Fringe Benefits


The term fringe benefits refers to the extra benefits provided to employees in addition to the normal compensation paid in the form of wage or salary. Many years ago, benefits and services were labeled “fringe” benefits because they were relatively insignificant or fringe components of compensation. However, the situation now is different, as these have, more or less, become important part of a comprehensive compensation package offered by employers to employees.

The main features of fringe benefits, as they stand today, may be stated as under:
a. They are paid to all employees (unlike incentives which are paid to specific employees whose work is above standard) based on their membership in the organization.
b. They are supplementary forms of compensation.
c. They help raise the living conditions of employees.
d. They are indirect compensation because they are usually extended as a condition of employment and are not directly related to performance.
e. They may be statutory or voluntary. Provident fund is a statutory benefit whereas transport is a voluntary benefit.

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