Fringe benefits

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.

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