What Are Non-Mandatory Benefits?

What Are Non-Mandatory Benefits?

Non-mandatory benefits are employee perks that aren't required by law. Learn why companies offer these benefits and get ideas for non-mandatory benefits in this guide.

Stefana Zaric
Written by Stefana Zaric
February 11, 2022
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Companies, especially their human resource departments, include attractive benefits in their employee compensation plans to attract top talent (and keep them around).

Federal law requires a handful of these benefits: The Affordable Care Act (ACA) requires employers with 50+ employees to offer health insurance to full-time employees. All employers must also provide workers' compensation insurance, unemployment insurance, social security, and medicare. 

In the past few years, more companies have added non-mandatory benefits to sweeten the deal for employees. These perks improve employees' quality of life and demonstrate a company's investment in their teams. 

In this article, we'll define non-mandatory benefits, give you a thorough list of non-mandatory benefit examples, and help you understand how to provide budget-friendly perks to your team.

What are non-mandatory benefits?

Non-mandatory benefits, also known as voluntary, optional, or non-statutory benefits, are perks employers offer to employees without legal obligation.

Non-mandatory benefits can be monetary or non-monetary. Common examples of non-mandatory benefits include child care assistance, long-term disability insurance, contributions to retirement saving plans, wellness stipends, paid vacation time, and tuition reimbursement.

Common types of non-mandatory benefits

Employers include a wide variety of perks in their benefits packages. The objective for each organization is to meet employees' needs, which vary depending on size, location, remote vs. on-site, and personal preference. Most organizations offer perks in these areas:

  • Smarter working
  • Health and wellness
  • Lifestyle and work-life balance
  • Financial security

Benefits for smarter working

Employers, including small business owners, offer benefits to ensure employees' workday is pleasant and productive. The list can include:

  • Flexible working: one of the most effective non-monetary ways to retain employees
  • Skills development: a win-win since employees further their skills and career while becoming better employees
  • Free meals and drinks: a simple way to keep employees energized and show that you genuinely care about them
  • Group activities and gift exchange: a strategy to build a connection between team members 

Benefits for health and wellness

Although some benefits associated with health are mandated in many countries, more companies are offering additional perks to support employees' mental and physical health, including:

  • Gym membership
  • Mental healthcare
  • Life and career coaching
  • Yoga or dance classes
  • Chiropractic sessions 
  • Fertility treatments 
  • Comprehensive packages (mental, physical, and financial wellness)

Benefits to improve lifestyle and work-life balance

Lifestyle benefits support employees and help them achieve better work-life balance, reducing stress and burnout. You can make your team members' lives easier by helping with:

  • Gas or transportation costs (if employees must commute)
  • Grocery delivery
  • Childcare
  • Legal services
  • Unlimited paid time off

Benefits for financial security 

Financial perks resemble traditional benefits, like insurance and paid time off. They help employees stay financially secure, even if they can’t work for some time. Companies can also get discounts from vendors if they shop for large teams. The following perks take a considerable burden off their budget:

  • Vision insurance
  • Dental insurance
  • Life insurance
  • Paid parental leave
  • Sick leave (which isn’t required by the FMLA)
  • Pension plans: defined benefit plans and defined contribution plans
  • Retirement plans (401k or employee-sponsored IRA)
  • Legal advice around saving and loans

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Why offer non-mandatory benefits to your employees?

A well-thought-out benefits plan helps you stand out among other companies and attract the most qualified workers. An attractive plan also benefits employers by improving employee experience, motivating workers to stay with your company, and enhancing work-life balance. Many fringe benefits are tax-deductible for the employer.

The 2020 Society for Human Resource Management (SHRM) Benefits Survey surveyed over 2,000 HR professionals to create a list of the most valuable benefits.

According to 90% of respondents, healthcare is the most important, followed by flexible work and generous leave policies. 

  • Healthcare: 90%
  • Flexible work: 83%
  • Leave: 83%
  • Family-friendly: 76%
  • Wellness programs: 62%
  • Retirement: 55%

Benefits attract top talent

People evaluate a company’s benefits package in addition to its compensation package and company culture. The set of perks gives employees something to get excited about. They also demonstrate your dedication to employee well-being and your financial stability.

Voluntary benefits contribute to work-life balance (and reduce burnout)

Benefits such as flexible working hours allow employees better time management and work scheduling. Companies that nurture an employee-first culture rarely deal with employee resignations.

A company that offers gym memberships and healthy free meals encourages employees to adopt healthy habits and prioritize maintaining their physical and mental health. These healthy habits improve focus and motivation, and decrease stress and burnout.

How to determine which non-mandatory benefits to offer

Choosing the right benefits for your employees starts with identifying your budget and talking to your employees. Then you can start creating a plan. 

Determine a non-mandatory benefits budget

Identifying your budget and determining how much you can invest in employee benefits is the first step towards a sustainable benefits plan. 

According to the Bureau of Labor Statistics, the average employer spends around $12.20 per hour on total benefits costs for a civilian employee, which includes mandated benefits. Of course, the amount differs between industries and the employees, but it's an indicator worth considering when calculating employee benefits.

Learn more about how to calculate employee benefits.

Consult your staff

The next step is to talk with your employees and learn what benefits they see as the most important. 

Run an employee benefits survey to understand your employees' unique concerns and preferences and use that information to determine which benefits to include in the benefits plan. Employees want to feel heard and don’t want irrelevant perks they won’t use. Don’t hesitate to go straight to the source and ask what your employees want.

Create a list of benefits you'd offer

Once you know what will motivate your employees and make their life easier, create a list of benefits, including non-negotiable and optional perks.

You can create different packages for different employees (full-time, part-time, independent contractors), but you must ensure to do it according to the law. All benefits-related decisions must align with employment-based classifications

Consider hiring a benefits broker, a professional specializing in employee benefits brokerage services. An experienced broker will be familiar with available packages and reliable vendors and create a plan according to your business's size and budget.

Select a benefits provider

With or without a benefits broker's help, your next step is to find a benefits provider. A company you choose is more than a vendor. It should be your partner, ensuring your employees get benefits aligned with their needs. At Deel, we use Zenefits to offer benefits to our full-time employees.

Track benefits utilization

Employees' needs change, and so should the benefits you offer them. So first, track the portion of employees using the benefits you offer: your benefits vendor will likely provide this functionality. If employee utilization is low, consider conducting another employee survey to determine why. Perhaps employees aren’t aware of the benefits or how to access them.

And if you're spending money on a benefit no one uses, consider replacing it with another perk your employees find valuable.

Use Deel and provide attractive incentives for your international team

Building an international team can be time-consuming, especially when compliance is involved. There are different local labor laws, taxes, and mandatory employee benefits for each country to keep up with. Not to mention creating and executing an attractive non-mandatory benefits package to help you retain your most talented workers.

Luckily, Deel keeps up with it all for you. We offer perks from over 150 partners in over 150 countries.

Deel lets you hire anyone, anywhere in the world, within minutes. Plus, you can rest assured legal experts vet your contracts to be completely compliant, so your new hires are set up to work correctly in no time.

Want to learn how it all works? Book a demo today to find out.

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