Employee Benefits vs Employee Rewards: What’s the Difference?
Employee benefits and rewards constitute integral elements within a comprehensive compensation framework provided by employers. These components, although interconnected, possess unique attributes and fulfill distinct functions.
Related: What Does a True Employee Benefits Programme Look like?
4 Major Differences
1. Purpose
Employee Benefits: Benefits, within the scope of employee welfare and support, constitute enduring provisions aimed at improving the overall quality of life for employees and their families. These provisions are strategically crafted to furnish financial stability, facilitate a harmonious equilibrium between work and personal life, and foster the well-being and health of the workforce. Illustrative instances of such benefits encompass comprehensive health insurance coverage, robust retirement plans, remunerated periods of leave (including vacation and sick leave), and educational assistance programs.
Employee Rewards: Rewards, in the context of employee motivation and recognition, are commonly employed as short-term incentives granted to individuals or teams upon successful attainment of predefined objectives or performance benchmarks. These incentives are strategically devised to inspire and acknowledge employees for their exceptional contributions and achievements. Various forms of rewards encompass monetary bonuses, commission-based incentives, recognition accolades, and performance-driven rewards.
2. Duration
Employee Benefits: Benefits are typically continuous and are extended to employees throughout the duration of their employment, typically on a recurring basis. They are regarded as integral components of the standard compensation package and are not contingent upon short-term accomplishments or milestones.
Employee Rewards: Rewards are frequently singular or intermittent disbursements or recognitions bestowed upon individuals for attaining particular milestones or meeting performance objectives. These rewards typically lack a recurring nature and are contingent upon specific achievements.
3. Taxation
Employee Benefits: Benefits like health insurance and retirement contributions can offer tax advantages to both employers and employees. In certain instances, employer contributions to these benefits may be eligible for tax deductions, and employees may also enjoy specific tax benefits related to them.
Employee Rewards: Rewards such as bonuses and commissions are typically subject to income tax, with potential variations in tax implications based on the country and local tax regulations. In many cases, employees receive the full reward amount upfront and subsequently fulfill their tax obligations when filing their income tax returns.
4. Customisation
Employee Benefits: Benefits are generally offered in a uniform manner to employees, although there may be limited room for customisation within the boundaries of legal and regulatory frameworks. As an example, employees may be afforded the choice to select from a range of distinct health insurance plans.
Employee Rewards: Rewards can be individually tailored to acknowledge and motivate particular behaviors, competencies, or accomplishments. They can be personalised to align with an employee's specific performance or the achievements of a team.
How are You Rewarding Your Employees?
In today’s modern working environment, employees are as discerning as ever. Beyond just a good financial compensation package, employees now take on a holistic perspective that places a significant weightage on welfare privileges and an enriching lifestyle.
So this begs the next question; are you doing enough to compete for the human capital talent that you want to attract and retain in your organisation?
Introducing…
Reward employees with the power of choice over the benefits they need to better their quality of life. Learn how you, as an employer, can maximise your employee benefits programme and implement a rewards programme too - at no extra cost!.
