Changes to Benefit plans – Proceed Carefully

January 16, 2009

As 2009 kicks off, we find ourselves waiting and watching as the face of the bear market begins to show itself. With politician speaking of growing deficit spending, we have to look inwardly to our own cost cutting to be able to weather the storm to come. One of the costs that many businesses incur is the cost of attracting and retaining quality staff – through a health benefits plan. This can be a huge expense for some companies, and is often one of the first to be amended – When amending the benefit plan, be careful. Changes may have to be approved my the employee class first otherwise you may find yourself in the middle of a labour liability case or worse, a human rights case!

When trying to cut costs an employee benefits administrator has to tread carefully – changes to the detriment of one employee class can trigger many kinds of legal proceedings especially if the original terms of employment states that the employee gets benefits as stipulated in the employee handbook.

First – you should have an employee handbook. This outlines the duties and responsibilities of the employer and employee. Let’s not forget, a person is selling their time to you in exchange for money and benefits to them – both should be outlined clearly and consensus should be reached.

Second – typical businesses will have several classes of employee – an owner class, a management class and a general employee class (NOTE: this will vary in each business). This is where things get interesting – once you establish a benefit for employees, changes are not easily made. You have to be aware that any changes that you make to the policy could result in consequences for you. For example:

if you reduce benefits for a particular class of employee, it could be considered discriminatory and could challenge labour and human rights laws
if you introduce a benefit that may be ideal for the employees, but some refuse to pay on the grounds that they never agreed to the benefit (such as adding Long Term Disability – where the employees pay the premium) – you could be forced to pay the premiums

Whatever your situation, you should try to remember what a benefit program is doing for your business – it is a tool that you are using to attract and retain the best. It is your investment in human capital. Some business owners consider it a gift and a privilege to their employees – an added cost. Yes it is, but is it also a tool in your pocket over your competition. You can give the staff something extra that will make them work smarter and harder for you. Use it wisely.