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Employee Benefits

Employee Benefits Companies must consider many personnel costs. These costs include employee benefits, such as health insurance and vacation days. What are other employee benefits?. Lesson Objective Compute the new salary after merit increase and cost-of-living adjustment. Content Vocabulary.

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Employee Benefits

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  1. Employee Benefits Companies must consider many personnel costs. These costs include employee benefits, such as health insurance and vacation days. What are other employee benefits?

  2. Lesson Objective Compute the new salary after merit increase and cost-of-living adjustment. Content Vocabulary salary scale A table of wages or salaries that compares various jobs in a company, used to estimate the costs of giving an employee a cost-of-living adjustment or a merit increase. cost-of-living adjustment A raise in an employee’s salary to help keep up with inflation. merit increase A raise in salary to reward an employee for the quality of work. • salary scale • cost-of-living adjustment • merit increase

  3. Example 1 Elaine Taylor is a systems analyst (salary level 2 position) for EPD Inc. The executive board of EPD voted to give all employees a cost-of-living adjustment of 2.8 percent. In addition, Taylor was awarded a merit increase of 3.5 percent. What will Taylor’s salary be for the coming year?

  4. Example 1 Answer: Step 1 Find the present salary from Figure 13.1 below.

  5. Figure 13.1 The present salary is $40,000.

  6. Example 1 Answer: Step 2 Find the cost-of-living adjustment. Salary × Cost-of-Living Adjustment Percent $40,000 × 2.8% = $1,120

  7. Example 1 Answer: Step 3 Find the merit increase. Salary × Merit Increase Percent $40,000 × 3.5% = $1,400

  8. Example 1 Answer: Step 4 Find the new salary. Present + Cost-of-Living + Merit Salary Adjustment Increase $40,000 + $1,120 + $1,400 = $42,520

  9. Example 2 D’Marco Mullin is a computer operator, salary level 3, for EPD Inc. He received a 2.8 percent cost-of-living adjustment and a merit increase of 4 percent. What is Mullin’s new salary?

  10. Example 2 Answer: Step 1 Find the present salary from Figure 13.1 below.

  11. Figure 13.1 The present salary is $38,500.

  12. Example 2 Answer: Step 2 Find the cost of living adjustment. Salary × Cost-of-Living Adjustment Percent $38,500 × 2.8% = $1,078

  13. Example 2 Answer: Step 3 Find the merit increase. Salary × Merit Increase Percent $38,500 × 4% = $1,540

  14. Example 2 Answer: Step 4 Find the new salary. Present + Cost-of-Living + Merit Salary Adjustment Increase $38,500 + $1,078 + $1,540 = $41,118

  15. Practice 1 Mark Webb earns $10.70 an hour. He receives a merit increase of 4.5 percent. What is his new hourly rate?

  16. Practice 1 Answer $11.18

  17. Practice 2 Kendra Gomez earned $48,214 last year. This year she receives a cost-of-living adjustment of 4.2 percent and a merit increase of 2.9 percent. What is her new salary?

  18. Practice 2 Answer $51,637.19

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