COMPENSATION & BENEFITS ASSIGNMENT

Compensation & Benefits of Airline Industry

Team Members: Annette Martins (10) Darius Dsouza (62) Reisha Bhat (82) Samantha Dcosta (94)

INDEX
Contents Page Number 1 6 7 11 13 16 18

Introduction Advantages of compensation and benefits Types of workers compensation benefits

Case Study 1 Jet Airways Case Study 2 Emirates Case Study 3 United Airlines References

Compensation and benefits Compensation and benefits (abbreviated C&B) is a sub-discipline of human resources, focused on employee compensation and benefits policy-making. It is also known in the UK as total reward and as remuneration in Australia and New Zealand. The basic components of employee compensation and benefits Employee compensation and benefits are basically divided into four categories: 1. Guaranteed pay monetary (cash) reward paid by an employer to an employee based on employee/employer relations. The most common form of guaranteed pay is the basic salary. 2. Variable pay monetary (cash) reward paid by an employer to an employee that is contingent on discretion, performance or results achieved. The most common forms are bonuses and sales incentives. 3. Benefits programs an employer uses to supplement employees compensation, such as paid time off, medical insurance, company car, and more. 4. Equity-based compensation a plan using the employers share as compensation. The most common examples are stock options. Guaranteed pay Guaranteed pay is a monetary (cash) reward. The basic element of the guaranteed pay is the base salary, paid based on an hourly, daily, weekly, bi-weekly or a monthly rate. The base salary is typically used by employees for on-going consumption. Many countries dictate the minimum base salary defining a minimum wage. Individual skills and level of experience of employees leave room for differentiation of income-levels within the job-based pay structure. In addition to base salary, there are other pay elements which are paid based solely on employee/employer relations, such salary and seniority allowance.

Variable pay Variable pay is a monetary (cash) reward that is contingent on discretion, performance or results achieved. There are different types of variable pay plans, such as bonus schemes, sales incentives (commission), overtime pay, and more. An example where this type of compensation plan is prevalent is the real estate industry and real estate agents. A common variable pay plan might be the sales person receives 50% of every dollar they bring in up to a level of revenue at which they then bump up to 85% for every dollar they bring in going forward. Typically, this type of plan is based on an annual period of time requiring a "resetting" each year back to the starting point of 50%. Sometimes this type of plan is administered so that the sales person never resets and never falls down to a lower level. It also includes Performance Linked Incentive which is variable and may range from 130% to 0% as per performance of the individual as per his KRA. Benefits There is a wide variety of employee benefits, such as paid time-off, insurances (life insurance, medical/dental insurance, and work disability insurance), pension plan, company car, and more. A benefit plan is designed to address a specific need and is often provided not in the form of cash. Many countries dictate different minimum benefits, such as minimum paid time-off, employers pension contribution, sick pay, and many more. Equity-based compensation Equity based compensation is an employer compensation plan using the employers shares as employee compensation. The most common form is stock options, yet employers use additional vehicles such as restricted stock, restricted stock units (RSU), employee stock purchase plan (ESPP), and stock appreciation rights (SAR). The classic objectives of equity based compensation plans are retention, attraction of new hires and aligning employees and shareholders interests.

Organizational place In most companies, compensation & benefits (C&B) is a sub-function of the human-resources function. HR organizations in big companies are typically divided into three: HR business partners (HRBPs), HR centers of excellence, and HR shared services. C&B is an HR center of excellence, like staffing and organizational development (OD). Main influencers Employee compensation and benefits main influencers can be divided into two: internal (company) and external influencers. The most important internal influencers are the business objectives, labor unions, internal equity (the idea of compensating employees in similar jobs and similar performance in a similar way),organizational culture and organizational structure. The most important external influencers are the state of the economy, inflation, unemployment rate, the relevant labor market, labor law, tax law, and the relevant industry habits and trends. Bonus plans Bonus plans are variable pay plans. They have three classic objectives: 1. Adjust labor cost to financial results the basic idea is to create a bonus plan where the company is paying more bonuses in good times and less (or no) bonuses in bad times. By having bonus plan budget adjusted according to financial results, the companys labor cost is automatically reduced when the company isnt doing so well, while good company performance drives higher bonuses to employees. 2. Drive employee performance the basic idea is that if an employee knows that his/her bonus depend on the occurrence of a specific event (or paid according to performance, or if a certain goal is achieved), then the employee will do whatever he/she can to secure this event (or improve their performance, or achieve the desired goal). In other words, the bonus is creating an incentive to improve business performance (as defined through the bonus plan). 3. Employee retention retention is not a primary objective of bonus plans, yet bonuses are thought to bring value with employee retention as well, for three reasons: a) a well designed bonus plan is paying more money to better performers; a competitor offering a competing job-offer to these top performers is likely to face a higher hurdle, given that these employees are already paid
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higher due to the bonus plan. b) if the bonus is paid annually, employee is less inclined to leave the company before bonus payout; often the reason for leaving (e.g. dispute with the manager, competing job offer) 'goes away' by the time the bonus is paid. the bonus plan 'buy' more time for the company to retain the employee. c) employees paid more are more satisfied with their job (all other things being equal) thus less inclined to leave their employer. The concept saying bonus plans can improve employee performance is based on the work of Frederic Skinner, perhaps the most influential psychologist of the 20th century. Using the concept of Operant Conditioning, Skinner claimed that an organism (animal, human being) is shaping his/her voluntary behaviour based on its extrinsic environmental consequences i.e. reinforcement or punishment. This concept captured the heart of many, and indeed most bonus plans nowadays are designed according to it, yet since the late 1940s a growing body of empirical evidence suggested that these if-then rewards do not work in a variety of settings common to the modern workplace. Research even suggested that these type of bonus plans have the potential of damaging employee performance.

Compensation : Refers to this exchange, but in monetary terms. Compensation is the employer's feedback for an employee's work. It simply is the monetary value you would give to your four employees in return of their services. In the book Human Resource Management, Gary Dessler defines compensation in these words "Employee compensation refers to all forms of pay going to employees and arising from their employment." The phrase 'all forms of pay' in the definition does not include non-financial benefits, but all the direct and indirect financial compensations. Benefits: Employees today are not willing to work only for the cash alone, they expect 'extra'. This extra is known as employee benefits. Also known as fringe benefits, Employee benefits are non-financial form of compensation offered in addition to cash salary to enrich workers lives. Employee benefits are not performance-based, they are membership-based. Workers receive benefits regardless of their performances. Employee benefits as a whole have no direct affect on employee performance, however, inadequate benefits do contribute to low satisfaction level and increase absenteeism and turnover in employees (DeCenzo and Robbins; 2007). So you would have to carefully design your benefit package. Your package may include a cell phone to each worker, taking them to a training workshop or seminar, giving them a day or two off every month and so on. While deciding on the benefits package, do consider the associated costs.

ADVANTAGES OF COMPENSATION AND BENEFITS A well designed compensation and benefits plan helps to attract, motivate and retain talent in your firm. A well designed compensation & benefits plan will benefit your boutique in the following ways. 1. Job satisfaction: Your employees would be happy with their jobs and would love to work for you if they get fair rewards in exchange of their services. 2. Motivation: We all have different kinds of needs. Some of us want money so they work for the company which gives them higher pay. Some value achievement more than money, they would associate themselves with firms which offer greater chances of promotion, learning and development. A compensation plan that hits workers needs is more likely to motivate them to act in the desired way. 3. Low Absenteeism: Why would anyone want to skip the day and watch notso-favorite TV program at home, if they enjoy the office environment and are happy with their salaries and get what they need and want? 4. Low Turnover: Would your employees want to work for any other boutique if you offer them fair rewards. Rewards which they thought they deserved? Advantages to your employees 1. Peace of Mind: your offering of several types of insurances to your workers relieves them from certain fears. Your workers as a result now work with relaxed mind. 2. Increases self-confidence.

TYPES OF WORKERS COMPENSATION BENEFITS Workers' comp benefits can include medical care, rehabilitation expenses, and disability coverage to compensate you for lost wages. If you've been injured on the job or become ill through your work, you may have already been told that you can receive some or all of these benefits through your employer's workers' compensation insurance. If you are a dependent family member of someone who was killed on the job, you might be entitled to death benefits through workers' compensation. This article takes a brief look at each type of workers' compensation benefit -explaining what it is and who is eligible. Each state has its own spin on these general rules, and the details can be complicated. If you have any questions about your workers' comp benefit eligibility, or if an employer is disputing your right to workers' comp benefits, you should consult with an attorney in your state who has experience dealing with workers' compensation issues. Medical Care Medical benefits available through workers' compensation include hospital and medical expenses that are necessary to identify and treat your injury or illness. Although the details of what is covered vary in each state, workers' compensation generally covers such things as doctor visits, medication, and surgeries. If you need equipment (such as a wheelchair or special vehicle) to help you deal with your injury, workers' compensation will likely cover that cost as well. In some instances, workers' compensation will also cover services like counselling, pain therapy, and acupuncture. For the most part, only generally acceptable medical practices will be covered. If you would like to use an experimental or investigative treatment or therapy, you may have trouble getting coverage for those expenses, so you may want to get an attorney's help. State laws differ on whether you or your employer gets to choose your health care provider, and some states regulate how much the provider may charge for your treatment.

Rehabilitation Rehabilitation benefits pay for medical and therapeutic care (such as physical therapy) necessary to help you cope with and recover from your injury or illness. They also cover the care and training necessary for you to regain the skills and abilities you need to return to work. If your injury or illness prevents you from returning to your former job, rehabilitation benefits might pay for evaluation, retraining, tuition, and other expenses associated with helping you become qualified to work at a different job. Disability The primary role of disability benefits is to compensate you for wages lost while your injury or illness makes it impossible for you to work. Disabilities fall into one of four categories depending on whether they are total or partial, temporary or permanent. A temporary total disability is one that prevents you from working at all, but only for a limited amount of time. In other words, you can't work now, but you will be able to work someday. The vast majority of workers compensation disabilities fall into this category. A temporary partial disability is one that prevents you from doing some of the duties of your job for a limited amount of time. In other words, you can do parts of your job now, and someday you may be able to do all of the duties of your job, just as you did before your injury. A permanent total disability is one that prevents you from ever returning to work. You don't need to be totally helpless or medically incapacitated to fall into this category, just unable to work at your job or a similar one. A permanent partial disability occurs when the damage is permanent, but it only partially impairs your ability to work. If your injury or illness places you in any one of these categories, you are entitled to some form of disability benefit. The benefit you receive will be based on the amount you were earning prior to your injury -- typically, two-thirds of your wages (although some states set a cap on the amount a worker can receive). You will not have to pay income tax on the benefits, so the amount
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will be closer to your usual wages than it first appears. Most states will require you to wait a period of time (usually a week) before you can start collecting disability benefits. Death Most states' workers' compensation programs provide death benefits to people who were related to the deceased worker (for example, a spouse, child, parent, or sibling) and were financially dependent on that person. Although most states provide funeral and burial expenses as part of this benefit, the main purpose of the benefit is to compensate dependent family members for the loss of financial support. Most states calculate this benefit as a percentage of the deceased worker's earnings. Some states have maximum and minimum amounts; others provide a lump sum. Sometimes, the relationship between the dependent and the deceased worker can pose difficult legal issues. For example, some states do not allow a partner to receive benefits if the partner and the worker were not legally married. And, although children born during a valid marriage are almost always allowed to receive benefits, only some states allow benefits for stepchildren or children born outside of marriage. Parents of the deceased worker can also receive benefits if they were financially dependent on the worker. Depending on the state, parents might include biological parents, adoptive parents, in-laws, and foster parents.

Fringe Benefits Fringe benefits are a variety of non-cash payments are used to attract and retain talented employees. They may include tuition assistance, flexible medical or child-care spending accounts (pre-tax accounts to pay qualified expenses), other child-care benefits, and non-production bonuses (bonuses not tied to performance). Tuition reimbursement can be an especially important benefit if you plan to take classes in your personal time. This can be a great way to advance in your career. Most firms offering tuition assistance require that courses are related to job duties.

Retirement Benefits Retirement benefits are funds set aside to provide people with an income or pension when they end their careers. Retirement plans fit into two general categories: In defined benefit plans (sometimes called pension plans), the benefit amount is pre-determined based on salary and the years of service. In these plans, the employer bears the risk of the investment. In defined contribution plans (such as a 401k plan), employer or employee contributions are specified, but the benefit amount is usually tied to investment returns, which are not guaranteed.

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CASE STUDY 1COMPENSATION & BENEFITS AT JET AIRWAYS Monetary Compensation Staff Travel Authority ( Free Tickets for air travel within India, subject to availability of seats) Eligibility: Employees who have completed 5 years of regular service with Jet Airways and those who superannuate. Superannuating employees will be eligible for 2 tickets per year for life (self and spouse). Only taxes for the ticket fare need to be paid. Tickets are subject to availability (Load-basis). Hence, the seats for the travel are not confirmed. Medical Benefits Medical Policy Covers Parents. Pre-existing diseases are also considered. The person is covered from the date of joining the company. Although Maternity is not considered to be an illness, it is also included in the Medical policy. Medical Reimbursements Eligibility: All employees not covered under ESIC including dependant family members (parents and children). Reimbursements can be claimed depending on employee grade. Unclaimed amount will be paid to the employee in March every year subject to tax. Reimbursements will be paid subject to provision of medical bills.
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 Mediclaim Policy Reimbursements, in case of hospitalization is considered on provision of supporting documents. Eligibility: All employees including their family. Group term Life Insurance Covers all types of death. Eligibility: Only employees of Jet Airways and not their dependants. Accident On Duty Policy Employee is covered for 104 weeks from the date of accident. Travel Policy ( covers Domestic and International travel for business purposes) To ensure the comfort of employees during business travel. Airport managers must prepare a list of hotels where employees can be accommodated. Expenses on telephone calls can be claimed with supporting vouchers to be attached. Expenses on liquor, cigarettes for entertainment purposes will have to be approved by V.P. Zero Sickness Bonus To reward Cabin Crew who show regular attendance to perform flight duties. This is done to enhance employee productivity. Company Car To provide car benefits for Grade M1 employees and above. Company provides fully maintained cars to expatriates.Only employees who own/buy cars of their own will be eligible for car allowance. Repairs and Maintenance allowance and Fuel Reimbursements can be claimed within prescribed limits.

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CASE STUDY 2COMPENSATION & BENEFITS AT EMIRATES Monetary benefits Competitive Tax-Free Basic Salary This is your fixed monthly cash payment related to your position and based on the knowledge and competencies you bring to the role. Salaries are benchmarked for all Cabin Crew employees against relevant industries and are reviewed on a regular basis to ensure they remain competitive. Accommodation Emirates provided shared Cabin Crew accommodation with your own bedroom. Transportation Emirates provided

Transportation

to

and

from

the

airport.

The eligibility of the following Emirates Cabin Crew benefits is dependent upon the role and/or applicants unique personal circumstances. Profit Share Scheme The Company operates a profit-share scheme based upon the profit of the Company for the financial year. A qualifying period is applicable. Exchange Rate Protection Scheme 50% of Basic Salary is protected against adverse exchange rate fluctuations between the UAE Dirham and your currency classification. This is not applicable to currency classifications that are pegged against the USD. Professional Specialist Allowances There may be additional allowances payable in order to recognise the speciality of the role undertaken.

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Non-Monetary Benefits Annual Leave Minimum of 30 calendar days per annum. Leave increases above 30 calendar days is dependent on the seniority of the position. End of Service Gratuity In accordance with UAE Labour Law, on leaving the company you will be provided with an end of service (gratuity) payment calculated as 21 days basic salary per annum for the first 5 years of service and then 30 days basic salary per annum for each year of service beyond 5 years of service. The eligibility of the following benefits is dependent upon the role and/or applicants unique personal circumstances: Leave Tickets Free annual leave tickets are provided to approved leave destinations for the employee and their eligible dependants, subject to Company policy. Education Support Allowance Financial support towards the payment of core tuition fees is provided to staff in more senior positions. It is intended as a contribution towards the overall expenses the employee may incur for their childrens education. Insurance Personal Life and Accident Insurance/Workmens Compensation Insurance. Medical and Dental Medical and Dental Provision/Government Health Card. Government Pension Scheme Eligible UAE National and GCC citizens are enrolled into their respective Government Pension Scheme, with employee and Company contributions payable. Provident Fund On leaving the Company an employee is entitled to an End of Service Gratuity or Provident Scheme payment, whichever is higher. The Provident Scheme is a long-term savings arrangement provided to more senior positions and is designed to help plan for retirement. The company
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contributes 12% of basic salary, while you are required to contribute 5% of your basic salary. Additional Privileges A range of concessional ticket options are available for staff and their eligible dependants, giving you the opportunity to travel the world. Some elements of concessionary travel are available immediately upon joining, but eligibility for others are subject to completion of a probationary period. Emirates Card By virtue of being an Emirates Group employee you can avail of attractive discounts at over 100 dining, retail, hotel and leisure outlets in Dubai and the UAE. You can also upgrade to the Emirates Platinum Card and avail over 300 additional discounts and benefits and club memberships.

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CASE STUDY 3COMPENSATION & BENEFITS AT UNITED AIRLINES United Airlines prides itself on offering a wide array of benefits and incentives to employees. Eligibility may vary according to length of service and position. Travel passes: As a United Airlines employee, you and your immediate family members, including parents, enjoy reduced-rate travel privileges. In addition, buddy and vacation passes are distributed to employees with at least six months of service. Profit sharing plan: United Airlines shares its continued success with all employees through one of the best plans in any industry. On-time bonus: When United Airlines meets its on-time goals for the month there is a cash bonus plan in place to reward the employees for their teamwork and dedication. Perfect attendance program: United Airlines has an exciting Perfect attendance Recognition Program that rewards employees for consecutive months or years of perfect attendance. Retirement benefits: United Airlines provides competitive retirement benefits such as a 401(k) Savings plan. Benefits vary by workgroup. Vacation and sick pay: As a full- or part-time United employee you can take advantage of your paid vacation time to travel and utilize your travel passes. The sick leave policy gives both full- and part-time co-workers time off from work with pay when ill or unable to work. Business travel accident insurance: United provides this coverage immediately for all employees. Medical and dental insurance: Co-workers have the option to enroll themselves and their family members, including same-gender domestic partners, in comprehensive medical and dental plans. Vision insurance: Co-workers may elect coverage for eye exams, glasses or contact lenses. Long-term disability plan: Co-workers may elect disability income protection coverage. Life insurance: United provides company-paid basic life insurance for co-workers. Employees may also elect optional life insurance for themselves and their families.

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 Flexible spending account: United co-workers have the opportunity to pay for certain health care and dependent care expenses with pre-tax money. Personal accident insurance: Employees may elect accident insurance coverage for themselves and family members in the event of accidental injury or death.

United Announces New Shared Rewards Opportunities for Employees Employees can earn up to an additional $1,200 yearly for on-time performance CHICAGO, Dec. 19 /PRNewswire-FirstCall/ -- United Airlines has announced a new incentive program available to the majority of represented employees. These employees can receive up to an additional $1,200 annually, when certain performance goals are achieved. "We are all focused on operating a good airline that is safe, clean and reliable; and our employees work every day to achieve an on-time operation for our customers," says John Tague, executive vice president and chief operating officer. "We are pleased to offer a program that will provide further incentive for our employees and to recognize their efforts." The program was developed to create a stronger link between pay and performance against United's most critical goals providing greater opportunity for all employees to benefit as United improves our performance for our customers. Under the new program, employees will have the opportunity to earn monthly cash rewards of up to $100 if United achieves a first-place ranking among competitors in Department of Transportation on-time arrival rankings, and a $65payment if the company achieves a second-place ranking or meets its own stated goal. Richard Delaney, president and directing general chairman of IAM District 141, said, "Our members deserve to be rewarded for the hard work they perform every day. This program recognizes that work and benefits IAM members in a real, tangible way." U.S. salaried and management employees as well as many of our international represented employees will participate in a separate incentive program based in part on an annual financial objective.

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References http://www.hr.com/en/app/blog/2010/02/compensation-and-benefits-definitionand-importanc_g5kiosxm.html https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad =rja&ved=0CEUQFjAD&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2F Compensation_and_benefits&ei=fQ0eUoOgO8SFrAeL4oDYCA&usg=AFQjC NHvv_WmI-HrX29d1xA7KjH4lsMbQ&sig2=_DCziWvAEPVyrQiVlJwnhQ&bvm=bv.51156542,d.bmk http://www.nolo.com/legal-encyclopedia/types-of-workers-compensationbenefits-32962.html http://www.iseek.org/jobs/benefittypes.html https://www.emiratesgroupcareers.com/english/Careers_Overview/cabin_crew/ emp_benefits.aspx

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