Fringe Benefits

Welfare expenses, wage supplements,

Perquisites other than wages.
• They are offered by the employer to the
employee as a ‘fringe’.
 The Glossary of current Industrial Relations
and wage Terms defined
• Fringe Benefits as “Supplements to wages
received by workers at a cost to employers.
The term encompasses a no. of benefits- paid
vacations, pension, health insurance plan etc.-
which usually add up to something more than
a ‘fringe’ and is sometimes applied to a
dubious benefit for workers”.
 ILO defines
• “wages often augmented by special cash
benefits, by the provision of medical and other
services, or by payments in kind that form part
of the wage for expenditure on the goods and
services. In addition, workers commonly
receive such benefits as holidays with pay, low
cost meals, low rent housing.
Such addition to wage proper are sometimes to
as ‘fringe benefits’.
• Benefits that have no relation to employment
or wages should not be regarded as fringe
benefits. Eg public parks, sanitation services,
fire protection.
 Features
• Supplement to regular wages or salary.
• Paid to worker not for specific job or
performance but to stimulate their interest in
the work.
• It involve labour cost for the employer and are
not meant directly to improve efficiency.
• It is monetary (paid holidays) and non
monetary (dispensary).
• Add to workers standard of living.
• These can be statutory (PF) or voluntary
(housing).
 Types of Fringe Benefits
A) Employee Security Payments
B) Payment for time not worked
C) Bonus and Award
 Employee Security Payments
• Employee contribution stipulated in legal
enactments- old age, survivor, disability,
health etc.
• Payment under workmen’s compensation act.
• Accident insurance
• Pensions
• Contribution to saving plans and health and
welfare funds.
 Payment for time not worked
• Rest period
• Holidays
• Vacations
• Sick leaves
• Severance pay (only when employee is
terminated)
• Leave of absence (educational leaves)
• Insurance.
 Bonus and Award
• Financial amenities
• Overtime and shift premiums.
• Attendance bonus
• Diwali bonus
• Bonus for good quality workmanship
• Profit sharing bonus.
• Suggestion award.
 Exhaustive list
• Payment without work eg. Sick leaves, maternity
leaves etc.
• Health and safety benefits.
• Retirement benefits PF, Pension, Gratuity etc.
• Subsidized housing, transport, lunch, free dress etc.
• Medical, legal, childcare, educational, recreational
facilities.
• Consumer cooperative stores, interest free loans,
holiday homes etc.