For maintaining the growth and stability in the economy of a country, ideal utilization of the non-human and human resources is imperative. Fringe benefits do provide protection, during periods of contingencies of life, for training and development of the employees, and for good working conditions and assistance to supplement their main income, opportunities for social interaction through cultural recreational facilities, etc.
During the World War II certain non-monetary benefits were extended to employees as means of neutralising the effect of inflationary conditions. These benefits, which include housing, health, education, recreation, credit, canteen, etc. Most of the organizations have been extending the fringe benefits to their employees, year after year, for the following reasons:. Employees demand a more and varied types of fringe benefits rather than pay hike because of reduction in tax burden on the part of employees and in view of the galloping price index and cost of living.
Trade Unions compete with each other for getting more and a new variety of fringe benefits to their members such as life insurance, beauty clinics.
If one union succeeds in getting one benefit, the other union persuades management to provide a new model fringe. Thus, the competition among trade unions within an organisation results in more and varied benefits.
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It improves morale and works as an effective advertisement. Social security is a security that society furnishes through appropriate organisation against certain risks to which its members are exposed. These risks are contingencies of life like accidents and occupational diseases. Employer has to provide various benefits like safety measures, compensation in case of involvement of workers in accidents, medical facilities etc. Human relations are maintained when the employees are satisfied economically, socially and psychologically.
Consumer stores, Credit facilities, Canteen, Recreational facilities etc. However, most of the benefits minimise economic problems of the employee. Thus, fringe benefits improve human relations. They serve as a motivating factor. They constitute an additional expenditure to the employer who can reduce the expenditure by avoiding or deferring certain benefits.
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Because they are the benefits given to the workers for their service, their sickness, problems faced by them during their service etc. These benefits cover not only employees but also their family members. Special Features of Fringe Benefits :. Fringe benefits, on the other hand, are those payments or benefits which a worker enjoys in addition to the wages or salary he receives. Secondly, these benefits are not given to workers for any specific jobs they have performed but are offered to them to stimulate their interest in their work and to make their job more attractive and productive for them.
They boost the earnings of the employees, and put extra spending money in their hands. Thirdly, fringe benefit represents a labour cost for the employer, for it is an expenditure which he incurs on supplementing the average money rates due to his employees who have been engaged on the basis of time schedules. Only the legal or union-imposed or voluntary non-wage costs, which can be computed into money wages, are considered to be fringes.
Fourthly, a fringe is never a direct reward geared to the output, effort or merit of an employee. It is offered, not on the basis of the hard work or long hours of work put in by an employee but on the basis of length of service, his sickness, sex, the hazards of life he encounters in the course of his work, etc. For example, maternity benefits are offered to female workers who have put in a prescribed period of service with a particular employer.
But wages are always fixed and paid regularly. It is a fringe benefit when it is enjoyed by all the employees. For example, a fringe benefit subsidising non-vegetarian meals taken in the factory canteen is not a fringe benefit for vegetarian employees. Sixthly, a fringe must constitute a positive cost to the employer and should be incurred to finance an employee benefit. Subsidised meals, however, definitely constitute a fringe benefit. Though these benefits are known as fringes, they are not merely so but are a substantial part of the expenditure incurred on wage and salary administration.
Organisations provide a variety of fringe benefits.
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Dale Yoder and Paul D. Standohar classified the fringe benefits under four heads as given hereunder-. Benefits under this head include accident insurance, -disability insurance, health insurance, hospitalisation, life insurance, medical care; sick benefits, sick leave, etc. This category covers the following benefits: anniversary awards, attendance bonus, canteen, co-operative credit societies, educational facilities, beauty parlour services, housing, income tax aid, counselling, quality bonus, recreational programmes, stress counselling, safety measures etc.
Robert H. Hoge classified the fringe benefits as follows:. Benefits under this category include: sick leave with pay, vacation pay, paid rest and relief time, paid lunch periods, grievance time, bargaining time, travel time etc. This category covers the benefits such as: premium pay, incentive bonus, shift premium, old age insurance, profit sharing, unemployment compensation, Christmas bonus, Deewali or Pooja bonus, food cost subsidy, housing subsidy, recreation etc.
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The following classification of fringe benefits is adopted for discussion about the fringe benefits in India. No adult worker shall be required to work in a factory for more than 48 hours in any week. The working hours should be 9 hours in any day. In some organisations, the number of working hours are less than the legal requirements.
An adult worker shall have a weekly paid holiday, preferably Sunday.
When a worker is deprived of weekly holidays, he is eligible for compensatory holidays of the same number in the same month. Some organisations allow the workers to have two days as paid holidays in a week. Indian organisations provide highest number of paid holidays in a year in Asia-pacific region. Companies operating second and third shifts, pay a premium to the workers who are required to work during the odd hours shift. Generally, organisations offer double the normal rate of the salary to those workers, who work on paid holidays. Workers in manufacturing, mining and plantations who worked for days during a calendar year are eligible for paid vacation at the rate of one day for every 20 days worked in case of adult workers and at the rate of one day for every IS days worked in case of child workers.
Physical and job security to the employee should also be provided with a view to promoting security to the employee and his family members. The benefits of confirmation of the employee on the job creates a sense of job security. Further a minimum and continuous wage or salary gives a sense of security to the sense of job security. Further a minimum and continuous wage or salary gives a sense of security to the life.
The Payment of Bonus Act, , provide income security to the employees. The compensation is paid at the rate of 15 days wage for every completed year of service with a maximum of 45 days wage in a year. Workers are eligible for compensation as stated above even in case of closing down of undertakings. Lay-off compensation can normally be paid up to 45 days in a year. In India, the Factories Act, , stipulated certain requirements regarding working conditions with a view to provide safe working environment.
These provisions relate to cleanliness, disposal of waste and effluents, ventilation and temperature, dust and fume, artificial humidification, over-crowding, lighting, drinking water, latrine urinals, and spittoons. Provisions relating to safety measures include fencing of machinery, work on or near machinery in motion, employment of young people on dangerous machines, striking gear and devices for cutting off power, self-acting machines, easing of new machinery, probation of employment of women and children near cotton openers, hoists and lifts, lifting machines, chains, ropes and lifting tackles, revolving machinery, pressure plant, floors, excessive weights, protection of eyes, precautions against dangerous fumes, explosive or inflammable dust, gas, etc.
Precautions in case of fire, power to require specifications of defective parts of test of stability, safety of buildings and machinery etc. The Act is intended to meet the contingency of invalidity and death of a worker due to an employment injury or an occupational disease specified under the Act at the sole responsibility of the employer. The Act covers the employees whose wages are less than Rs. Amount of compensation depends on the nature of injury and monthly wages of the employee.
Dependants of the employee are eligible for compensation in cases of death of the employees. Today various medical services like hospital, clinical and dispensary facilities are provided by organisations not only to employees but also to their family members. This Act is applicable to all factories, establishments running with power and employing 20 or more workers.
Employees in these concerns and whose wages do not exceed RS. This benefit is provided in the following forms- a Out-patient treatment, or attendance in a hospital, dispensary, clinic or other institutions; or b By visits to the home of the insured person; or c Treatment as in-patient in a hospital or other institution. However, most of the large organisations provide health services over and above the legal requirements to their employees free of cost by setting up hospitals, clinics, dispensaries and homoeopathic dispensaries.
Sometimes, they provide the facility of reimbursement of medical expenses borne by the employees. Some of the software companies in order to enable the employees to select their life partners started providing dating allowance. This allowance has been criticised widely as it is against the culture of India. This allowance results in family problems of already married couples. Perhaps, no employee benefit has received as much attention in recent years as that of canteens. Some organisations have statutory obligation to provide such facilities that imposes a statutory obligation to employees to provide canteens in factories employing more than workers.
Others have provided such facilities voluntarily. Foodstuffs are supplied at subsidised prices in these canteens. Some companies provide lunch rooms when canteen facilities are not available. The objective of setting-up of these societies is to encourage thrift and provide loan facilities at reasonable terms and conditions, primarily to employees. Some organisations encourage employees to form cooperative credit societies with a view to fostering self-help rather than depending upon moneylenders, whereas some organisations provide loans to employees directly.
Of all the requirements of the workers, decent and cheap housing accommodation is of great significance.
The problem of housing is one of the main causes for fatigue and worry among employees and this comes in the way of discharging their duties effectively. Most of the organisations are located very far from towns where housing facilities are not available. Organisations also provide assistance or aid regarding legal matters to employees as and when necessary through company lawyers or other lawyers. Organisations provide counselling service to the employee regarding their personal problems through professional counselors.
Employee counseling reduces absenteeism, turnover, tardiness etc. Some large organisations set-up welfare organisations with a view to provide all types of welfare facilities at one center and appointed welfare officers to provide the welfare benefits continuously and effectively to all employee fairly. Organisations provide educational facilities not only to the employees but also to their family members.
Educational facilities include reimbursement of fee, setting up of schools, colleges, hostels, providing grants-in-aid to the other schools where a considerable number of students are from the children of employees. Further, the organisations provide reading rooms and libraries for the benefit of employees. Companies provide conveyance facilities to their employees from the place of their residence to the place of work as most of the industries are located outside town and all employees may not get quarter facility.