Hr finance topics

2.  Meaning of incentive and fringe benefit
 Characteristics of fringe benefits
 Need for extending benefits to employees
 Objectives of Fringe benefits
 Types of fringe benefits
 Principles of fringe benefit

3.  Fringe benefits are the extra benefits provided to
workers other than usual compensation paid in the form
of wage or salary. Certain supplementary benefits and
services known as fringe benefits.
 Examples: life insurance, medical care, retiring rooms,
educational benefits, stress consultation etc

4.  Additional to the direct wages.
 Advantage to the employees.
 Situational Cash benefits
 Different from welfare services.

5.  Rising Prices and Cost of living
 Attractive areas of negotiation
 For retaining employees
 Non taxable Rewards
 Legal obligation
 pressure of trade union
 Management realization

6.  To create and improve sound industrial relations
 To boost up employee morale.
 To motivate the employees by identifying and
satisfying their unsatisfied needs.
 To provide qualitative work environment and work
life.

7.  To protect the health of the employees and to
provide safety to the employees against accidents.
 To promote employee’s welfare by providing
welfare measures like recreation facilities.
 To create a sense of belongingness among
employees and to retain them. Hence, fringe
benefits are called golden hand-cuffs.
 To meet requirements of various legislations
relating to fringe benefits.

8.  Classified under Four heads:
1) Employment Security
2) Health Protection
3) Old Age and Retirement
4) Personnel Identification, Participation
and Stimulation

9.  Benefits under this head include insurance,
technological adjustment pay, leave travel pay,
overtime pay, leave for maternity, leave for
grievances, holidays, cost of living bonus, call-back
pay, lay-off, retiring rooms, jobs to the
sons/daughters of the employees

10.  Benefits under this head include accident
insurance, disability insurance, health
insurance, hospitalization, life insurance,
medical care, sick benefits, sick leave

11.  Benefits under this category include: deferred
income plans, pension, gratuity, provident fund, old
age assistance, old age counselling , medical
benefits for retired employees, travelling
concession to retired employees, jobs to
sons/daughters of the deceased employee

12.  This category covers the following benefits:
anniversary awards, attendance bonus, canteen,
cooperative credit societies, educational facilities,
beauty parlour services, housing, income tax aid,
counselling, quality bonus, recreational programs,
stress counselling, safety measures

13.  Fringe benefits are categorized as follows:
 Payment for Time Not worked: 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.
 Extra Pay for time Worked: 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.

14.  Satisfaction of Real Needs
 Flexibility
 Proper Communication
 Educate the workers
 Corporate Tools
 Participation

15.  The term “incentive” is used to signify inducements
offered to employees to put forth their best in order to
maximize production results.
 Incentives are classified as:
Financial Incentives
Non – Financial Incentives

16.  Financial: attractive wages, bonus, DA
,travelling allowance, housing allowance,
gratuity ,pension and PF
 Non-financial: Designation, nature of the
Job, working conditions , status, privileges ,
job security, opportunity for advancement and
participation in decision making.

17.  Motivation
 Saving in Production
 Simple to understand
 Rewards for good production
 Relationship with effort and efficiency
 Timely payment of incentive

18. 1.The Taylor differential piece-rate
system
 Objectives:
1. To give sufficient incentive to workmen to
induce them to produce up to their full
capacity.
2. To remove their fear of wage cut.

19.  2. TIME RATE SYSTEM:
Under this system, fixed time rate is
guaranteed. For example. An employee
works for 8 hours in a day and he is paid
salary according to the time devoted by him.

20.  3. The Marrick differential system(merger
of time rate and piece system)
Under this straight piece rate are paid up to
83 percent of the standard output, at which a
bonus of 10 percent of the time rate is
payable, further 10 percent bonus on
reaching standard output.

21.  Leads to increased Expenses
 Increases danger of accidents
 Leads to higher labor cost
 Standards are based on past performance.

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