Fringe Benefits

Meaning
Benefits given to employees in addition to their
salary or wage are called fringe benefits. Thus
fringe benefits are those monetary and nonmonetary benefits given to the employees during
and post employment period which are connected
with employment but not to the employees
contribution to the organization. Cockmar defined
those benefits which are not provided by an
employer to or for the benefits of an employees and
which are not in the form of wages, salaries and time
related payments.
Coverage
The fringe benefits covers bonus, social security
measures, retirement benefits like provident fund,
gratuity, pension workmens compensation, housing
medical, canteen, Co-operative credit, consumer
stores educational facilities, recreational facilities
financial advice and so on.
Need
1.
2.
3.
4.
5.

Employee Demands
Trade Union Demands
Employers preference
As a Social Security
To improve Human Relation

Objectives
1. To create and improve sound industrial relations.
2. To boost up employee morale.
3. To motivate the employees by identifying and
satisfying their unsatisfied needs
4. To provide qualitative work environment and
work life.
5. To provide security to the employees against
social risk
like old age benefit and maternity benefits
6. To protect the health of the employees and to
provide safety to the employees against
accidents
7. To promote employees welfare by providing
welfare measures like recreation facilities.
8. To create
employees

sense

of

belongingness

among

9. To meet requirements of various legislations

relating to
fringe benefits.

Factors Influencing Employee Benefit

_ Absolute and per capita cost of fringe Benefit
_ Organization financial ability to provide the benefits
_ Employees deficiencies or needs
_ The bargaining strength of trade unions.
_ Employees significance to the organization
_ Fax benefits to the organization and individual
employees.
_ Need for building public image for the Organization.
_ Organizations awareness and policy towards social
responsibility.
_ Employees reactions to the benefits
TYPES OF FRINGE BENEFITS
1. For Employment Security
Benefits under this head include employment
insurance, technological adjustment pay , leave
travel pay, overtime pay, level for negotiation, leave
for maternity, leave for grievances, holidays, cost of
living bonus, call back pay , lay off pay, retiring
rooms, jobs to the sons/daughter of the employees.

2. Health protection
Benefits include accident insurance, disability
insurance, health insurance, hospitalization, life
insurance, medical care, sick benefits sick leave.
3. For Old Age and Retirement Benefits
It include deferred income e plan pension , gratuity,
provident fund, old age pension old age counseling,
medical benefits for retired employees, traveling
concession to retired employees.
4. For Personnel Identification, Participation
and Stimulation:
The category covers the following benefits:
anniversary awards, attendance bonus, canteen,
cooperative credit societies, educational facilities,
beauty parlour services, housing, income tax aid,
counseling, quality bonus, recreational programmes,
stress counseling, safety measures etc.
In addition to fringe benefits, managements provide
different types of non-monetary rewards. These nonmonetary rewards include:
(i) Treats cover free lunches, festival bashes, coffee
breaks, picnics, dinner with the boss, dinner for the
family, birthday treats.
(ii) Knick-Knacks cover desk accessories, company
watches,
tie-pins,
brooches,
diaries/planners,
calendars, wallets and T-shirts.
(iii) Awards include trophies, plaques, citations,
certificates, scrolls, and letters of appreciation.

(iv)Social
Acknowledgment
includes
informal
recognition, recognition at office get-together,
socialisation of advice, suggestions etc.
(v) Office Environment covers redecoration, flexible
hours etc.
(vi) Tokens covers movie tickets, vacation trips, early
time-offs etc.
(vii)
On-the-job
rewards
include
increased
responsibility, job rotation, training etc.

Advantages of Fringe Benefits

Advantages of non-monetary rewards include:
{i} Non-monetary rewards motivate employees to
perform better.
{ii} Non-monetary rewards build employee selfesteem.
{iii} Employees become more loyal to the company.
{iv} These benefits create an atmosphere where
change is not resented.
{v} These benefits can be provided without any
extra cost.
{vi} Create close bondage between the company
and employee family.
Disadvantages of Fringe Benefits
The non-monetary rewards, despite the advantages
discussed above, suffer from the following
disadvantages.

{i} These benefits demotivate the employees, if the

processes are not transparent.
{ii}These rewards may result in short-sighted and
hasty decision-making.
{iii}These rewards may result
competition among employees.

in

unhealthy

{iv}Work intrudes on the home life of employees.

{v} Employees feel that managements concentrate
on the non-cost programmes.
{vi} These rewards will not work, if monetary
rewards are not adequate.