Compensation

Compensation and Employees' Retention

Compensation and Employees' Retention

Introduction

Employees' compensation is a type of insurance that employers must have to protect employees who experience work-related illnesses or injuries. The insurance typically covers a fixed amount of the costs of medical coverage and the replacement of a portion of lost income owed to the employee if he or she does not work during the injury or illness. For example, if an employee of a house-painting company falls off a ladder while at work and injures his back, the company's employees' compensation insurance pays for a percentage of the employee's medical bills and replaces some of his lost income while he takes a month off work to recover from the injury. This paper discusses compensation and how it can help retain the best employees.

Discussion

Employees' compensation also provides benefits for dependents of workers who die in work-related accidents or because of work-related illness. In some cases employees' compensation covers what is known as “occupational diseases,” or chronic illnesses that occur as a result from work. For example, many workers whose jobs necessitate working on a computer or operating machinery for long periods of time find that the strength and function of their arms or hands deteriorates (a condition known as carpal tunnel syndrome). Some employees' compensation plans may cover carpel tunnel disease. (Reingold, 2008)

Employers are required by law to carry employees' compensation insurance. The insurance protects employers as well as employees, since it shields the employer from the risk of having to pay hefty medical fees out of the company's own resources. Employees' compensation is designed to protect companies from being sued by employees for workplace conditions that caused the injury or illness, and in many states, but not all, the insurance does provide that coverage. The benefits from employees' compensation programs are managed at the state level, usually by the state department of labor. Each state has the power to define the benefit level for the employers in that state; that is, the extent of compensation available to injured or ill workers varies by state. (Hood, 2005)

History of Compensation in retaining employees

Since the making of Egypt's pyramids or even before, compensation in is being used to retain employees. In the eighteenth and nineteenth centuries increased industrialization meant that greater numbers of workers suffered injuries on the job. Workers began to blame employers for injuries that were the direct result of dangerous work environments. Without the protection of employees' compensation laws, injured workers had to individually file lawsuits for damages against their employers and carried the burden of proving that their injury was the fault of the employer. Workers who did file suits risked losing their jobs as well as wages. Successful lawsuits sometimes resulted in unpredictable and devastating financial losses to employers.

In 1884 Germany became the first country to legislate a compensation program for workers and employers mandating that employers share in the cost of paying benefits to injured workers. In 1897 Britain also passed a similar law protecting workers and ...