Employee benefits are a form of contractual compensation that goes hand in hand with a salary. That means that once the terms of your employment are agreed upon, including the benefits you will receive, they cannot be changed without your consent. This is becoming an increasing problem for employers today, as standard employee benefits options are becoming too expensive to maintain, but changing the benefits packages can come with a large list of complications.
Changing compensation without consent is a breach of contract
Employers are allowed to make minor changes to any kind of compensation without any consent. That being said, the size of the allowable change is debatable. Case law states that any change in excess of 15% is a breach of contract that allows employees to sue the employer at fault for damages after they leave to look for another job, which is known as a constructive dismissal. 15% should be taken as a guideline rather than a rule, because even a 5% change to compensation can amount to the same situation.
The first thing any employee should do in the event of such a contract breach is to insist that their employer maintain the benefits that were agreed upon, or provide additional pay to compensate for the fact that you must now secure your own benefits. If they refuse then it will be up to you whether you want to continue employment there without benefits or find a new opportunity that will provide them. Most employees consider the benefits as an inducement to take the job, and if this is the case for you then you will have a strong chance of successfully challenging any decision made to take them away.
Removing benefits can severely damage a company culture
Employees trust their employers to honor their promises and protect them with benefits. When this promise isn’t kept, the damage it does to the company’s reputation can be very negative, and virtually impossible to reverse. Rather than getting rid of benefits entirely, many companies struggling to avoid traditional benefits plans are switching to sustainable benefit plans to save money and culture in one go.
Sustainable health benefits are plans designed to incur minimal increases over time, all while continuing to provide high quality benefits for employees. Dedicated account managers routinely monitor plans and put cost saving measures in place at various intervals during or after the plan year, or when events that usually cause price increases occur, to make everything more cost efficient.
Benecaid has seen a very high success rate for companies with sustainable health benefits. 1/3 of Benecaid clients in 2015 saw no increase or reduction of rates, and the average increase for clients who did experience one was 5%. This is less than half the increase seen by the industry’s overall blended health care trend, which was nearly 12%. Rather than being put in the position where they can no longer afford benefits and are in danger of breaching contractual compensation, your company should carefully consider making the cost-saving decision to implement sustainable health benefits.