Exam 9: Employee Benefits

Correct Answer:

Verified

The government has played a key role in the growth of employee benefits. There are three
government-mandated employment-related benefits: Workers' Compensation (provincial), Employment Insurance (federal), and Canada/Quebec Pension Plan (federal and Quebec). Additionally, such laws as the Income Tax Act, impacts most other employee benefits such as pension benefits acts. Mandatory retirement at age 65 has been outlawed in most provinces. Many pension and benefit plans have been revised to permi continued pension accrual and continuing benefits coverage for those working past age 65.
Unions have fought for the introduction of new benefits and the improvement of existing benefits. Many of the benefits in existence today were provided at employer initiative. Many employer-initiated benefits (such as rest breaks)were designed to create a climate in which employees perceived that management was genuinely concerned for their welfare.
Another important and sound reason for the growth of employee benefits is their cost-effectiveness in three situations. The first, is that most employee benefits are not taxable. Provision of a benefit instead of an equivalent increase in wages avoids payment of personal income tax. The second component arises because many group-based benefits (e.g., life and health insurance)can be obtained at a lower rate than could be obtained by employees acting on their own. Third, benefit premiums and pension contributions are tax deductible up to limits specified in the Income Tax Act.