What are employee benefits

Employee benefits are additional perks provided to employees beyond their base salary, often outlined in the gross pay section of their contract. These benefits play a crucial role in enhancing employee retention, loyalty, and satisfaction, and may include:

• Health insurance: Coverage for medical, dental, and vision care.
• Retirement plans: Contributions to retirement savings accounts, such as 401(k) in the US.
• Paid leave: Includes vacation days, sick leave, and parental leave.
• Bonuses: Performance-based or annual bonuses to reward employees.
• Flexible working hours: Allowing employees to adjust their working hours.
• Gym memberships: Subsidies or full coverage for fitness center memberships.
• Childcare support: Assistance with childcare expenses or onsite facilities.

Increasingly, businesses are extending these benefits to part-time workers and contractors, fostering a healthier, more inclusive work environment.

What are some examples of international employee benefits?

Employee benefits for companies that hire globally vary by country. If you hire a person outside your country, you’ll need to provide benefits compliant with local laws. Check out our global hiring guide for any country’s specific requirements. Or, check out a sample of mandatory worldwide benefits below.

United States: In the US, full-time employees (and their family members) must receive health insurance, pension plans, unemployment insurance, workers’ compensation, and family and medical leave.

Europe: In most European countries, full-time employees get paid vacation time, retirement contributions, long-term disability insurance, paid parental leave, and more.

Asia: In Asia, employees receive pension insurance, maternity insurance, unemployment insurance, medical insurance, and work-related injury insurance in almost every country.

Africa: In many African countries, employees are entitled to a skills development levy on top of medical and unemployment insurance.

Australia: In Australia, employees are entitled to paid time off (PTO), maternity leave, long service leave, paid sick leave, and superannuation.

Latin America: Dental care is mandatory in some countries in LATAM, such as Brazil. Other common statutory benefits include retirement plans, paid time off, health plans, and sometimes, even 13th and 14th-month salary.

Why invest in a strong employee benefits package?

Employee benefits are an investment rather than an expense. According to Buck, 80% of employers experienced direct savings thanks to their voluntary benefits program, primarily through employee attraction and retention, employee engagement, and higher participation in cost-favorable plans.

Attract top talent: The pandemic and subsequent rise of remote work started a talent war around the globe. Many people will not consider jobs that don’t offer flexible working hours or working from home or say they’d quit if asked to return to the office. That’s why companies must also provide competitive employee benefits in addition to competitive salaries.

Increase job satisfaction and retention: Offering benefits such as unlimited paid time off, flexible working hours or wellness programs can help increase your employee retention rate.

Employees who feel valued and fairly compensated for their work are more likely to engage with their coworkers, become top performers, and stay loyal to your company for years.

Comply with legal requirements: Learning about mandatory employee benefits worldwide also helps you avoid legal penalties for non-compliance with local laws. When hiring international employees, you must learn about minimum wages, taxes, working hours, and statutory benefits. Having this knowledge will ensure you provide your employees with every legal entitlement.

Reduce costs: Some employees are willing to accept an average salary if you offer an above-average benefit plan. Reducing salaries could be a huge saving for your business, especially if you’re only getting started or you run a small business with limited salary budgets. Of course, no benefit is a good excuse for underpaying employees. 

Improve employee productivity: With the right benefits package, you can help your employees be healthier, achieve a better work-life balance, and feel less stressed at work. Supportive benefits can contribute to employees taking fewer sick days, creating a more positive atmosphere within the team, and working more productively.

How can you create an employee benefits package for your team?

Creating an employee benefits package is complex, especially for global teams. Employers need to stay on top of local laws to ensure compliance. They must also learn which perks their team will appreciate and use. You can handle benefits yourself or outsource benefits administration to an EOR.

Establish a budget: Before you dive deep into planning your benefits package, you have to know how much money you have at your disposal. Examine other businesses of your size and other companies from your industry to get an idea of a standard benefits package.

Forecast your hiring in the upcoming year. Are you planning to hire five or 55 employees this year? Your team’s growth may help you determine how much money per employee you can set aside for the benefits.

Calculate the cost per employee per year for each type of employee benefit you’d like to offer and determine which benefits are eligible for tax deductions.

Total employee compensation entails more than just employees’ net salary. Commissions, bonuses, stock options, profit sharing, and IT reimbursements also take part of the total compensation package. Create flexible packages based on position and location and determine the range of costs you may incur for hiring in different countries.

This flexibility will allow you to allocate your resources appropriately. Some employees prefer a higher salary and fewer benefits. Others accept a lower salary if they can receive help with their student loan repayments, for example.

Determine which benefits you’ll offer: Try to be as inclusive as possible. Understanding your employees and what matters to them will help you provide them with suitable benefits. If most of your workers are parents, include childcare perks or tuition reimbursement for their children.

Consider creating personalized benefits packages. Some employees may not want a gym membership but would love to take dance lessons or receive travel discounts.

How do you calculate employee benefits?

Calculate your employee benefits to understand how much your workers cost you and create forecasts and budgets for the future. For each employee with a salary of $35,000 per year, your overall costs may range from $43,750 to $49,000. 

The formula includes, depending on your employee benefits package, mandatory benefits, fringe benefits, and any potential bonuses, commissions, merit pay, etc.

The overall costs also depend on the location and local statutory benefits. If you’re interested in a particular country, use our salary calculator to calculate the overall costs of hiring a foreigner.

Here’s an example:

You’re from the US and want to hire a software engineer in Germany. For a monthly salary of $66,000, your total annual cost would be around $80,340. You’d have to pay:

• $5,478 for retirement benefits

• $5,095 for healthcare insurance plans

• $702 for unemployment security

• $994 for long-term insurance fees

• $1,320 for accident security

• $660 for maternity leave

Learn more about the employee benefits in each country with Deel's Global Hiring Guides.