Question

You have been asked by your human resources (HR) director to create a benefits booklet for the employees within your organization. In your booklet, you will explain the discretionary (including pension and retirement plans) and mandated benefits that your organization offers. Be sure to completely explain these benefits and how to use them within your booklet. When discussing pension and retirement plans, ensure that the participation requirements for these plans are fully described.

The booklet should consist of at least five pages. No plagerism please. Be original and cite all sources

Answer 1

Employees Benefits scheme:

Provident Fund/Pension and Retirement scheme:

• All full time employees, contractual employees and trainees of the Company are eligible for Provident Fund from the date of joining.

• 12% of salary (Basic salary for permanent employees Or Stipend in case of Trainees/Contractual employees) is contributed monthly by the employee and equivalent amount by the Company to the Provident Fund.

• Employee’s contribution of 12% of salary is totally deposited in provident fund account whereas out of Employer’s contribution 8.33% is deposited in Pension scheme with the Government subject to a maximum of Rs. 541/- per month.

• The entire accumulation in the Provident fund plus applicable interest is available to the employee on retirement or separation.

• Each employee has to make a nomination through PF nomination form to designate family members who will receive the amount standing to the credit in the fund in the event of death.

• For the purpose of nomination, ‘Family’ means employee’s spouse, legitimate children, step-children and dependents parents, sisters and minor brothers.

• All members of Provident Fund are covered under Employees' Deposit-Linked Insurance Scheme (EDLI). Under this scheme in case of death of employee during service, the nominees of the employee shall receive a one-time compensation of Rs.1.32 Lakhs.

• A new employee on joining has the option of transferring his/her PF accumulations from the previous employer through Form 13. the same can be obtained from KRM or Payroll department.

• If the employee has a family, he has to nominate one or more person to receive the amount standing to his credit in the fund in the event of his death. For the purpose of nomination, ‘Family’ means employee’s spouse, legitimate children, step-children and dependents parents, sisters and minor brothers. Nomination should be made in prescribed format available with KRM department.

Withdrawal from Provident Fund:

• Any employee willing to withdraw amount from PF needs to apply to the Trustees of Provident Fund. The application is processed by KRM and Payroll departments.

• Withdrawals from Provident Fund can either be in terms of refundable loan or nonrefundable advance.

• Non refundable withdrawal is permissible in below circumstances only:

– For housing i.e. purchase of site and construction of house by self only or jointly with the spouse – permissible after 10 years of service

– Paying life insurance policy premium for self or spouse provided policy is assigned to trustees of Provident fund

• Refundable loan (Maximum 24 Equated Monthly Installments)

– Sickness of self & family members.

– Higher education of children beyond high School stage

– Rehabilitation against damage by calamities.

– Paying for legal proceedings that are instituted by employee in connection with official duty and are not against the employer

– Purchasing equipments for handicapped.

• Refundable loan (Maximum 48 Equated Monthly Installments)

– Marriage of self or children or sister

– Funeral or other mandatory religious ceremonies

– Repayment of Housing loan

• The rate of interest for PF loan is considered as 1% above the rate declared by the Government for giving credit of interest on member’s account. Since the present interest rate on PF is 8.6%, the present interest on refundable loans will be 9.6% on monthly reducing balance.

Tax on PF withdrawal:

• As per the provisions in the Income-tax Act, if the employee has rendered continuous service for five years or more, then the withdrawal of accumulated balance from PF is not taxable.

• If the PF balance includes amount transferred from previous employer(s), then the years of continuous service rendered to the former employer(s) would be included for the purpose of computing the five-year period.

Knowing your Provident Fund account balance

• Every year, a statement of account is provided to all the employees showing the balance in the Provident Fund account. In case the same is not received by anyone, it can be obtained from Payroll department.

Gratuity Scheme:

• All permanent employees of the company are covered under this scheme.

• Each employee is required to nominate one or more member of his family, who will receive the gratuity in the event of the death of the employee.

• Gratuity is payable to the employee after completion of 5 years of service upon cessation of employment by way of superannuation, or resignation, or death or disablement. However, in case of separation in 5th year, a continuous service of 240 days shall be construed as 1 year for payment of gratuity.

• Completion of 5 years of continuous service is not necessary for payment of gratuity in case of retirement or in the event of death or separation due to physical disablement or mental infirmities while in service which render an employee permanently incapable of further work.

• In the case of death of the employee or separation due to mental infirmities, the gratuity payable to him shall be paid to his/her nominee or his legal representative.

• The amount of gratuity shall be equal to fifteen days Basic salary last drawn by the employee for every completed year of service or part thereof in excess of six months subject to a maximum of Rs. 10 Lacs.

• For calculating “completed years of service” the period of service between date of joining as probationer till date of separation is considered. Continuous service of six months or more is considered as full year’s service.

• Gratuity is wholly forfeited in case of termination of services for misconduct.

Leave Travel Assistance Policy:

All employees will be entitled for LTA as mentioned in the Offer/ Appointment Letter.

The amount of LTA will be equivalent to two month’s Basic salary and they are eligible for the following year.

• LTA can be claimed post completion of 1 year of continuous service in the company. LTA will become due to the employee post the date of joining in the following year. For example, if an employee has joined on 1st July 2011, the LTA will become due on 2nd July 2012.

• Employees can claim LTA on or after the date on which it becomes due till end of financial year (i.e. till March end). In the above example, the concerned employee can claim LTA from 2nd July till 31st March.

• These rules are applicable for all employees of the organization irrespective of their year of joining.

• LTA application should be given in specified format to KRM department. It will then be approved by appropriate authority and forward to Accounts department for releasing the appropriate amount.

• The employees can avail the LTA amount once in a Financial Year provided that they have availed Privilege leave of at least 6 days.

• The application for leave must be submitted to KRM department mentioning it to be

LTA Leave.

• In order to avail of this benefit and employee must have requisite Privilege leaves to his credit.

• Leave period will include intervening holidays, if any.

• LTA cannot be accumulated.

Note on Income Tax Benefit

• Employees are required to submit a written declaration of the amount utilized for travelling at the time of claiming LTA. There is no statutory obligation to submit evidence or bills for the travel to the Company; these are to be submitted at the time of filing Income Tax return.

• If the amount claimed for exemption is lower than the LTA eligibility, then the balance will be subject to Tax as per rules.

• Exemption can be claimed only for cost of tickets by shortest distance for travel in

India with family i.e. spouse, children, dependent parents and siblings.

• The exemption can be claimed in respect of two journey(s) in a block of 4 calendars

years. The current block is year 2010-2013.

Medical Reimbursement Policy:

• Medical expenses will be reimbursed for self, spouse and dependent children. (i.e. legitimate or legally adopted children).

• Medical expenses include all expenditure incurred by an employee or his/ her dependants towards charges paid on Consultation fees, Pathology, conducting any other tests, or on the purchase of medicines or aids viz. Hearing, Visual, Dental, aids for impaired organs etc.

• Medical reimbursement entitlement amount will be 1 month’s Basic salary annually.

• For employees having Basic salary less than or equal to 15000/- PA, the amount will be reimbursed on submission of original receipts for medical expenses incurred for self, spouse and children. Medical Reimbursement may be claimed twice in every month on submission of bills.

• For employees having Basic salary more than 15000/- PA, the amount upto 15000 will be reimbursed on submission of original bills. Amount over and above 15000 will be paid through salary every month on equated basis. Medical Reimbursement may be claimed twice in every month on submission of bills subject to a maximum

of Rs. 1250/- per month.

• An employee has to claim the entire amount within the financial year. Any balance will be forfeited by the closing hour of financial year.

• The employee leaving the company during the year due to any reasons will be entitled to medical reimbursement up to the last day of service.

• For employees who are retiring in a financial year, the amount of Medical reimbursement for that year will be paid in full at the time of separation regardless of the month of superannuation. All payments are subject to statutory deductions.

Procedure

• Prescribed form to be duly filled and signed with all supporting cash memos/receipts/bills etc. and submit to KRM

• The Form will then be approved by appropriate authority (for MHS Division to be approved by IR & Administration department at Kamarhatty Plant and for the rest

by KRM at Taratolla H.O.).

• The same is then forwarded to Accounts Department for reimbursement.

• The reimbursement cycle is on a monthly basis and all bills will be consolidated and settled every month or can be collected cumulatively within one financial year.

Mediclaim Policy:

• Present insurer is National Insurance Co Ltd (Div-Ix Kolkata) and Present TPA (Third Party Administrator) is Family Health Plan (TPA) Limited.

• Mediclaim insurance will be applicable for Self (Primary Insured), Spouse and 2 dependent children.

• Midterm inclusion of member in the family cover can be considered only for

Newborn babies after completion of 3 months and Newly married spouse within 1 month of marriage. Employees should forward the enrollment forms duly filled to KRM for getting additional enrollments.

• Coverage on floater basis implies that the sum insured may be availed by any one family member alone or more than one member jointly.

• All employees and their declared dependents will be issued Mediclaim ID online card by the TPA.

• Any new joinee (and his eligible family members) to TIL will be covered from day one.

• Hospitalization should be anywhere in India.

• Cashless hospitalization facility is provided in the policy provided the hospital is part of the network hospital list of the TPA and identity of the patient is established by presenting the necessary documents (Mediclaim ID Card ). Hospital bills in all other cases may be reimbursed after discharge and payment.

Coverage

• Room, boarding, nursing expenses - maximum limit per illness 25% of Sum Insured. Room rent limit per day will be 1% of Sum Insured per day subject to maximum limit Rs. 5000. If admitted in Intensive Care unit – 2% of sum insured per day subject to maximum of Rs. 10,000

• Fees of surgeon, anaesthetist, medical practitioner, consultant and specialist - maximum limit per illness 25% of Sum Insured

• Anesthesia, Blood, Oxygen, OT Charges, Surgical appliances, Medicines, Diagnostic Material etc. and X-ray, Dialysis, Chemotherapy, Radiotherapy, cost of Pacemaker, artificial limbs and cost of stent and implant - maximum limit per illness - 50% of Sum Insured

• Ambulance services - 1% of the sum insured subject to maximum of Rs 1000/- provided registered ambulance is used for shifting patient from residence to hospital if admitted to ICU or emergency ward OR from one hospital to another.

• Hospitalization expenses of person donating an organ during the course of organ transplant will also be payable.

• Pre and post- hospitalization expenses (except maternity) – Relevant medical expenses incurred during period upto 30 days prior and 60 days after the hospitalization for a particular disease/ illness/ injury will be considered as a part of claim.

• Pre-existing condition will be covered by the policy. Pre-existing condition means any disease/ illness/ injury which existed prior to the effective date of insurance.

Exclusions applicable as per policy:

• Any congenital internal diseases like Cataract, Hernia, Prostrate operation etc. will be covered from day one.

• Maternity coverage will start after completion of 9 months from the date of joining with a maximum ceiling of Rs. 50,000.

• New born babies will be covered after completion of 3 months of age subject to intimation and documentation. This covers any exigency arising to save the life of the child.

• Employees and their spouses will be covered post retirement Exclusions

• Hospitalization primarily for diagnostic purposes/ health checkups

• Out Patient services

• Congenital external disease, sterility, venereal disease

• Intentional self-injury, use of drugs, alcohol, rest cure etc.

• All psychiatric & psychosomatic disorders / diseases

• AIDS or any sexually transmitted disease (STDs)