Employee Welfare: Definition, Features, Approaches, Objectives, Types, Benefits

What is Employee Welfare?

Employee welfare means anything done for the comfort and improvement, intellectual or social of the employees over and above the wages paid which is not a necessity of the industry.

What is Employee Welfare
What is Employee Welfare?

Employees are one of the most important resources of the organisation and it is important that the physical and mental well being of the employees is ensured. For this, the organisation has to view employees as an investment rather than as an expense. This is essential as the profitability of the organisation is directly linked with the productivity of the workforce.

The productivity of the employees depends on the environment of the organisation and the welfare measures taken by the organisation. The main aim of undertaking employee welfare measures is to earn and retain the goodwill and loyalty of the employees and their union.

In order to ensure these things, it is very essential that the safety of the employees is guaranteed. But this is one of the major challenges for the organisation, especially in such situations where unsafe conditions are part of the job profile of the employees. An organisation which overlooks the safety of the employees may have to face many consequences such as opposition from employee unions or even legal proceedings.

So, it is very essential that the physical, mental and emotional well-being of employees is ensured so that a motivated and loyal workforce is created which works with full commitment towards the achievement of organisational goals.

Definition of Employee Welfare

These are the definition of employee welfare:

The whole field of welfare is one in which much can be done to combat the sense of frustration of the industrial workers, to relieve them of the Personnel and family worries, to improve their health, to offer them some sphere in which they can excel, others and to help them to a wider conception of life.

Prof. H.S. Kirkaldy

Employee welfare covers all the efforts which employers make for the benefits of their employees over and above the working conditions fixed by the Factories Act and the provisions of the social legisla- tion providing against accident, old age, unemployment and sickness.

N.M. Joshi

Employee welfare refers to the efforts made by the employers to improve the working and living conditions over and above the wages paid to them. In its widest sense it comprises all matters affecting the health, safety, comfort and general welfare of the workmen, and includes provision for education, recreation, thrift schemes, convalescent homes

According to Balfour Committee

Features of Employee Welfare

The following are the features of employee welfare:

  1. Employee welfare is a voluntary activity of the organisation which is done for the general well-being of the employees.

  2. It is usually an activity which is over and above the statutory and contractual obligations of the organisation.

  3. Objectives and strategies of the organisation provide a broad outline of the policies of employee welfare.

  4. Such measures enhance the mental, physical, intellectual and moral well being of the employees.

  5. It is a continuous and ongoing process and not a one-time activity.

  6. Such activity can extend even to the personal life of the employees.

Approaches to Labour Welfare

Labour welfare is a dynamic concept and it has constantly adapted itself to the changing circumstances. This development is, however, evolutionary. There have been three general approaches in the evolution of the concept. They are:

  1. Paternalistic Approach
  2. Industrial Efficiency Approach
  3. Social Approach
Approaches to Labour Welfare
Approaches to Labour Welfare

Paternalistic Approach

In the early phase of industrialization i.e., during the early days of this century, the paternalistic approach to labour welfare was adopted. The employers of those days started providing such facilities duly motivated by philanthropic, humanitarian and religious considerations.

In those days, employers maintained direct contact with their workmen. Hence, they were in a position to understand their problems, difficulties and strains. But those days have gone and at the present provision of welfare, amenities can no longer be regarded as an act of charity.

Industrial Efficiency Approach

The next step in the evolutionary process was the industrial efficiency approach. With the passage of time, the size of business undertakings became large. They were organized in the form of joint-stock companies and there was a total separation of ownership and management.

Hence, the so-called employers were no longer able to maintain direct contact with the workers. Besides, there was also an acute need for an increase in production etc. The persons at the helm of affairs feel that the problem of increasing efficiency can be tackled only through the provision of welfare facilities to the employees.

But this approach was not free from defects. Trade unions strongly opposed it. They felt that the worker’s welfare could not be treated at par with the problems of care, maintenance and upkeep of machines. J.V.C. Brown made a pointed reference to this weakness and stated that the motive behind the provision of such facilities was wrong and selfish.

Facilities were provided not for any social cause or with a broad outlook but to increase the efficiency of the workers which ultimately bring profit to the pockets of the industrialists. Hence this approach also became unpopular.

Social Approach

The latest trend in the concept of labour welfare is the shift of emphasis from that of increased efficiency to the promotion of the general welfare of the workers. This social approach does neither involve any philanthropic consideration for the ulterior motive of increasing the level of labour efficiency.

In other words, labour welfare is an end itself and the development of loyalty towards the employer and merest inefficiency is only incidental. However, it is believed that improvement of worker’s morale, efficiency and loyalty shall be the natural outcome of such provisions. This approach is welcomed by the workers and their unions.

Objectives of Employee Welfare

The following are the major objectives of employee welfare:

  1. Employee welfare creates a motivational environment which enables better cooperation from the employees for plans and proposals of the organisation.

  2. The focus is on retaining employees who are talented.

  3. The long-term aim is to achieve a level of productivity and performance which is desired by the organisation.

  4. Through such measures, the organisation aims to create goodwill among the labour market which helps them to attract the best talents with ease.

  5. It creates a strong bond of loyalty between the organisation and the employees.

  6. It facilitates the creation of team spirit and cooperation among the employees of the organisation.

  7. Through welfare measures, the organisation aims to get complete attention and devotion of the employees towards their jobs.

Principles of Employee Welfare

These are the principle of social responsibility:

  1. Social Responsibility
  2. Democratic Values
  3. Fair Wages
  4. Work Efficiency
  5. Reconstruction of Personality
  6. Shared Responsibility
  7. Universality of Welfare
Principles of Employee Welfare
Principles of Employee Welfare

Social Responsibility

Employee welfare is not philanthropy. That must be taken as a social responsibility by the employers; because the working class can not be left pauperized and poverty-ridden. The social and economic inequality brings not only psychological and social unrest but also reduces job involvement and breeds inefficiency.

Democratic Values

Democracy is based on social justice. It is based on the principle of equity and equality. The widening gap between the rich and the poor is an unhealthy sign of democracy. The working class, therefore, must be provided welfare amenities, that will help reduce the income gaps and would, ultimately, result in improved job satisfaction.

Fair Wages

The services should meet the workers’ real needs. This means that the management must determine with active involvement by the employees, what the true needs of the employee are. A cafeteria may be used to manage the operation.

The principle of the adequacy of wages concedes that labour welfare services are not a substitute for wages, instead, it is to motivate the workers for better performance. And that would result in better working and social life for workers.

Work Efficiency

If the industry provides labour welfare services and amenities to the workmen, it will result in improvement in their work efficiency, which will result in higher productivity and greater competitive advantage for the industries.

Reconstruction of Personality

When the needs and aspirations of employees are taken care of, it results in the development of a positive approach in the workforce. The positive atmosphere, thus, created results in a change in the personality of employees. With the improved industrial relations situation, gradually the personalities of the officials and the workmen get reconstructed in a positive manner.

Shared Responsibility

The successful running of an industrial enterprise is the shared responsibility of both the workers and management. The management must arrange for employee welfare activities in order to improve the job morale of the workforce, which would result in an amicable work environment and higher productivity of the concern.

Universality of Welfare

The need for welfare services for employees is universal in nature. It is needed to be provided to the working class everywhere in the world and to all the categories of employees and workmen in all the countries and all sorts of industries and other sectors.

Types of Employee Welfare

These are the types of employee welfare:

  1. Intramural Facilities
  2. Extramural Facilities
  3. Statutory Facilities
  4. Mutual Facilities
  5. Voluntary
Types of Employee Welfare
Types of Employee Welfare

Intramural Facilities

The facilities provided inside the factory are known as intramural facilities. These facilities include activities relating to minimization of industrial fatigue, provision of safety measures like fencing and covering of machines, good layout of the plant and machinery, sufficient lighting conditions, first aid appliances etc. Provisions of such facilities are also obligatory in all industrial establishments all over the world.

Extramural Facilities

Facilities offered to the workers outside the factory are known as extramural facilities. They include better housing accommodations, indoor and outdoor recreation facilities, sports, educational facilities etc. The provocation of these facilities is voluntary.

Earlier, due attention was not given to the provision of extramural facilities to the workers but now it is realized that these facilities are very important, for the general welfare and enlistment of the workers.

Statutory Facilities

Under this category, welfare facilities are provided according to the labour legislation passed by the Government. The nature and coverage of these facilities vary from country to country. Again these facilities very are either intramural facilities or extramural facilities.

These facilities must be provided by all the employers and cannot be ignored. Any contravention of the statutory provisions shall render the employer punishable under the Act concerned. The National Commission of Labour has divided all the statutory measures under two distinct heads:

  1. Facilities have to be provided irrespective of the size of the establishment e.g., drinking water.
  2. Facilities which are to be provided subject to the employment of a specified number of persons, e.g., crèches.

Mutual Facilities

These facilities are usually outside the scope of the statutory facilities. These activities are voluntarily undertaken by the workers themselves for their own interest. As such the employer has no say in it.


The facilities which are voluntarily provided by the employers come under this category. Hence these are not statutory. No doubt, the activities under this category ultimately lead to an increase in the efficiency of workers.

Benefits of Employee Welfare

Following are the benefits of employee welfare:

  1. Improved Industrial Relations
  2. Increase in the General Efficiency and Income
  3. High Morale
  4. Creation of Permanent Labour Force
  5. Improvement in the Mental and Moral Health
  6. Change in the Outlook of Employers
  7. Social Benefits
Benefits of Employee Welfare
Benefits of Employee Welfare

Improved Industrial Relations

These measures provide great satisfaction to the workers and also help in maintaining industrial peace. Conflicts, chaos, unrest etc. are minimized. A feeling of oneness with the organization is created.

Increase in the General Efficiency and Income

Welfare facilities make their workers happy and content both at home and in the factory and it brings improvement in their general efficiency. Their efficiency and productivity may not be up to the mark if they are not relieved of their domestic worries like poor housing, and unsanitary conditions rate.

Once they are relieved of these worries, they work with full zeal and enthusiasm.

High Morale

The welfare measures shall also help in securing the willing cooperation of the workers. Once satisfied they will be less tempted to destructive and anti-social activities. Thus, a high degree of employee morale is ensured.

Creation of Permanent Labour Force

These facilities will provide an attraction to the workers to stay longer in the undertaking. In the absence of such facilities, the workers often leave for their villages in search of recreation etc. Efficient workers can also search for better chances and may switch over to other establishments. In order to create a permanent labour force, such facilities are essential.

Improvement in the Mental and Moral Health

These facilities bring a drastic change in the outlook of the workers, improve their mental faculty and help them in becoming good citizens. In the absence of such facilities, they are bound to fall prey to the various social evils like drinking, gambling etc.

Change in the Outlook of Employers

A change in the attitude and outlook of the employees and their heartfelt co-operation shall also change the outlook of the employers as well. They will become more sympathetic towards them. They will not even hesitate to share the fruits of their hard labour with the workers.

Social Benefits

Besides the various economic advantages to the employers and employees, these measures also offer various social advantages. The increase in the efficiency of the workers ultimately leads to an increase in production, productivity and the earnings of the undertakings.

The increased earnings also lead to higher wages and make the workers happier and enable them to live “a richer and fuller life”. Finally, the living standard of the society is raised.

Types of Welfare Measures

These are types of welfare measures:

  1. Statutory Welfare Facilities
  2. Non Statutory Welfare Measures

FAQ Related to Employee Welfare

How to improve employee welfare?

In order to ensure these things, it is very essential that the safety of the employees is guaranteed. But this is one of the major challenges for the organisation, especially in such situations where unsafe conditions are part of the job profile of the employees. An organisation which overlooks the safety of the employees may have to face many consequences such as opposition from employee unions or even legal proceedings.

What are the benefits of employee welfare?

These are the benefits of employee welfare:
1. Improved Industrial Relations
2. Increase in the General Efficiency and Income
3. High Morale
4. Creation of Permanent Labour Force
5. Improvement in the Mental and Moral Health
6. Change in the Outlook of Employers
7. Social Benefits etc.