Employment in Private Sector: Financial Benefits

According to Adams (1965), Herzberg (1968), Maslow (1954) and Rousseau (1995), compensation or benefits is seen as a part of human capital management that place emphasis on management aspects (such as planning, organizing, monitoring and controlling) the various types of payment systems (financial and non-financial benefits) for rewarding employees. Within organizations, individual employees have different interpretations of compensation or benefits. They often regard compensation or benefits as reward rights and obligations are established based on the terms and conditions in the contract of employment.

Usually, when we talk about employee benefits, it will include the following financial and non-financial benefits, inter alia:

a.      short-term employee benefits, such as wages, salaries and social security contributions, paid annual leave and paid sick leave, profit sharing and bonuses and non-monetary benefits (such as medical care, housing, cars and free or subsidized goods or services) for current employees;

b. post-employment benefits such as pensions, other retirement benefits, post-employment life insurance, provident fund, and post-employment medical care;

c. other long-term employee benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, profit sharing, bonuses and deferred compensation;

d. termination benefits; and

e. equity compensation benefits.

Employee benefits include benefits provided to either employees or their dependants and may be settled by payments (or the provision of goods or services) made either directly to the employees, to their spouses, children or other dependants or to others, such as insurance benefits.

Articles 7and 8 of International Covenant on Economic, Social and Cultural Rights (adopted and opened for signature, ratification and accession by United Nations General Assembly resolution 2200A (XXI) of 16 December 1966) are also relevant for our discussion in Chapter 3:

Article 7

The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work which ensure, in particular:

(a) Remuneration which provides all workers, as a minimum, with:

(i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work;

(ii) A decent living for themselves and their families in accordance with the provisions of the present Covenant;

(b) Safe and healthy working conditions;

(c) Equal opportunity for everyone to be promoted in his employment to an appropriate higher level, subject to no considerations other than those of seniority and competence;

(d) Rest, leisure and reasonable limitation of working hours and periodic holidays with pay, as well as remuneration for public holidays

Article 8

1. The States Parties to the present Covenant undertake to ensure:

(a) The right of everyone to form trade unions and join the trade union of his choice, subject only to the rules of the organization concerned, for the promotion and protection of his economic and social interests. No restrictions may be placed on the exercise of this right other than those prescribed by law and which are necessary in a democratic society in the interests of national security or public order or for the protection of the rights and freedoms of others;

(b) The right of trade unions to establish national federations or confederations and the right of the latter to form or join international trade-union organizations;

(c) The right of trade unions to function freely subject to no limitations other than those prescribed by law and which are necessary in a democratic society in the interests of national security or public order or for the protection of the rights and freedoms of others;

(d) The right to strike provided that it is exercised in conformity with the laws of the particular country.

2. This article shall not prevent the imposition of lawful restrictions on the exercise of these rights by members of the armed forces or of the police or of the administration of the State.

3. Nothing in this article shall authorize States Parties to the International Labour Organisation Convention of 1948 concerning Freedom of Association and Protection of the Right to Organize to take legislative measures which would prejudice, or apply the law in such a manner as would prejudice, the guarantees provided for in that Convention.

Further, Articles 23-25 of the Universal Declaration of Human Rights (adopted and proclaimed by United Nations General Assembly resolution 217 A (III) of 10 December 1948) are also relevant for our discussion here:

Article 23.

(1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.

(2) Everyone, without any discrimination, has the right to equal pay for equal work.

(3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.

(4) Everyone has the right to form and to join trade unions for the protection of his interests.

Article 24.

Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay.

Article 25.

(1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

For our intent and purposes, clause 18 of  Malaysia Code of Conduct for Industrial Harmony states that:

Although payment systems vary according to the nature and organisation of the work, local conditions and other factors, the following principles should be observed so as to ensure that the system of payment is soundly based and thereby reduces the incidence of disputes arising there from:

(a) payment systems should be as simple as possible;

(b) differences in rates should be related to the requirements of the job which should, wherever possible, be assessed by agreed or well established methods; 

(c) piece-work rates, incentive bonuses, etc. should be determined by agreed or well established methods; and

(d) rates of payment should be jointly negotiated where a recognised trade union exists.