Employee Welfare – Its Benefits and Principles

Employee welfare defines as “efforts to make life worth living for workmen”.  “Employee welfare is a comprehensive term including various services, benefits and facilities offered to employees & by the employers. Through such generous fringe benefits the employer makes life worth living for employees.”

Welfare includes anything that is done for the comfort and improvement of employees and is provided over and above the wages. Welfare helps in keeping the morale and motivation of the employees high so as to retain the employees for longer duration. The welfare measures need not be in monetary terms only but in any kind/forms. Employee welfare includes monitoring of working conditions, creation of industrial harmony through infrastructure for health, industrial relations and insurance against disease, accident and unemployment for the workers and their families.

Employee welfare entails all those activities of employer which are directed towards providing the employees with certain facilities and services in addition to wages or salaries.

The very logic behind providing welfare schemes is to create efficient, healthy, loyal and satisfied labor force for the organization. The purpose of providing such facilities is to make their work life better and also to raise their standard of living.

These efforts have their origin either in some statute formed by the state or in some local custom or in collective agreement or in the employer’s own initiative:

  • To give expression to philanthropic and paternalistic feelings.
  • To win over employee’s loyalty and increase their morale.
  • To combat trade unionism and socialist ideas.
  • To build up stable labour force, to reduce labour turnover and absenteeism.
  • To develop efficiency and productivity among workers.
  • To save oneself from heavy taxes on surplus profits.
  • To earn goodwill and enhance public image.
  • To reduce the threat of further government intervention.
  • To make recruitment more effective (because these benefits add to job appeal).

The important benefits of welfare measures can be summarized as follows:

  • They provide better physical and mental health to workers and thus promote a healthy work environment
  • Facilities like housing schemes, medical benefits, and education and recreation facilities for workers’ families help in raising their standards of living. This makes workers to pay more attention towards work and thus increases their productivity.
  • Employers get stable labor force by providing welfare facilities. Workers take active interest in their jobs and work with a feeling of involvement and participation.
  • Employee welfare measures increase the productivity of organization and promote healthy industrial relations thereby maintaining industrial peace.
  • The social evils prevalent among the labors such as substance abuse, etc are reduced to a greater extent by the welfare policies.


Principles of Employee Welfare Service

Following are generally given as the principles to be followed in setting up a employee welfare service:

  • The service should satisfy real needs of the workers.  This means that the manager must first determine what the employee’s real needs are with the active participation of workers.
  • The service should such as can be handled by cafeteria approach.  Due to the difference in Sex, age, marital status, number of children, type of job and the income level of employees there are large differences in their choice of a particular benefit.  This is known as the cafeteria approach.  Such an approach individualises the benefit system though it may be difficult to operate and administer.
  • The employer should not assume a benevolent posture.
  • The cost of the service should be calculate and its financing  established on a sound basis.
  • There should be periodical assessment or evaluation of the service and necessary timely on the basis of feedback.