** HR Compensations & Benefits

When it comes to terminating an employee's contract, one may be left wondering whether it is necessary to provide a transition fee or if one is allowed to deviate from this obligation.
If both parties are in agreement and want to come to an end of the working relationship, the transition fee does not have to be given to the employee. The legislator granted freedom for the parties to make other arrangements which could mean providing the employee with a higher or lower compensation. Employers could also provide a study or outplacement program or have the employee remain employed without working so they can look for a job from their existing employment. Additionally, they may offer the employee the chance to take over their lease car at a discounted price or give them a new bicycle. Whatever the scheme, it is important for the employee to understand the implications. To make sure that the negotiations are done properly, it is advised for the employee to find someone to oversee the process. In the event that negotiations are unsuccessful and the contract is terminated through the government or the subdistrict court, the employer...

Working in the Netherlands can provide some useful benefits in terms of compensations, thanks to employment laws that enforce positive relations between employees and employers. Knowing these potential benefits is important for both job seekers and employers to better understand what companies are expected to offer in the area of both direct and indirect benefits that make up compensation packages. In the Netherlands, there has been a growing trend of cultivating a work ethos that accommodates the ‘wellness’ of employees, including benefits such as flexible working hours and a higher national minimum wage.

Starting out with the basics, job candidates should expect average wage rates when compared to the rest of Europe. Basic salaries are normally calculated per month or year for full-time employment, and per hour for part-time employment. Income tax is also normally deducted before payment at the end of each month. The average annual salary in the Netherlands is around €25,000 - €30,000, with the national minimum wage being €1,565.40 for workers over the age of 21. In terms of working hours, Dutch law prohibits employees from exceeding 9 hours a day or 45 hours a week. Of course, despite these minimal legal requirements, job seekers should...

Many companies – large and small, seem to be driven by the concept “pay for performance”. The popular understanding of its meaning reflects the longstanding belief in the corporate world that financial incentives are the most powerful motivator of executive performance.
Yet the findings of various studies by behavioral psychologists suggest otherwise. These findings have profound implications, for they raise questions about the motivational rationale underlying incentive compensation programs.

A meta-analysis by Jenkins and co. tried to ascertain whether, and how strongly, financial incentives are related to performance quantity and quality. They were aware of the well-established view that financial incentives are directly related to performance, and that they might decrease intrinsic motivation, since incentives control employees externally and could result in decreased self-determination. After reviewing 39 studies, they determined that the relationship between financial incentives and performance quality is not significantly different from zero. This means that financial incentives are related to performance quantity instead of performance quality. Financial incentives may jeopardize intrinsic motivation, but their correlation with performance quantity is more positive than negative.

What is also an important factor in an employee’s satisfaction with their pay is the perceived fairness, according to Glomb and Kemmeyer-Mueller. Perceived fairness...

A good salary can attract employees towards a job and incentivise them to work hard, but there are numerous other factors to take into consideration to keep workers happy and maintain a satisfactory work environment. Employee satisfaction is the emotional fulfilment of one’s personal needs within a job setting and can play an important role for employers to ensure good productivity from workers. The importance of employee satisfaction can arguably vary across different job sectors, where sectors which deal directly with customers, such as tourism, appear to benefit most due to their social nature; a satisfied employee will likely lead to a satisfied customer. So, what factors affect employee satisfaction and help to create an appealing working environment?

A quick internet search will reveal numerous lists and models for job satisfaction that normally mention factors such as promotions, good relationships with co-workers and the boss, low stress levels etc. Clearly, there is no definitive list of ways to improve employee satisfaction, and therein lies the challenge commonly faced by modern human resources departments to determine what works when it comes to keeping employees happy. Different employees will respond differently to various factors, and it can prove difficult to measure the happiness...

Employee shareholder plans, otherwise known as employee stock ownership plans (ESOP), are plans that offer employees part-ownership in the company through the allocation of shares. They are often used as a corporate finance strategy to align the interests of the employer with those of the company, and come in a variety of forms. Participants can buy stock directly, or it can be offered to them as a bonus. Participants usually benefit from a range of tax breaks on their stocks. So why are many companies jumping on the ESOP bandwagon?

From an employer’s perspective, shareholder plans are generally seen as a way to make the company more attractive, to encourage employees to stay with the company long term, and to align the interests of the company with that of the employee. A 2012 study by the University of Loughborough found a number of benefits to share ownership on employees’ attitudes and behaviours. They discovered that those who participate in ESOPs are more motivated and committed to their employer, and produce better quality work. Furthermore, half of employees said that such plans incentivised them to stay with their current employer for longer. States can also legislate in favour of these policies....

A profit sharing plan, also known as a deferred profit sharing plan (DPSP), is a plan that gives employees of the company a share in the profits. It is essentially a collection of incentive plans that provide direct or indirect payments to employees on top of their regular salary and bonuses. There are usually restrictions as to how a person can benefit from such a plan, such as withdrawing funds, or the way in which shares are allocated. Payment into the plan is at the company’s discretion. Examples of companies which have such schemes include the financial services company First American and the Chinese telecommunications giant Huawei.

Profit sharing plans are generally only made if acompany has been profitable for a prescribed length of time, or when an employee contract demands certain compensation. Profit sharing usually occurs annually. Generally more senior employees can expect to see a substantial profit sharing bonus (figures of 40-50% of annual salary are not uncommon). Lower level employees are awarded less, on the order of 1-2% of their annual salary. This reflects the belief that the most compensated employees are responsible for ensuring the success of the company, and are generally part of the management...