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Fringe+benefits

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  • 1. FRINGE BENEFITS
  • 2. FRINGE BENEFITS Are extra benefits provided to workers other than usual compensation in form of salary Referred to as ‘fringe benefits’ because years ago they were small, relatively inconspicuous Purpose - retain employee in organization on long term basis. Differ from incentive plans since benefits & services not contingent on performance of individual, team or organization Accrue to all employees by virtue of their membership in organisation Organization should make employees abreast of fringe benefit programmes to motivate them 2 & improve status of their organization. Are of two types: Mandatory & Voluntary
  • 3. FRINGE BENEFITS Rapid industrialization, heavy urbanization & growth of capitalistic economy made it difficult for employees to protect themselves against adverse impact of these developments Labour scarcity & competition for qualified personnel led to evolution & implementation of no. of compensation plans Realisation on part of management wrt its responsibility towards employees that  benefits of productivity increase resulting from increasing industrialization should go, at least partly, to employees responsible for it,  they be protected against insecurity arising from unemployment, sickness, injury & old age. Labour legislation on social security, made it imperative for employers to share with employees cost of old age, survivor & disability benefits 3 Hence the importance of fringe benefits
  • 4. FRINGE BENEFITS Influence of other factors on ‘Fringe Benefits’  Rising prices & cost of living brought about incessant demand for provision of extra benefits to employees  Employers found fringe benefits attractive areas of negotiation when wage & salary increases not feasible  Greater pressure placed upon competing organizations to match these benefits to attract & retain employees  Fringe benefits - non-taxable rewards; major stimulus to their expansion 4
  • 5. FRINGE BENEFITS Coverage of Benefits  Benefits consist of items/ awards supplementary to normal pay.  Some –pensions & sick pay - are essential entitlements, common term ‘fringe benefits’ is perhaps misleading.  Benefits such as cars, medical insurance & ‘perks’, are in nature of optional extras & recruitment retention & incentives strategies of organization  Entitlements include the following:  Pension Provisions › regarded as most important benefit after basic pay › kind of deferred pay, building up rights to guaranteed income on retirement (or to dependants, on death) 5 › financed by contributions from company with facilities for contribution by employees as well.
  • 6. FRINGE BENEFITS Sick Pay › Sickness or enforced absence from work haunt workers with prospect of lost earnings; provision for genuine sufferers. › Many employers supplement benefit by additional sick pay schemes Medical Benefits › Say private medical and/or dental insurance. Some medical services may also be provided at workplace: for example eye & hearing tests (where relevant to the industrial context). Maternity Leave & Maternity Pay Holidays › Benefit, taken for granted › Employees who have been continuously employed for 26 weeks entitled to 15 days’ leave per annum, rising to 20 days for leave › No statutory right to ‘customary’ holidays (public holidays, 6 Christmas etc) ; may be granted by contract terms. › Additional holiday entitlements regarded as fringe benefit, including sabbaticals & long-service leaves.
  • 7. FRINGE BENEFITS Otherbenefits include the following: Company Cars › highly-regarded benefit in India/ UK, especially among managerial staff, status symbol, and for those whose work requires extensive travel (eg. sales & service staff). Transport Assistance › Examples include loans for purchase of annual season tickets, or bulk buying of tickets by employers for distribution to staff. Housing assistance, in the form of › Allowances to staff transferred or relocated – lodging, and so on, or 7 › assistance for house purchase – bridging loan, preferential mortgage terms.
  • 8. FRINGE BENEFITS Catering Services › Most commonly, subsidized food or luncheon vouchers. Recreational Facilities › Subsidy & membership of social & sports clubs or provision of facilities such as a gymnasium or bar. Allowances for › Telephone costs › Professional subscriptions or work related reading matter. › Discounts or preferential terms on the organization’s own products services.  EG: Bank employees receive mortgage subsidy-discounts on unit trusts or insurance products; bonus interest on accounts or savings plans; or reduced interest rates on overdrafts & loans. Educational Programmes › In-house study opportunities, or sponsorship of external study 8 (not necessarily work-related).
  • 9. FRINGE BENEFITS Family-friendly Policies › Workplace nurseries, term-time hours contracts, career break schemes. Severance Pay › Provides a one-time payment when an employee is terminated. Done on humanitarian ground. Insurance: › May be life, health & accident. May be for individual or group Disablement benefit › Insured employees, disabled temporarily or permanently due to employment injury, occupational diseases, or both entitled to cash benefit Dependent’s benefit › If insured person dies as a result of employment injury, his 9 dependents are entitled to compensation under the Act
  • 10. FRINGE BENEFITS Other Fringe Benefits › Entertainment benefit by way of food, drink or recreation › If an employee owes debt to the organisation, it may release employee from obligation to pay › Provision of personal attendants- sweeper, gardener & watchman › Increasingly common for employees & their families to be provided with vacation & holiday facilities › Customary in India to provide gifts directly or indirectly in the form of vouchers or tokens to employees on social, festival & religious occasions 10
  • 11. EXAMPLES OF FRINGE BENEFITS Educational  Motorola India offers educational assistance to employee’s spouses for getting a suitable job abroad when employee is given international assignment  NIIT gives employees paid sabbaticals for 6 months every 5 years  HLL offers career break to employees wishing to study Family  Motorola India provides childcare centres to working mothers & flexible working hours to certain employees  NIIT offers wedding anniversary allowance  LG has initiative called ‘Joyful Working Team’ where employees &families taken for lunch or sporting activities like rafting. ‘Happy Moments Board’ to share positive happenings in members’ lives  Infosys allows employees leave without pay for a year to 11 allow them to join their partners abroad

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