Fringe benefits are the perks that employees receive from employers beyond any financial compensation. These are the various type of non-wage compensation other than salaries like health insurance, life insurance, childcare reimbursement, education assistance, employee loans, employee stock options, retirement plan contributions, personal use of a company-owned vehicle, etc. These additional benefits provide the employees with social security, making the overall work environment pleasant.
How Fringe Benefits Work
The fringe benefits offered to employees vary from one company to the other. It is in the employer’s hands to choose the benefits provided to the employees. Often employees are also given a chance to select from the fringe benefits they are interested in during the recruitment process. The purpose of providing fringe benefits to employees is to ensure the comfort of employees at the workplace. Retaining employees only on salary is a challenging task. Fringe benefits add many compensations. It attracts high-value and talented employees who help improve the growth and productivity of the company.
Examples of Fringe Benefits
Some examples of fringe benefits are free meals, gym, health insurance, employee stock options, retirement benefits, transportation plans, childcare and education assistance, etc.
Health insurance is the fringe benefit offered by the organisation to employees to ensure employees well-being. Companies reimburse partial to full amount to employees to cover their medical or surgical cost. The amount is either reimbursed to the employees on submission of required documents or it can be directly paid to insured medical department.
To provide wages, training, and career guidance to employees who become unemployed because of no fault of their own, the Federal Unemployment Tax Act (FUTA) requires employers to pay a federal and state unemployment tax to the department of labor. These benefits provide monetary assistance to the unemployed citizens who fulfill the act’s requirements. This Act is applicable in some countries.
According to the law, companies and organizations that employ more than a certain number of employees, should provide family and medical leave to the employees who have completed a year or more in the company. These medical leaves are unpaid, protected, and granted for 12 weeks.
Worker’s compensation is the benefit offered to employees injured at work or acquired from an occupational disease. According to the department of labor, companies must provide employees with medical treatment, wage replacement benefits, rehabilitation, and other benefits. This compensation is different in different states, and every state compensation board is separate.
Free or Discounted Meals
Free or discounted meals are another fringe benefit. A few organizations offer their employees free or discounted breakfast and lunch at the office. It may also include other meals such as free coffee or discounted snacks.
Company-owned vehicles are a fringe benefit given to the employees for their personal and professional usage. Employees use this vehicle to commute to work if they travel a lot. It reduces the employee’s expenditure on gas, and they can use this vehicle to perform job responsibilities.
Some companies offer the employees the reimbursement of the amount spent on child upbringing during their employment. It covers partial or complete costs such as a child’s education, health, etc. Other organizations may offer on-site childcare.
Free or Discounted Lodging
Companies or organizations may offer free or discounted lodging to employees when they travel on the job. The employers can also reimburse the amount spent on stay in the hotel for the employees who attend the company’s meetings or conferences in different cities or countries.
Why Should you Invest in Fringe Benefits
Companies that invest in fringe benefits are likely to have positive employee responses. Fringe benefits promote employee wellness, public perception, and employee engagement. Fringe benefits automatically increase employee retention, also attracting a larger pool of talent. It is a driving factor to motivate employees to perform better at work, thus increasing the growth and productivity of the company.
Frequently Asked Questions (FAQs)
Fringe benefits are the perks that employees receive from employers beyond any financial compensation. These include health insurance, life insurance, childcare reimbursement, education assistance, employee loans, employee stock options, retirement plan contributions, personal use of a company-owned vehicle etc.
Yes, they are included in the employee’s gross income, though some exceptions are. They are considered as part of the employee’s salary.