Nowadays, there are many differences between legally required and discretionary benefits. Thus, we are going to define them in the body of this paper.
There is no doubt that many people spend almost half of their life time at work. It means that people should take care of their working environment and think about legally required and discretionary benefits very carefully. It is true that different companies are interested in well-qualified workers and their motivating will help to increase the company’s productivity in short terms. In such a way, it is not enough to follow only the legally required benefits, but it is always necessary to remember about discretionary ones.
Defining the term ‘benefit,’ we can say that it means reward, but there are a big variety of rewards in different companies and some rewards are necessary, while others are playing the role of a motivating factor. As it was previously said, benefits are generally divided into two big groups, legally required and discretionary. The term legally required speaks for itself, because exactly these benefits must be provided to the employee by law. In other words, legally required benefits include special programs established by the United States Government for the purpose of to protect employees from expected and unexpected events in their lives, such as unemployment, disability, illness or retirement. These programs can help people to overcome various life difficulties on their way and assist employees in crisis situations, promoting employee’s health and safety, and maintaining family income for some period of time. In addition, these programs are regulated by law and their non-observance may be considered in the court.
Some companies have no enough costs for discretionary benefits, but their first duty is to provide exactly the legally required benefits, because if the company is not able to afford the legally required benefits, it should be closed in any way. According to Martocchio, “some of these legally required benefits include unemployment insurance, workers compensation, and the FMLA” (Martocchio, 2003). The government set special standards for the legally required benefits and control them by special procedures.
Observing discretionary benefits, we can say that they are greatly different from the legally required benefits, because their first duty is to motivate employees to work better and provide employees with the higher working environment. Discretionary benefits, in contrast to the legally required benefits, are not required by law, and they may vary from organization to organization. Traditionally, companies competed for the best employees in one or another industry through the big number and kinds of possible benefits. Nowadays, discretionary benefits present the level of one or other company, and they also demonstrate that company is able to sustain competitive advantages. According to Martocchio, “Employees view discretionary benefits such as paid vacation and holidays as an entitlement much like any of the legally required benefits” (Martocchio, 2003).
Discretionary benefits may be divided into three main groups: protection programs, services and pay for time not worked. Additionally, explaining previous statement we can say that comprehensive benefit package also includes in itself not only financial and health care benefits, but also personal and career benefits, which help the employee not only to earn money working in the company, but also to think about own self-realization.
To sum up, we have observed both the legally required and discretionary benefits and pay a specific attention to their differences.
Martocchio, J. Strategic Compensation: A Human Resource. Prentice Hall, 3rd ed., 2003.