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Benefits & Compensation in Georgia

What are employee benefits? 

Employee benefits are both financial and non-financial remuneration offered to employees as part of the employment agreement. Employee benefits are generally required by law, and their quantum depends on the risk accompanied by the job or industry where the employee is working and the domestic laws where the job is based. Employee benefits are often provided voluntarily by the employer, which is known as a  benefit-in-kind.

The remunerations in the employee benefit may include health insurance, company stocks, or other benefits offered to employees. Two jobs might pay the same salary, but the employee benefits would vary. Therefore, these benefits make the job offer a better financial proposition than others. Read ahead to learn more about the compensation and benefits policy in Georgia.

Some employee benefits are country-specific; for example, many countries make it mandatory to provide health insurance as an essential component of the employee benefits packages. Companies should provide fair and performance-based employee benefits as they are crucial to human resource best practices.

From the employee’s point of view, along with salary, if the benefits provided by their employer increase their social security, they can easily take care of themselves and their family. From the employer’s perspective, these benefits help keep the staff happy, satisfied, and committed to their work, reducing employee attrition.

Compensation Laws in Georgia

The laws related to compensation structure in Georgia state that all businesses with three or more part-time, full-time, or seasonal employees need to have active workers’ compensation coverage. The amount of the compensation varies based on the number of employees. If a business does not provide the workers’ compensation package in Georgia, it’s liable for illness or injury that the employees face. In the case of severe incidents, your company can also face civil or criminal penalties.

In Georgia, the insurance coverage provided in workers’ compensation can be helpful if you have employees who fall under the following categories:

  • Suppose the employee trips over a box and fractures his wrist. Workers’ compensation structure in Georgia covers the expenses of their emergency medical expenses and any further follow-up appointments.
  • Suppose the employee tears his ligament while handling a heavy object. Then the cost of medical treatment, surgeries, or physical therapy is included in the worker’s compensation Georgia.
  • In case the employee develops carpal tunnel syndrome due to years of continuous office work. Then the compensation helps to cover the treatment for this repetitive strain and injury.

Additional workers’ compensation coverage in Georgia

The workers’ compensation structure in Georgia also covers the following points:

  • Disability benefits in case an employee gets temporarily disabled.
  • Death benefits and funeral costs if the death of the employee is caused by work-related incidents. These benefits also support the dependents by offering two-thirds of the weekly average wage of the employee.
  • Missed wages for the employees who need some time off to recover from the injury. 
  • Continuous care support in case the injured worker requires an extended amount of time  for  treatment, including physical therapy.

How to Design an Employee Benefits Program for Employees in Georgia

Managing employee benefits is an essential and expensive process for employers. Employers have to mostly provide mandatory employee benefits like contributions towards social security, unemployment insurance, worker’s compensation, and health insurance. It’s notable that insurance and similar other benefits are sometimes voluntary and provided by employers to enhance their employees’ social security.

These benefits programs typically include medical insurance, life and disability insurance, retirement benefits, and educational support programs. The five essential factors that you need to consider while designing the employee benefits plan include:

Step 1

Start by identifying your organization’s objectives behind the employee benefits program and the allocated budget.

Step 2

Next, you need to conduct an assessment to determine the mandatory employee benefits according to government regulations. You can also get input from your employees about the expected benefits they are looking forward to.

Step 3

After taking these inputs, you can design the employee benefits program for your business.

Step 4

You need to communicate the benefits plan to your employees

Step 5

You can further conduct an evaluation process at regular intervals to determine the effectiveness of the benefits offered.

What are the mandatory benefits employers offer in Georgia?

The compensation and benefits policy in Georgia mandates the employers to provide a pension savings scheme, healthcare benefits, and a mandatory personal accident insurance policy. The further section briefly discusses the compulsory compensation package in Georgia:

Pension savings scheme

This compensation package in Georgia applies to Georgian citizens who are generally employed or fall under self-employment. The only exception to this employee compensation and benefits in Georgia are the non-resident persons. This pension savings scheme also includes the foreign citizens and the stateless individuals residing permanently in Georgia.

The employer finances the pension contributions of employees in this employee compensation policy in Georgia with a limit of two percent of the taxable wage of the said employee. The payment is made through the electronic system into the pension account of the individual employee. If the employee is a self-employed person, he needs to pay four percent of his annual income. The Georgian government pays a part of the contribution based on the employee’s income level and the type of business.

If the employee has crossed the age of 60 years (55 years in the case of women), the registration in the pension scheme is voluntary. Furthermore, if the employee has attained the age of 40 years before enacting this law and wishes to be excluded from this savings scheme, then there are provisions for them to leave the scheme.

  • Mandatory personal accident compensation structure in Georgia: Starting from 2019, through the law passed by the Government of Georgia, insurance has become an important part of Georgia’s compensation and benefits policy. All domestic and international organizations must provide compulsory accident insurance to their employees engaged in hazardous work.

The updated compensation package in Georgia has made it obligatory to purchase insurance for all legal entities; this also includes self-employed individuals who have been granted the status of high-risk work as per the government resolution of Georgia.

Medical benefits for employees in Georgia

The Georgian government in the year 2013 flagged the ‘State Universal Health Care Program’, which offers a minimum service package to all  citizens who do not have state or private insurance coverage. The citizens whose annual income exceeds 40,000 Georgian Lari (GEL) and residents who already have private insurance are not eligible under this health care program. Most international companies and large organizations provide their employees with private insurance as a part of the compensation package in Georgia.

How Are Employee Benefits Taxed in Georgia?

The general question that comes to mind is whether taxes need to be paid on Georgia’s compensation and benefits policy. Therefore, the Georgian Workers’ Compensation Act has been updated, protecting the employees under its regulations. Under normal circumstances, residents need not pay taxes on their employee benefits in Georgia.

Under the Georgian law and Internal Revenue Service (IRS) codes, the workers’ compensation is generally not considered an income, which means they do not have to claim that amount on any tax form. Therefore, except in specific cases, the workers’ compensation settlements are protected from taxation.

Restrictions for Georgia Benefits and Compensation

The following points highlight the cases where workers’ compensation should be reported, and tax is calculated on it:

  • When the employee receives SSDI and SSI payments: When an individual receives workers’ compensation claim benefits offered by the Supplemental Security Income (SSI) or the Social Security Disability Insurance (SSDI). In that case, a portion of this income is liable to be taxed.

Subject to the condition that the total amount arrives after adding the workers’ compensation claim, SSI and SSDI benefits cross a threshold limit. The employee needs to pay tax on the excess amount.

  • If the employee returns to work on light duty: If the employee still receives workers’ compensation and returns to work, then, in this case, a part of his income will come under the ambit of taxation, but this tax is dependent on any wages earned.
  • In case of interest payments on workers’ compensation: If the company pays the workers’ compensation as an additional employee benefit along with interest, this interest amount received is taxable and needs to be reported to the IRS. 

Optional Benefits for Employees in Georgia

Some of the optional benefits of the compensation package in Georgia are as follows:

Health insurance benefits

In Georgia, there is no mandatory law regarding providing health insurance as an employee benefit. Hence, many organizations provide employees’ insurance as an additional employee benefit; this supports increased employee satisfaction.

Obligatory social insurance

As per the Georgian laws and regulations, neither the employer nor the employee is required to pay for an obligatory social insurance contribution. To help your employees during their retirement phase, you may provide them with a retirement insurance policy under the additional compensation package in Georgia.

How Multiplier Can Help with Benefits Management in Georgia

The global benefits solutions provided by Multiplier make it easy to manage employee benefits for international businesses. Your business can use the best-in-class solution provided by Multiplier to enhance the employee experience of your teams and offer the industry’s best benefits that match the global standards.

Multiplier helps you eliminate the need to collaborate with any country-specific third-party vendors and eases any paperwork requirements. With Multiplier, you can seamlessly select and manage all the employee benefits and take care of the coverage, customization, and insurance compliance for your global teams. This supports you in concentrating on your business operations and other administrative processes.

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