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What Are Fringe Benefits for an Employee?

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  • What Are Fringe Benefits for an Employee?

    Hi All,
    What are Fringe Benefits? Are they differing from the benefits that every employee would get?

  • #2
    Hi Sunanya ,

    I have some points about Fringe Benefits; these points may give you a clear idea about 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 boosts 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 includes Cafeteria subsidies, union credit, house financing etc.

    • Payment for special duties: Such as working on grievance redressal procedures and labor 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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