Fringe Benefits

As the job market becomes increasingly competitive, organisations are recognizing the importance of going beyond the traditional paycheck to create a comprehensive compensation package. Many companies now also offer a range of perks, also known as fringe benefits. Learn more here. 

What Are Fringe Benefits?

Fringe benefits, often referred to as perks or perks and perquisites, are additional non-wage compensations provided by employers to their employees. These benefits are distinct from regular salary or wages and come in various forms, contributing to an employee's overall job satisfaction and well-being.

Fringe benefits extend beyond the monetary aspect, encompassing services, privileges, and amenities that enhance an employee's work experience. They can be offered as part of a standard benefits package or customised to meet the unique needs of the workforce.

Examples of Fringe Benefits

An employer can offer the following fringe benefits to all or selected employees:

Health Insurance

One of the most common fringe benefits, health insurance coverage, helps employees manage medical expenses. This may include coverage for hospital stays, surgeries, prescription medications, and preventive care.

Retirement Plans

Companies often offer retirement benefits such as 401(k) plans in the US, contributing to employees' long-term financial security. Some employers match a percentage of employees' contributions, further sweetening the deal.

Flexible Work Arrangements

Recognising the importance of work-life balance, companies may offer flexible work schedules, remote work options, or compressed workweeks, allowing employees to tailor their work hours to fit their lifestyle.

Professional Development Opportunities

Fringe benefits can extend to professional growth. This may include access to workshops, seminars, or tuition reimbursement programs, encouraging employees to enhance their skills and stay competitive in their field.

Company Vehicles

In certain industries, employers may provide company vehicles or offer car allowances to employees, reducing their commuting expenses.

Gym Memberships and Wellness Programs

Promoting employee well-being, companies may offer gym memberships, wellness programs, or even on-site fitness facilities, fostering a healthier and more engaged workforce.

Paid Time Off (PTO)

Beyond standard vacation days, fringe benefits can include additional PTO for personal or family needs, contributing to a healthier work-life balance.

Why Do Companies Offer Fringe Benefits?

Most companies offer various fringe benefits to:

Attract and retain top talents

Offering a comprehensive package of fringe benefits sets a company apart in the competitive job market, attracting top-tier talent and increasing employee retention rates.

Enhance job satisfaction

Fringe benefits contribute to overall job satisfaction by addressing various aspects of employees' lives, from health and wellness to personal and professional development.

Increase productivity

When employees feel valued and supported, they are likely to be more engaged and productive. Fringe benefits contribute to a positive work environment, fostering higher levels of employee performance.

Boost company brand and image

Companies offering an attractive array of fringe benefits gain an edge against competitors and boost their brand reputation. 

Are Fringe Benefits Taxable?

While fringe benefits provide significant advantages, it's essential to consider their tax implications. Check the relevant law as it often enumerates which types of benefits are supposed to be taxable. 

For example, in the UK, fringe benefits are taxable, and both employers and employees must adhere to tax regulations. However, there are exceptions. Employer-provided meals in the canteen, hot water and water at work, a mobile phone, and workplace parking are tax-free. 

In the Philippines, de minimis benefits or those of relatively small value are non-taxable. Examples include rice subsidy of no more than 2,000 PHP per month, laundry allowance not exceeding 300 PHP monthly, and clothing allowance not exceeding 6,000 PHP per year. 

Understanding the tax implications of fringe benefits is crucial for both employers and employees to ensure compliance with tax laws and regulations.

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