Chapter 14 Employee Benefits

Multiple Choice Questions

1. All financial rewards that are not paid directly in cash to the employee are: bFac

(a) Illegal L(b) Benefits(c) Performance bonuses(d) Gratuities

2. Many benefit programs are in direct conflict with the principles of: dFac

(a) equal pay for equal work M(b) pay for performance(c) merit based pay(d) both (a) and (b)

3. Most benefits are determined by: c

Und(a) the individual’s contribution towards the organisation’s achievement of its M

strategic objectives(b) the organisation’s yearly profit margins(c) membership of an organisation(d) the relationship the employee has with their supervisor

4. A benefits program will not improve motivation or be cost effective if: d

Und(a) it is tied to performance M(b) the benefits offered are not of value to employees(c) length of service determines benefits(d) it is poorly designed

5. A well designed benefits program should: a

Und(a) fit with the organisation’s strategic business objectives and culture H(b) not be a financial cost to the organisation(c) be determined through negotiation with employees(d) provide employees with benefits equivalent to at least 20% of their normal salary

6. Indirect or non-cash compensation items such as life insurance, medical benefits, bsick leave and the like are: Fac

L(a) service benefits(b) fringe benefits(c) bonus payments(d) performance bonuses

7. Employers have felt pressured to introduce more ‘tax-free’ benefits because of: dFac

(a) employee demand M(b) the reduced costs to the organisation(c) the actions of competitors(d) high tax rates on wages and salaries

8. Employers have increased the availability of fringe benefits due to all of the afollowing except:Und

M(a) employee commitment(b) status(c) union pressure(d) taxation

9. The increasing paternalism and involvement in employees’ private lives associated c with some benefits is being questioned. These include:

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(a) sick leave and maternity leave(b) retirement benefits and safety clothing(c) elder care and adoption assistance(d) payment of union duties and provision of uniforms

10. Australian federal government tax designed to tax organisations on the benefits a provided by them to their employees are: Fac

L(a) fringe benefits tax(b) merit annual tax(c) annuity tax(d) benefit plan tax

11. A fringe benefit tax is payable on all of the following benefits except: dFac

(a) motor vehicles L(b) low-interest loans(c) airline transport(d) annual bonus

12. Employee benefits still exempt from Fringe benefit tax include all of the following c except: Fac

L(a) superannuation contributions(b) employee share acquisition schemes(c) childcare expenses(d) medical treatment

13. Non –contributory superannuation is a: a

Fac(a) scheme where all contributions to the retirement plan are made by the company M(b) scheme where all contributions to the retirement plan are made by the employee(c) scheme where all contributions to the retirement plan are made by the state(d) scheme where all contributions to the retirement plan are made by the union

14. To cater for the different benefit needs of employees some organisations offer a c flexible system known as: Fac

L(a) flexi-benefit(b) supermarket benefits(c) cafeteria benefits(d) weighted benefits

15. A benefits scheme where employees choose their own benefits up to a certain cost is a known as: Fac

L(a) cafeteria benefits(b) workers compensation(c) flexi-benefit(d) individual benefits

16. A disadvantage of cafeteria benefit plans is c

Und(a) they can be complex to administer M(b) employees may fail to choose those benefits that are in their best interest(c) both (a) and (b)(d) that the choice of benefits is limited

17. Which of the following benefits is not required by law bfac

(a) workers compensation L(b) provision of uniforms(c) sick leave(d) annual leave

18. The claimed benefits of child-care services are c

Und(a) increased labour turnover M(b) increased absenteeism(c) increased employee loyalty(d) lower productivity

19. Which of the following is not a claimed benefit of childcare services a

Und(a) improved quality of output M(b) improved organisational image

(c) enhanced employee morale(d) assists in recruitment

20. The major obstacles to more employers introducing child-care programs include all bof the following exceptUnd

M(a) high initial establishment costs(b) lack of employee demand(c) loss of government subsidies(d) unfamiliarity with child-care options

21. An Australian study found that for every employee with elder-care responsibilities an c average of ____days were lost per year Fac

M(a) 25(b) 6(c) 3(d) 12

22. A company sponsored program that helps employees to cope with personal problems c that are interfering with their job performance is a(n)

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(a) employee welfare program(b) workers counselling service(c) employee assistance program(d) family welfare system

23. Which of the following is not a claimed benefit of employer sponsored health d promotion programs

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(a) improved morale(b) decreased workers compensation claims(c) improved organisational image(d) improved employee retention

24. Employer sponsored programs that focus on physical fitness, stress reduction, weight c loss, and smoking cessation are known as Fac

L(a) preventative health programs(b) employee fitness programs(c) employee assistance programs

(d) health care insurance

25. For a preventative health care program to be effective it should a

App(a) be accompanied by an educational program that encourages health and fitness H(b) target selected groups of employees only(c) be designed to fit comfortably into lunch breaks(d) emphasis short-term, targeted fitness activities

26. A system that allows employees to choose their own starting and finishing time b within a broad range of available hours is Fac

L(a) unstructured work(b) flexitime(c) task autonomy(d) variable employment

27. If an organisation designed work schedules that allowed employees to work the hours c required for the week in less than five days and take a three-day weekend they would

App be using which type of flexible work schedule M

(a) Flexitime(b) variable day(c) maxiflex(d) permanent part-time

28. When employees work on alternate weeks, split days, or some other variation they d are said to be Fac

L(a) permanent part-time(b) casual employees(c) variable week employees(d) job sharing

29. The erosion of the predictability and regularity of hours of work for employees has b been identified by the Human Rights and Equal Opportunity Commission as a major

Und disadvantage of M

(a) part-time positions(b) flexible work schedules(c) contract work(d) seasonal work

30. Employee loans, study leave, travel time, and free parking are categorised as what a

type of benefits FacL

(a) miscellaneous benefits(b) fringe benefits(c) employee assistance benefits(d) workers compensation benefits

31. More and more organisations have introduced non-traditional benefits such as cFac

(a) health insurance L(b) workers compensation coverage(c) massage services(d) preventative health programs

32. To live comfortably in their retirement, it is recommended that retirees should have a an income equivalent to Fac

H(a) 50 – 70 % of their pre-retirement income(b) 3 years full time salary(c) 10 % of the value of an average family home(d) the weekly government pension

33. When an employee receives a lump-sum retirement benefit, spends it, and then b claims the age pension it is Fac

L(a) good financial planning(b) double-dipping(c) benefit stacking(d) pension savings

34. The National Commission of Audit claims that the present arrangements for c superannuation and pensions Fac

H(a) rewards people for working past the generally accepted retirement age(b) taxes retirees to an unacceptable high rate(c) rewards the dissipation of savings to preserve eligibility for the age pension (d) encourages savings and investment in superannuation schemes

35. Which of the following is not an accepted rationale for the provision of dSuperannuation

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(a) it is a gratuity from a grateful employer in recognition of long and faithful service(b) it is viewed as a form of deferred income(c) it is viewed as a morale obligation of employers(d) it is viewed as a valuable source of tax deductions for an employer

36. A superannuation plan which pays out on the employee’s retirement a predetermined a amount either as a lump sum or as a monthly pension, is known as Fac

L(a) a defined-benefit plan(b) a defined-contribution plan(c) a lump-sum pension plan(d) an annuity

37. A retirement plan that specifies employer and employee contributions, but does not b specify what the actual benefit at retirement will be is known as Fac L

(a) a defined-benefit plan(b) a defined-contribution plan(c) a lump-sum pension plan(d) an annuity

38. A claimed disadvantage of employee contributions to superannuation is b

Und(a) employee opposition to contributory plans M(b) union opposition to contributory plans(c) reduced cost to the employer(d) increased cost to the employer

39. Several issues are particularly important in relation to superannuation. Which of the d following is not discussed by Stone in relation to superannuation

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(a) retirement age(b) occupational superannuation(c) vesting(d) health of retiree

40. The size of superannuation benefits in Australia has increased. This is partly due to c

Und(a) the increased length of service of employees M(b) employer recognition of organisational responsibilities(c) the linking of pension benefits to the cost of living(d) the increased age of retirees

41. Provision in a retirement plan that gives employees a right to specific benefits after a b stated number of years of service is known as Fac

M(a) a defined-benefit plan(b) vesting(c) compulsory superannuation(d) a defined-contribution plan

42. The ability of an employee to transfer without penalty their accrued retirement c

benefits from one superannuation plan to another superannuation plan is known as FacL

(a) superannuation compression(b) transferability(c) portability(d) policy merging

43. Criticisms of occupational superannuation include all of the following except b

App(a) lack of flexibility M(b) low interest rates(c) restricted choice(d) politicisation

44. The low participation rate of women in superannuation schemes can be attributed to d all of the following except

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(a) ineligibility on the grounds of age and work status(b) perceived unattractiveness of the schemes(c) a belief that their future is secured by their spouse’s superannuation scheme(d) a lack of understanding of the issues associated with the choice of a scheme

45. An organisation can gain a competitive edge, and attract and retain people with the b skills it needs to achieve its key business objectives by

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(a) a better staffing policy(b) a strategic use of benefits(c) cutting employment costs(d) being innovative and risk taking

True/False Questions

1. Bowen and Wadley argue that “the distribution of benefits is often inconsistent with T

the overall philosophy of compensation”.Fac

M

2. Benefits are discriminatory. T FacL

3. A benefit program does not have to be tied to an organisation’s business objectives F

and culture to be effective.Und

M

4. Indirect or non-cash compensation items such as life insurance, medical benefits, and F sick leave are employer obligations.

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5. Fringe benefits can act as powerful motivators because they are viewed as status T symbols.

Und L

7. If an organisation introduced a scheme where all contributions to the retirement plan F are made by the organisation they are using a form of worker contributory

Appsuperannuation. M

8. Flexible benefit plans have been adopted to cater for the differing needs of employees. T

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9. Cafeteria style benefits plans are often complex to administer, require constant Tmonitoring and updating, and are viewed by unions as attempts by management to Undrestrict benefits. M

11. It is estimated that sick leave costs Australian employers $15 billion a year. TFacL

12. Insurance designed to protect employees during long-term disablement (and loss of Fincome) through illness or injury is workers compensation insurance.

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13. Research has shown that providing childcare services has had no impact on Fabsenteeism, labour turnover, employee loyalty, productivity or company image.

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14. A major obstacle to employers introducing childcare programs is the loss of Tgovernment subsidies.

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15. An employee’s productivity, attendance and morale can be affected by caring for an Tolder person. Fac

M

16. Employee Assistance Programs have been established by many organisations to Fassist employees to develop and manage their careers.

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17. Flexible work schedules permit the organisation to respond quickly to changes in the Tworkforce and to satisfy customer demands for increasing information.

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18. A work schedule where employees must complete the award set hours in a fortnight Fand be in the office every day from Monday to Friday each week, but choose the

Undhours worked is maxiflex. M

19. According to the Human Rights and Equal Opportunity Commission women are Toften disadvantaged by the introduction of flexible working hours. Fac

L

20. Offering a variety of miscellaneous benefits to employees can increase the Torgansiation’s overall labour costs. Fac

L

21. Under a defined-benefit plan retirees can only receive their superannuation in the Fform of monthly payments.

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M

22. A major reason for early retirement is to permit organisations to open up jobs for Tyounger employees.

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23. Vesting refers to an employee’s earned benefit rights, applied after a specified Tnumber of years of service.

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Essay Questions

1. Critically discuss the advantage of offering a cafeteria style benefit plan for employees.

2. Organisations are offering a broader range of benefits to employees than ever before. Discuss the reasons for this, and how an attractive benefit program can help an organisation to achieve its strategic objectives.

3. The design of superannuation has received a great deal of attention recently. Discuss the different philosophies behind the provision of superannuation, and how these viewpoints help to determine the superannuation approach taken by organisations.

4. The provision of childcare benefits has been claimed to have had a significant impact on organisations. Examine the claimed benefits of such programs and how they might impact upon an organisation’s ability to achieve its strategic objectives.