the fixed contribution to be made every month and makes the contribution voluntarily. However, it does not have the compulsory 12% contribution made by the company like in the case of EPF.
  • Private Plans
    include the following: 
    (i)Private Provident Fund:
    Some companies opt out of the EPF scheme and set up their own PF trusts to manage them in-house. Such private funds offer better rates to employees, allow for early encashment in addition to offering loans on their respective accounts as well.
    (ii) Superannuation Plans:
    These are optional benefit plans which are offered to some of the employees. It is used as a long-term incentive plan for managers since the vesting period is longer.
    (iii) Gratuity Plans:
    Gratuity is mandated as an employee benefit by the Payment of Gratuity Act. According to this Act, employees must obtain a lump sum payment for 15 days  for each year of service. 
    (iv)Pension Plans:
    Many industries such as Railways, mines, Banks, and so on offer pension plans to employees. It refers to the investment of some portion of an employee’s income into a plan that can provide regular income after retirement.
  • Healthcare Benefits
    Healthcare benefits include reimbursement of medical bills, group insurance policies, discounts on medical facilities, and so on.
  • Wellness Programs
    Wellness Programmes such as Yoga programs, pre, and postnatal care, gym memberships are offered at discounted rates by several organizations since modern-day employers are realizing the importance of the needs of employees and their wellness.
  • Miscellaneous Benefits
    Other miscellaneous benefits include:
  • Food Coupons:
    Many organizations have the provision of providing food to their employees and this has led to employees being issued with food coupons. Food coupons such as those from Sodexo are used as tax saving instruments as well.
  • Conveyance:
    Several organizations offer cab/shuttle services to their employees. Company car lease policy is an effective tax saving policy which can be availed if available with the organization.
  • Leave Encashment:
    Employees can avail the benefit of paid leave for several reasons such as annual holiday, sick leave, maternity/paternity leave. Paid leave can be accumulated and carried forward for future use or can be encashed in some instances.
  • Financial Education:
    Several organizations are introducing financial wellness programs for their employees. This is of immense help to employees in planning for their future, fulfilling short and long-term financial goals as well as planning for their retirement. This ensures that employees are stress-free concerning their finances and are completely focused on their work.


Organizations need to bear in mind to adopt a strategy of an employee benefits scheme that would be most appropriate in terms of employee satisfaction and employee engagement as well as in controlling expenses and in the growth of revenue for the organization. For managing Flexi benefits and compensation smoothly companies can use payroll software which keeps the records of all types of benefits considered for each employee and also helps to calculate the remuneration.  

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