Fringe Benefits:
Fringe benefits are the benefits that employer provides in term of rewards and services other than wages and salary. Almost any non-salary benefit given by an employer to staff is regarded as “fringe” benefit. These benefits are significant as they can help business enterprise in attracting and retaining talented staff. It can become a vital factor in the success of an organization. Fringe benefits comprise both financial and non-financial benefits given to the workers during the job as well as post-employment period.
Definitions of Fringe benefits:
Any wage cost not directly connected with the employee’s productive effort, performance service or sacrifice”. – D. W. Balcher
“Fringe benefits are those benefits which are provided by an employer to or for the benefit of an employee and which are not in the form of wages, salaries and time- related payments.” – Cockmar
These benefits are given for specific reasons as below:
- These benefits act as motivation.
- It can ensure long term employment as some benefits are related to term of service.
- It can help in obtaining some tax benefits.
- It can help making salary package attractive and competitive, hence helps recruiting and retaining talented people.
- To develop a good image of the company in the eyes of public.
- To comply various laws related with employee welfare which are formulated by central and state Government.
Some of the important fringe benefits are:
Insurance– Employees are given benefits of insurance related to accident disability or death.
Medical benefits– employees are given medical facilities directly by company or via insurance agencies
Retirement Benefits– employees are given retirement benefits like provident fund, pension or gratuity.
Paid leave– employees are given various kinds of leaves like sick leave casual leave or annual leave during which they receive their salaries and full benefits. Some companies also give paid maternity and paternity leave to the employees.
Other benefits– Many companies give assistance in term of loans at lower rate of interest for some special occasions like marriages, child education or for buying house or vehicles.
Employee compensation if administered properly can become an effective tool to improve overall performance of the organisation. Without proper wage administration there would be higher rate of turnover, higher absenteeism and lesser job satisfaction in employees.