Some jobs come with a few perks or freebies that are unrelated to employee salary. These perks or bonuses other than employee salary are known as fringe benefits. This is great when you need more commitment from your employees, seek ways to keep the best talent in your service or simply to make your business more attractive to potential employees. Here is everything you need to know about fringe benefits.
What are fringe benefits?They are extra compensations that are not monetary, which an employer provides to employees. Salaries, bonuses, and all other forms of cash compensations are not included. Fringe benefits save employees a couple of expenses and make the job more comfortable for them. Furthermore, they are not included in the employee’s taxable income which is why they are called perks. There are, however, those benefits that are a legal requirement and those that are optional. The whole idea about offering fringe benefits is to increase overall job satisfaction, motivate and engage workers.
The Importance of Fringe BenefitsIn terms of fringe benefits, businesses may and ought to be inventive. After all, they can begin to actually compete in order to establish themselves as a desirable employer when they pay attention to their employees' needs and provide them with benefits that are important to them. Because these benefits are optional, employees (and potential hires) take attention.Consider fringe benefits to be significant instruments that firms can use to attract and retain the best personnel.
Are supplemental benefits becoming more popular?Employers understand the true worth of talent in today's environment, whether we are in the midst of or after the "Great Resignation." Top performers, leaders, and employees have never been more vital.Furthermore, it has never been more difficult to recruit and retain them, which is why fringe benefits are so vital. They are important because top talent seeks more than an interesting role and a good salary. Professionals today expect benefits to support "the full person."This became very apparent throughout the Covid-19 epidemic. According to a recent survey of hundreds of UK business leaders, nearly half (46%) claim their businesses have added additional perks as a result of the crisis.According to this survey, the most popular fringe benefits are:
- Work-from-home options
- Wellness assistance
- Plan de pension/retraite
How fringe benefits work?In today’s competitive business space, it can be incredibly difficult to retain top employees with basic salaries. That’s where fringe benefits become relevant. Even though they are designed to make workers more comfortable on the job, they also serve a company’s reputation. They help companies stand out for providing the most perks for their employees. It increases a company’s chance of attracting highly skilled and talented workers from competing businesses.The types of fringe benefits provided to workers differ from one employer to the other as employers are at liberty to choose what types of benefits to offer. Likewise, in some companies, the employee gets to choose his/her preferred benefit from available options. Options like a free gym membership, free yoga class, a company car, tuition reimbursement, child care, company cafeteria, etc.
Types of fringe benefitsTwo major classes of fringe benefits exist. Some perks are a legal requirement while others are optional.
1. Fringe benefits that are legally requiredEmployers must provide health care, cushion economic hardships, and provide retirement sustenance. Examples of compulsory fringe benefits include the following:
Medical insuranceMedical insurance is covered by the Patient Protection and Affordable Care Act. It states that companies with more than fifty people should provide healthcare plans. And workers should have health insurance coverage. The healthcare insurance plans cover access to primary care physicians, emergency care, and so on.
Medical leaveA business that employs over fifty people is legally required to provide medical leave to workers who are over a year with the company. This medical leave is not a paid one and can last for about twelve weeks.
2. Fringe benefits not legally requiredThese perks are left at the discretion of the employer. Some of them are taxable for the employer while some are not. Examples of optional benefits may include:
- Retirement benefits
- Achievement awards
- Fitness and exercise facilities
- Employee discounts
- Elder and child care benefits
- Tuition reimbursement
- Education assistance
- Transport and commute benefits
- Paid leave or time off
- Paid vacations or holidays