Maintenance of benefits: Overview, definition, and example
What is maintenance of benefits?
Maintenance of benefits refers to the continuation or preservation of certain advantages, rights, or benefits that an individual or group is entitled to, especially during specific periods such as employment transitions, layoffs, or periods of absence. It is often used in the context of employee benefits, where employers are required to maintain certain benefits, like health insurance, paid leave, or retirement contributions, even when an employee is not actively working or is in transition.
For example, an employee who is on maternity leave may be entitled to have their health insurance benefits continue during the time they are away from work.
Why is maintenance of benefits important?
The maintenance of benefits is important because it ensures that individuals do not lose critical support or protections during times of life change or employment transition. For employees, this provision offers peace of mind by ensuring that they can still access important benefits, such as healthcare, life insurance, or pension contributions, during times when they are not actively working.
For employers, maintaining benefits can help retain employee loyalty and improve morale, especially during temporary absences, transitions, or restructuring. It also helps employers comply with legal requirements in certain situations, such as under the Family and Medical Leave Act (FMLA) in the U.S.
Understanding maintenance of benefits through an example
Imagine a worker who takes a medical leave of absence for several months due to illness. According to the company’s policy or employment agreement, the employee’s health benefits continue during this period, ensuring they still have access to necessary medical care despite not working. This maintenance of benefits provides the employee with security during a challenging time and prevents any gaps in essential coverage.
In another case, an employee is laid off as part of a company’s restructuring. The company agrees to continue the employee’s healthcare coverage for six months following the layoff as part of the severance package, allowing the employee to transition smoothly without losing essential health benefits.
An example of a maintenance of benefits clause
Here’s how a maintenance of benefits clause might appear in an employment agreement:
“During any authorized leave of absence, including but not limited to medical leave or maternity leave, the Employer agrees to maintain the Employee’s benefits, including health insurance and paid time off, under the same terms and conditions as if the Employee were actively at work, for a period of up to [Insert Duration].”
Conclusion
The maintenance of benefits is a critical provision in employment contracts and agreements, ensuring that individuals retain essential benefits during periods of transition, absence, or change. It provides employees with security and continuity in access to healthcare, paid leave, and retirement contributions, especially during times when they are unable to actively work. For employers, maintaining benefits helps foster goodwill, ensure compliance with legal obligations, and support employees through challenging periods.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.