What does Fringe Benefits mean?
Fringe benefits include any additional employment compensation which is not part of the employee's salary or wage. Fringe benefits can include paid vacation, pension benefits, medical insurance, housing allowances, car allowances, paid company car, childcare benefits, life insurance benefits, Medical, prescription, dental, and vision plans, legal assistance, adoption assistance, employee discounts for entertainment, or subsidized meal plans.
Advantages of Fringe Benefits
Employers use a variety of different compensation techniques, including fringe benefits, to attract the best employees to join their workforce. Although providing fringe benefits to employees may cost employers extra money, employers have found that offering fringe benefits such as great health care plans can help improve overall employee satisfaction and help with employee retention.
In some cases employees will choose fringe benefits over higher salaries. Fringe benefits have also been known to boost the morale of the worker and improve their work ethic. In some cases, such as purchasing group healthcare coverage for their employees, there may be benefits to the employer too, such as lower costs.
Disadvantages of Fringe Benefits
Fringe benefits can cost employers a significant amount of money, including high administrative fees. This can be especially true if one of the fringe benefits offered to workers is good healthcare coverage. With the sky-rocketing costs of health insurance employers may find that they are no longer able to prove healthcare, which can be difficult for employees who have traditionally received it and now assume it will be offered. Offering fringe benefits to certain groups and not others can also open a company up to certain types of discrimination lawsuits.