What is Fringe Benefits? Nature and Objectives

Meaning and Definition of Fringe Benefits

Fringe benefit is a benefit which is additional to the employees ordinary wages and which is value to the employee and his family. The materiality of fringe benefits increases the retirement benefits.

According to D. Belcher __ “Fringe benefits are any wage cost not directly connected with the employees’ productive effort,performance,service, or sacrifice”.

According to the Industrial Relations and Wage Terms, “Fringe benefits supplements to wages received by workers at a cost to the employees. The term encompasses the number of benefits,paid vacations,pension,health insurance plans etc., Which usually add up to the something more than the fringe and is sometimes applied to practice that may constitute a dubious benefit for workers”.

According to Cockman __ “ Employee benefits are those benefits which are supplied by an employer to or for the benefits of an employee and which are not in the form of wages,salaries and time rated payments”.

Nature Of Fringe Benefits

1. Additional to salary/wages: The fringe benefits which are provided to the employees are in addition to their wage or salaries and other performance related incentives. These are provided wither due to statutory reasons or on voluntary basis.

2. Membership: Fringe benefits are provided to the employees due to their membership in the organization. These are not provided to the employees for the performance of any specific job rather is given to them as a mean for facilitating the performance of their jobs.

3. Difference due to class: The benefits are provided to all the employees irrespective of their efficiency and performance. The difference in the benefits is due to the different classes of the personnel.

4. No relations to salary/wages: Even though the fringe benefits constitute the major portion of the employees salary, these are not related with the employment and wages.

5. Indirect compensation: These benefits are the indirect compensation because these are usually extended as a condition of employment and are not directly related to performance.

Objectives of fringe benefit

  1. To develop the sense of belongingness and loyalty among the workers.
  2. To ensure health,safety,and welfare of the employees and workers.
  3. To enhance the motivation and morale of the employees by satisfying their unsatisfied needs.
  4. To satisfy the demand of the trade union.
  5. To improve the public image of the organization.
  6. To create and improve sound industrial relations.