It doesn’t matter if you’re an employer or working as an employee, it’s important to understand the difference between statutory and non-statutory benefits. A lack of knowledge in this area could cost you time, money, and other resources sooner than you think.
In this article, we break down what makes a benefit statutory or non-statutory, and why it matters to you.
The primary difference between statutory and non-statutory benefits is that statutory benefits must be provided to employees. If you’re an employer, you’re required by law to provide your workforce with these benefits. Neglecting to do so can result in hefty fines and penalties, as well as potential legal action from affected employees.
Statutory benefits vary from country to country. In the United States, for example, here are three of the most well-known statutory benefits:
There’s more gray area with non-statutory benefits, since what’s provided is up to the employer’s discretion. Some of the most commonly offered non-statutory benefits include:
Some employers provide all of these benefits, among others. Other employers don’t provide any non-statutory benefits, and they’re under no legal obligation to do so.
As an employer, you must provide employees with statutory benefits as outlined by the federal government and any state and local regulations.
You have more flexibility with non-statutory benefits. Since you don’t have to provide these, it’s your decision as to the package you create for employees.
As a general rule of thumb, the more non-statutory benefits you provide, the more enticing your company will be to job candidates and current employees.
Take for example two companies:
Which of these two companies has a better chance of attracting and retaining talent? It seems pretty clear that company #1 provides a better benefits package.
Now that you have a clear understanding of the difference between statutory and non-statutory benefits, it’s time to answer some key questions as they pertain to your specific company.
The most important thing to remember here is that statutory benefits vary from country to country. For instance, statutory benefits in the United States aren’t the same as in India.
Once you know your non-statutory benefits inside and out, you can answer two additional questions:
Cost factors heavily into the non-statutory benefits that you provide. You don’t have to pay every last dollar of every benefit. It’s common for employers to ask that employees cover a portion of the cost, such as for medical insurance.
It’s always a good idea to take cues from your employees. Even if they’re not making specific requests, it doesn’t mean they’re satisfied. Consider sharing a survey that allows you to collect feedback.
This is a lot of information to take in, and you likely have questions or concerns. Our all-in-one global employment platform can help you better understand and manage both statutory and non-statutory benefits.
For example, if you want to provide your distributed team with health insurance, we make it simple to do so. You can provide coverage to employees in more than 180 countries, but not until you have an account. Sign up today to learn more and test drive our industry-leading platform!
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.