1. Definition of fringe benefits
Employee benefits (also called fringe benefits) are various non-wage compensations provided to employees in addition to their normal wages or salaries.
2. Purpose of fringe benefits:
The purpose of employee benefits is to retain people in the organization and not to stimulate them to greater effort and higher performance.
3. Advantages of fringe benefits:
Advantages for employer
• Improves efficiency and productivity as employees are assured of security for themselves and their families.
• Premiums are tax deductible as corporation expense, which means savings with quality coverage.
• Helps attract and retain better qualified employees.
• Provides high risk coverage at low costs easing the company’s financial burden.
Advantages for employees
• Employees with personal life insurance enjoy additional protection.
• Confidence in company’s schemes boost staff morale and pride in company.
• Employees enjoy cheaper rates negotiated through their employer than they could obtain as an individual.
• Peace of mind leading to better productivity as employees are assured of provision for themselves and families in any mishap.
4. Types of fringe benefits:
• Premium Payments: This is the period of time a worker has worked, and payment is based on daily or weekly.
• Payment for time not worked: Which include payment for sick leave and for time during which an employee is under medical care. Payments for holiday, vacations, call back time, dressing time, portal-to-portal time and wet time.
• Payment for employee service: This include Cafeteria subsidies, union credit, house financing etc.
• Payment for special duties: Such as working on grievance redressal procedures and labour contract negotiations.
• Payments for health & Security benefits: These include retirement plans, social security payments, Saving plans, Profit sharing plans, Group Life Insurance etc.
• Other expenditure: Like holiday bonus, on educational reimbursements, employee uniforms, work cloths, supper money or meal allowance etc.