1. FRINGE BENEFITS

2. FRINGE BENEFITS
 Are extra benefits provided to workers other
than usual compensation in form of salary
 Referred to as ‘fringe benefits’ because years
ago they were small, relatively inconspicuous
 Purpose - retain employee in organization on
long term basis.
 Differ from incentive plans since benefits &
services not contingent on performance of
individual, team or organization
 Accrue to all employees by virtue of their
membership in organisation
 Organization should make employees abreast
of fringe benefit programmes to motivate them
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& improve status of their organization.
 Are of two types: Mandatory & Voluntary

3. FRINGE BENEFITS
 Rapid industrialization, heavy urbanization &
growth of capitalistic economy made it difficult for
employees to protect themselves against adverse
impact of these developments
 Labour scarcity & competition for qualified
personnel led to evolution & implementation of no.
of compensation plans
 Realisation on part of management wrt its
responsibility towards employees that
 benefits of productivity increase resulting from increasing
industrialization should go, at least partly, to employees
responsible for it,
 they be protected against insecurity arising from
unemployment, sickness, injury & old age.
 Labour legislation on social security, made it
imperative for employers to share with employees
cost of old age, survivor & disability benefits
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 Hence the importance of fringe benefits

4. FRINGE BENEFITS
 Influence of other factors on ‘Fringe Benefits’
 Rising prices & cost of living brought about incessant
demand for provision of extra benefits to employees
 Employers found fringe benefits attractive areas of
negotiation when wage & salary increases not feasible
 Greater pressure placed upon competing organizations to
match these benefits to attract & retain employees
 Fringe benefits - non-taxable rewards; major stimulus to
their expansion
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5. FRINGE BENEFITS
 Coverage of Benefits
 Benefits consist of items/ awards supplementary to
normal pay.
 Some –pensions & sick pay - are essential
entitlements, common term ‘fringe benefits’ is
perhaps misleading.
 Benefits such as cars, medical insurance & ‘perks’,
are in nature of optional extras & recruitment
retention & incentives strategies of organization
 Entitlements include the following:
 Pension Provisions
› regarded as most important benefit after basic pay
› kind of deferred pay, building up rights to guaranteed income on
retirement (or to dependants, on death)
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› financed by contributions from company with facilities for
contribution by employees as well.

6. FRINGE BENEFITS
 Sick Pay
› Sickness or enforced absence from work haunt workers with
prospect of lost earnings; provision for genuine sufferers.
› Many employers supplement benefit by additional sick pay
schemes
 Medical Benefits
› Say private medical and/or dental insurance. Some
medical services may also be provided at workplace: for
example eye & hearing tests (where relevant to the
industrial context).
 Maternity Leave & Maternity Pay
 Holidays
› Benefit, taken for granted
› Employees who have been continuously employed for 26
weeks entitled to 15 days’ leave per annum, rising to 20 days
for leave
› No statutory right to ‘customary’ holidays (public holidays,
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Christmas etc) ; may be granted by contract terms.
› Additional holiday entitlements regarded as fringe benefit,
including sabbaticals & long-service leaves.

7. FRINGE BENEFITS
 Otherbenefits include the following:
 Company Cars
› highly-regarded benefit in India/ UK, especially
among managerial staff, status symbol, and for
those whose work requires extensive travel (eg.
sales & service staff).
 Transport Assistance
› Examples include loans for purchase of annual
season tickets, or bulk buying of tickets by
employers for distribution to staff.
 Housing assistance, in the form of
› Allowances to staff transferred or relocated –
lodging, and so on, or 7
› assistance for house purchase – bridging loan,
preferential mortgage terms.

8. FRINGE BENEFITS
 Catering Services
› Most commonly, subsidized food or luncheon vouchers.
 Recreational Facilities
› Subsidy & membership of social & sports clubs or provision of
facilities such as a gymnasium or bar.
 Allowances for
› Telephone costs
› Professional subscriptions or work related reading matter.
› Discounts or preferential terms on the organization’s own
products services.
 EG: Bank employees receive mortgage subsidy-discounts on
unit trusts or insurance products; bonus interest on
accounts or savings plans; or reduced interest rates on
overdrafts & loans.
 Educational Programmes
› In-house study opportunities, or sponsorship of external study
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(not necessarily work-related).

9. FRINGE BENEFITS
 Family-friendly Policies
› Workplace nurseries, term-time hours contracts, career break
schemes.
 Severance Pay
› Provides a one-time payment when an employee is terminated.
Done on humanitarian ground.
 Insurance:
› May be life, health & accident. May be for individual or group
 Disablement benefit
› Insured employees, disabled temporarily or permanently due
to employment injury, occupational diseases, or both entitled
to cash benefit
 Dependent’s benefit
› If insured person dies as a result of employment injury, his
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dependents are entitled to compensation under the Act

10. FRINGE BENEFITS
 Other Fringe Benefits
› Entertainment benefit by way of food, drink or
recreation
› If an employee owes debt to the organisation, it may
release employee from obligation to pay
› Provision of personal attendants- sweeper, gardener
& watchman
› Increasingly common for employees & their families
to be provided with vacation & holiday facilities
› Customary in India to provide gifts directly or
indirectly in the form of vouchers or tokens to
employees on social, festival & religious occasions
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11. EXAMPLES OF FRINGE BENEFITS
 Educational
 Motorola India offers educational assistance to
employee’s spouses for getting a suitable job abroad
when employee is given international assignment
 NIIT gives employees paid sabbaticals for 6 months
every 5 years
 HLL offers career break to employees wishing to study
 Family
 Motorola India provides childcare centres to working
mothers & flexible working hours to certain employees
 NIIT offers wedding anniversary allowance
 LG has initiative called ‘Joyful Working Team’ where
employees &families taken for lunch or sporting
activities like rafting. ‘Happy Moments Board’ to share
positive happenings in members’ lives
 Infosys allows employees leave without pay for a year to
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allow them to join their partners abroad