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Understanding Fringe Benefits: Importance and Types in Employee Compensation

Fringe benefits are non-monetary rewards given to employees in addition to their wages or salary. These benefits can include health insurance, company cars for personal use, or discounted loans, contributing to employee satisfaction and morale. They are designed to create a positive work environment, enhance industrial relations, and motivate employees by meeting their personal needs. While they offer advantages like tax benefits and improved loyalty, challenges exist, such as employee reliance on these perks. Understanding and implementing fringe benefits effectively can yield substantial organizational gains.

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Understanding Fringe Benefits: Importance and Types in Employee Compensation

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  1. Presentation on Fringe Benefits

  2. Fringe benefits are rewards given to employees as an extra to their wage or Salary. These can be an extra that is awarded with the job on a permanent basis or some times a reward for a particular achievement. Fringe benefits are benefits that are in kind: NOT money Fringe Benefits

  3. Definition: Fringe benefits are those monetary and non monetary benefits given to the employee during and post employment period which are connected with employment but not to the employees contribution to the organization. For Example, You could receive a benefit when you: • Use a work car for private purposes • Are provided with a cheap loan • Are provided with free private health insurance • Are provided with cleaning services for your private residence

  4. Benefits in Kind1.These are extras which are awarded in the form of an item or service.2.These can be car, health care, discount, accommodation, cheaper food and drink

  5. Objectives of Fringe Benefits • To create and Improve sound Industrial Relations • To boost up employee morale • To motivate the employees by identifying and satisfying their unsatisfied need • To provide qualitative work environment and work life • To provide security to the employees against social risks like old age benefits and maternity benefits.

  6. Need and Importance of F.B • To retain the employees • Employee demands • To motivate performance • As a social security • Trade union demand • Skill shortage • Hazards of Industrial Life

  7. Principles of FRINGE BENEFIT Programme • Satisfaction of real need • Flexibility • Proper communication • Considering the wishes of employees • Educate the workers • Participation

  8. Types of Fringe Benefits • Payment for time not worked. • Employee security. • Safety & health. • Workmen’s compensation. • Health benefits. • Voluntary arrangements. • Welfare & recreational facilities. • Old age & retirement benefits.

  9. Advantages • No additional tax is paid on fringe benefits as they do not involve money. • They can be used to encourage the employee to work harder.

  10. Disadvantages • The employee has no choice on how they are spent. • Benefits are lost when an employee leaves the job, some times causing hardship.

  11. Conclusion • Basically a fringe benefit provided to an employee or an associate (Ex: Family, Spouse & Children) because of his employment • Fringe benefits provide output in terms of employee loyalty and cooperation, employee welfare and create organizational image.

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