Employee welfare

Concept and Rationale

Meaning & definition of Employee
Welfare
• Employee welfare means “the efforts to make life worth living for
workmen. That means taking care of the well being of the
employees by different organisations.
• . According to Todd “employee welfare means anything done
for the comfort and improvement, intellectual or social, of the
employees over and above the wages paid which is not a
necessity of the industry.
• Referred to as betterment work for employees.
According to the Royal Commission
on Labour
• Labour welfare is a term which must
necessarily be elastic, bearing a
somewhat different interpretation in one
country from another, according to
different social customs, the degree of
industrialization and educational level of
workers.
Features of Employee Welfare
• Employee welfare is a comprehensive term including various
services, facilities and amenities provided to employees for their
betterment.
• The basic purpose is to improve the lot of the working class.
• Employee welfare is a dynamic concept.
• Employee welfare measures are also known as fringe benefits
and services.
• Welfare measures may be both voluntary and statutory
Objectives of Employee Welfare
• Employee welfare is in the interest of the employee, the
employer and the society as a whole. The objectives of
employee welfare are:
• It helps to improve. It improves the loyalty and morale of the
employees.
• It reduces labour turnover and absenteeism.
• Welfare measures help to improve the goodwill and public
image of the enterprise.
• It helps to improve industrial relations and industrial peace.
• It helps to improve employee productivity
Merits
• Motivates employees
• Employee Retention
• Minimized social evils
• Better Job satisfaction
• Cuts down labour turnover
Demerits
• Huge cost involved
• Employees being dissatisfied
Agencies of Employee Welfare
1. Central government: - The central government has made elaborate
provisions for the health, safety and welfare under Factories Act 1948, and
Mines Act 1952. These acts provide for canteens, crèches, rest rooms,
shelters etc.
2. State government: - Government in different states and Union Territories
provide welfare facilities to workers. State government prescribes rules for the
welfare of the workers and ensures compliance with the provisions under
various labour laws.
3. Employers: - Employers in India in general looked upon welfare work as
fruitless and barren though some of them indeed had done pioneering work.
4. Trade unions: - In India, trade unions have done little for the welfare of
workers. But few sound and strong unions have been the pioneering in this
respect. E.g. the Ahmedabad textiles labour association and the Mazdoor
sabha, Kanpur. 5. Other agencies: - Some philanthropic, charitable d social
service organizations like: - Seva Sadan society, Y.M.C.A., etc
 Types of Employee Welfare
Intramural: - These are provided within the organization like:
1. Canteen,
2. Rest rooms,
3. Crèches,
4. Uniform etc.
Types of Employee Welfare
Extramural: - These are provided outside the organization, like:
1. Housing,
2. Education
3. Child welfare
4. Leave travel facilities,
5. Interest free loans,
6. Workers cooperative stores,
7. Vocational guidance etc.
Types of Employee Welfare
• Statutory welfare work - comprising the legal provisions in various
pieces of labour legislation.
• Voluntary welfare work - includes those activities which are undertaken
by employers for their voluntary work.
• Different ways of Social Security Provision in India
1. Social Insurance- common fund is established with periodical
contribution from workers out of which all benefits in terms of cash or
kind are paid. The employers & state prove major portion of finances.
Benefits such as PF, Group Insurance etc. are offered.
2. Social Assistance- Benefits are offered to persons of small means by
govt. out of its general revenues. E.g- Old age pension
Organisation For Welfare
• The Factories Act ,1948 mandates that every industrial
establishment must appoint a welfare officer if the number of
employees is 500 or more.
• It is argued that the prime responsibility for welfare should rest
with the line manager or the HR manager .
Assessment Of Effectiveness
• Effectiveness of welfare must be assessed periodically.
• Two methods of assessment
1. Trend Analysis
2. Opinion Survey
Fringe Benefits
• The term fringe benefits refers to the extra benefits provided to
employees in addition to the normal compensation paid in the form of
wage or salary.
• Objectives
I. To create & improve sound industrial relations.
II. To promote employees welfare.
III. To motivate the employees by identifying & satisfying their unsatisfied
needs.
IV. To provide security to the employees against social risks like old age
benefits & maternity benefits.
V. To provide safety against accidents.
Features of fringe benefits
• They are supplementary forms of compensation.
• They are paid to all employees based on there membership in
the organization.
• They help to raise the living conditions of the employees. It may
be statutory or voluntary.
 Need for fringe benefits
• Employees demand
• Trade union demand
• Employer’s preference
• As a social security
• To improve human relations
 Examples of fringes
• 1. Legally required payments

• Old age, survivors, disability and health insurance (commonly known as social security)

• Worker’s compensation

• Unemployment compensation

• 2. Contingent and Deferred benefits

• Pension plans

• group life insurance

• military leave and pay

• maternity leave

• child care leave & sick leave etc.

• 3 Payments for time not worked

• vacations & voting pay

• 4.Other benefits travel allowances & moving expenses

• uniform tool expenses

Impact of Welfare on Productivity
• The welfare measures aim at integrating the socio-psychological
needs of employees, the unique requirements of a particular
technology, the structure and processes of the organization and the
existing sociocultural environment.
• It creates a culture of work commitment in organizations and society
which ensure higher productivity and greater job satisfaction to the
employees.
• Due to the welfare measures, the employees feel that the
management is interested in taking care of the employees that result
in the sincerity, commitment and loyalty of the employees towards the
organization.
• The employees work with full enthusiasm and energetic behavior
which results in the increase in production and ultimately the increased
profit.
I L O’s Employee Welfare

• ILO has suggested welfare funds on a collective basis to finance

activities in small undertakings.
• It has adopted a number of convections & recommendations
regarding industrial accidents & occupational health.
• New dimension to welfare activities has been provided by ILO’s
contribution to family welfare & population education prog among
industrial workers in organised sector in India
• It has rendered exemplary service to all 3 elements composing it –
govt, employees & workers.
• It has greatly influenced labour legislation, labour welfare , trade
unionism & Industrial Relations in India