Employee Benefits (Occupational Benefits and Fringe Benefits)

Concept and Building Blocks

Employee benefits are all benefits an employer grants its staff in addition to cash salary in order to insure risks, build up retirement provision and remain an attractive employer. In Switzerland the core consists of statutorily required personnel insurance and voluntary additions. Compulsory are occupational pension provision under the BVG for employees above the entry threshold and accident insurance under the UVG. On top of these come extra-mandatory pension provision including management plans and 1e solutions, daily sickness allowance insurance replacing the statutory duty to continue paying salary, supplementary UVG insurance for excess salary, private ward and waiver of benefit reductions, group accident and business travel insurance, and group supplementary health insurance contracts that give employees discounted hospital and outpatient supplementary cover with simplified enrolment. For expatriates, international private medical insurance (IPMI) and social security coordination are added. Employer contributions to health insurance premiums, health offerings and family or mobility benefits are also counted.

Design and Benchmarking

Design follows a total rewards logic: benefit levels, cost sharing between employer and employees, waiting periods and coordination of the individual covers must be aligned so that neither over- nor under-insurance arises – for instance between daily sickness allowance, BVG disability pension and federal disability insurance. Brokers such as Aon, Mercer, WTW or Kessler compare plans against industry and competitors in benchmark studies, review costs, claims experience and rating, and support tenders and the pooling of international risks. For tax purposes, employer contributions to BVG and daily sickness allowance are deductible, whereas contributions to health insurance premiums and many additional benefits count as salary. Employee benefit programmes are closely linked to absence management and corporate health management, since both drive the claims experience of personnel insurance and therefore premiums.

Country Comparison

In Germany the main building blocks are occupational pensions under the Occupational Pensions Act with five funding vehicles, company health insurance (bKV) and group accident insurance; in Austria pension funds and company group insurance together with the occupational staff provision scheme. Because Swiss basic health insurance cannot be concluded on a group basis and has no employer share, group supplementary and daily allowance solutions carry more weight in Switzerland than in the neighbouring countries.