What are Employee Benefits?

Employee benefits are any perks or compensation given to employees in addition to their salary.

Employees are given a base salary or wage amount, and that is their basic compensation for doing their job. Employee benefits are anything additional given to employees that compensates them for their work and employment at the company. They are typically non-cash and indirect ways of compensating an employee. A complete benefits package often includes health insurance, paid time off, retirement plans, and similar programs.

Some employee benefits are legally required, and the requirements will differ from state to state. Some states have laws about diverse types of sick leave and other similar benefits. But there are also some federally mandated employee benefits that are important to understand. These benefits are federally required:

  • Time off for employees to vote, perform jury duty, or serve in the military

  • Workers’ compensation benefits for employees who are injured on the job

  • Compliance with the Family and Medical Leave Act (FMLA)

  • Taxes toward unemployment insurance both on the state and federal level

  • Contributing to the state short-term disability insurance

If employers meet state and federal requirements for benefits, they can provide any additional benefits they want. Companies are not required to provide health insurance, retirement plans, dental insurance, life insurance, or other similar benefits, but they can be a way to help the company attract employees.

Employee benefits can be a powerful tool. Employees love to work for companies that provide benefits, and having good benefits can help an organization show its value. These are three key benefits of employee benefits.

Essential for recruiting and retaining employees

Employees have many options of places to work. Since the Great Resignation, more and more employees are highly selective with where they choose to work. They have options, so they choose the companies that provide them with the experience they need and the benefits they want.

Benefits are key when it comes to recruitment. Employees consider a good benefits package to be one of the most important things they look for when choosing a job. Employees are more likely to choose an organization that offers good benefits than one with the same pay and only the federally required benefits. Essentially, employees want benefits and choose companies that offer them.

Recruiting is also crucial for a company. It takes valuable time and money to train a replacement for an employee who leaves a company, which is why so many companies put an emphasis on retention rate. Employee benefits are a fantastic way to help boost retention and keep employees at a company. That’s because benefits help them feel supported and help their wellbeing, so they have a better experience with the company. Having employee benefits is now essential for recruiting and retaining employees in this current work environment.

Highlight organization’s values

Employees want to work for companies that have great values. Most organizations try to have a focus on values that improve the world. Employee benefits are a way to help organizations show their values and let employees live the values. For example, if a company values and wishes to promote charity, paid time off (PTO) and similar benefits can help employees live that value because they’re able to take a day off work (without losing pay) to give back to the community.

Show employees you care

Employees want to work for an employer that cares about them and their wellbeing. This aligns with both retention and values: employees will stay when their employers care, and employers with people-oriented values want to support employee wellbeing. 

Including employee benefits can help organizations show employees that they care about them, and that can boost employee morale and improve the workplace environment. Employees will feel happier and healthier at work, and the company benefits because the employees are able to do their best work. Ultimately, most companies find that employee benefits are worth the cost. 

There are four main types of benefits that employers offer their employees.


Offering insurance benefits means that the company pays a portion of the premiums or secures a lower premium rate for its employees. These lower premiums (or partially paid premiums) help the employees save money on insurance in the long run, and many employees love these benefits. Many companies offer health insurance, vision insurance, and dental insurance to help support employee and dependent health. 

Companies can offer additional types of insurance. Some companies find offering life insurance to be a powerful way to show that they care about the employees’ families as well as the employee. Some companies will also offer more disability insurance to provide employees with more security. 

Graphic outlining the types of employee benefits


Retirement is a common goal for many Americans. It’s common for companies to help support their employees’ retirement. Retirement benefits can come as a 401k with employer and matched contributions. Other savings accounts are options, and investment plans are also a benefit plan some companies choose.

Time off

Time away from work is important to reduce burnout. Because of that, many countries mandate time off. While the US does not mandate it, offering time off benefits can help give companies a competitive edge when it comes to hiring and recruiting. Time off could include sick leave, paid vacation time, bereavement or compassionate time, and parental leave. Including those types of benefits can show employees that the company cares about their wellbeing and their success. 

It is also worth considering other types of time off. Some companies provide time off for employees to receive training or to improve their skills—sometimes to even take a sabbatical. These benefits are also a type of time off, and they can provide companies with a competitive advantage compared to companies that don’t offer those types of benefits. 

Additional benefits

There are other benefits (sometimes also called perks) that do not fit into the other categories but can still provide employees with great support and help the company improve hiring:

  • Tuition reimbursement
    Many employees are students or interested in taking courses and receiving certifications. Tuition reimbursement allows them to take these courses, and their employer will reimburse them later for some or all the cost of the tuition.

  • Corporate discount
    If a company offers goods or services, it can be a benefit to offer employees discounts on those. Some companies might test products or services by offering them at steeply discounted rates for employees to try and enjoy. Some companies—like retail stores—might offer a discount percentage on their goods for employees.

  • Performance bonus
    Employees love to be appreciated. Performance bonuses are additional financial rewards when an employee performs exceptionally well. It helps employees feel appreciated and motivates them to perform at their best.

  • Office perks
    Nap rooms, a library, a ping pong table, free food, an on-site gym, and more are all office perks. These benefits help make the office a more satisfying and comfortable place to work and help employees feel appreciated.

  • Stock options
    Employers can help offer employees lower priced stocks to help them invest in the company and share in the success of their company. Stocks also help employees feel more invested in their company and that they are rewarded for their hard work.

  • Wellness programs
    Wellness programs are all about improving employee health, which helps employees feel like their organization cares about them as a person. Healthier employees also perform better. Wellness programs can include step initiatives, health screenings, smoking cessation programs, access to nutritionists, competitions, and more.

  • Training
    Employees want to work somewhere where they have the opportunity to continue learning and growing. Providing employees with training programs helps them to sharpen their skills and benefit both themselves and the company.

The workforce is constantly changing and shifting, and a one-size-fits-all approach to benefits no longer works. Now, it’s important to consider what employees are in the workforce and to choose benefits that are valuable to them. Right now, millennials make up most of the workforce, so it’s important to know what benefits millennials seek out. These are the most important benefits for millennials:

Student loan assistance

Most millennials have student loans. Companies that offer to help pay off their student loans can attract and retain some of the best employees.

State-of-the-art technology

Millennials are digital natives, and they want technology at work to be easy for them to use and up-to-date. Having advanced and high-end technology helps them feel like they can work better.

Time-off bonuses

Millennials value work-life balance more than previous generations. They are less interested in monetary bonuses and more interested in bonuses that involve more time off work. Paying for a weekend getaway is a more appealing option than a check for Millennial employees.

Corporate social responsibility

The millennial generation wants to give back. Helping employees be involved with charity and other forms of corporate social responsibility is appealing to many modern employees.

Removing the 9–5 system

Millennials more than ever love flexibility with the workday. Millennials do not find 9–5 to be the only way to be productive. Many millennial employees will choose a job with a flexible schedule over a job with higher pay. Offering flexibility is reliable to attract Millennials.

Remote working

Remote work in some form is what millennials want—even if it’s just one day a week. Millennials love flexible work hours and having a flexible workspace where they do not have to be physically present in an office to perform their duties.

Personal growth development

Millennials want to keep learning and growing. Providing ways for them to develop personally is a great way to attract them to your company. For example, book clubs, photography clubs, and other similar clubs are a way for employees to bond over similar interests and to continue to learn and develop themselves.

There are many reasons why employers should implement employee benefits for their employees. Here are some of the key reasons why:

Increase productivity

Employees who are taken care of perform better on the job. If they feel like they have support, they are better able to focus on their work and fulfill their responsibilities more efficiently.

Increases loyalty

Offering employee benefits keeps employees wanting to stay at the company. The employees feel that the company cares about their wellbeing, and they want to help support the company as well.

Lowers absenteeism

Absenteeism is when employees miss work, and it can cost companies money. Benefits help lower absenteeism because employees have better avenues for taking time off and because they’re generally healthier and more supported.

Improves recruiting

Employees want to work for a company that offers good benefits, so recruiters can find the best employees.

Increases retention

Employees that have benefits typically want to stay at that company. Ultimately, that saves the company money and time, keeping their best talent in-house.

Benefits are such a crucial way to support employees and to attract the best talent to come to your company and to stay. But to be able to make the most of employee benefits, you need a way to monitor benefits and keep track of all the moving parts that make benefits possible. To optimize your benefits and improve your employees’ experience with your company, trust ServiceNow. 

ServiceNow HR legacy is a straightforward way for employees to have access to all their benefits information and for the HR department to update and improve benefits. You can use HR dashboards, reports, and other HR management modules to monitor and manage HR benefits cases in the non-scoped version of HR. ServiceNow provides you with the support you need to fully support your employees.  

Take control of employee benefits and give your employees the easy, personalized benefits and support they need from your company. Learn more about HR benefits management from ServiceNow, sign up for a demo, and help your employees find success with your company.

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