How do statutory benefits differ from discretionary benefits?

Statutory benefits are those that are mandated by law, meaning employers are legally required to provide them to eligible employees. These benefits often include things like workers’ compensation, unemployment insurance, and certain health benefits. Because they are dictated by federal, state, or local legislation, employers cannot choose whether or not to offer these benefits; they must comply with the law.

In contrast, discretionary benefits are not required by law. Instead, they are offered at the discretion of the employer as part of a benefits package. Examples of discretionary benefits might include paid time off, health club memberships, or educational assistance. Since these benefits are not mandated, employers can tailor their offerings based on their business needs or competitive positioning in the job market.

This distinction highlights the fundamental difference where statutory benefits arise from legal obligations, whereas discretionary benefits stem from organizational choices and strategies.