Fringe Benefits are the monetary compensation to the employees apart from the wages and salary. It has been studied that employees weigh the job opportunities on the basis of the fringe benefit they will get with the job. 30% of the compensation comprises of fringe benefits. Fringe benefits could be a great indicator of job satisfaction and employee retention program overall.
Nowadays, fringe benefits comprise not only dental checkups and insurance, but also gym memberships and free meals. Employees feel that these benefits are essential for their lifestyle and help them save money. Many Internet giants and companies are offering a wide array of fringe benefits for employees, which makes attractive for the employees and future applicants.
What is a Fringe Benefit?
The Fringe benefits are compensation from the employers or say privilege to the employees for being part of the company. They consist of part of your year package and help employees use the services of the company at the concession rate.
The main parts of fringe benefits include-
- Dental and health check-up and insurance
- Privilege to club, gyms, and resorts
- Employee share in the equity of the company
- Housing allowance
- Free meals and drinks
- Company car
- Vacation pay or vacation
- Sick days
- Performance bonuses at the end of the year
These days companies are also offering student loans and educational support for employees or family of employees. Fringe benefits attract the employees as the employer and help share their expenses in employee retention. Many companies also pay your cable and phone bills so that communicating with the employees is not a hassle.
The law requires some fringe benefits, and some are offered to employees by the company for the convenience of employees and the company overall. The benefits extended to the employees are nor entirely tax-free for the company. Some benefits are still taxable to the company, and some listed in 401(k) are subject to deferred tax.
Importance of Fringe Benefits
- Employee Retention: many studies have shown that employee benefits help in employee retention in the company. They are given benefits which makes them loyal to the company they form a part of the company workforce.
- Employee Engagement: Fringe benefits like giving part in the company equity and year-end performance bonus, motivate the employees, and engage them towards the company goals.
- Wellness of Employee: The benefits are for the advantage of the employee. Some service sector companies offer fringe benefits like getting employee discounts on the services of the company. The health care and insurance benefits ensure that the employees are protected from external factors.
Fringe benefits are the discretion of the employer and provided to employees as part of their employment in the company. Some benefits are optional to the employees, and some are required by the law, which can be redeemed by the employees anytime during their employment.
Such employee benefits are offered to the employees during the on-boarding process. They are optional and will be available to the employees if they apply for it while the benefits which are redeemable to the employees like coupons and discounts can be used by the employees anytime.