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Fringe Benefit meaning:

Any privilege, service, facility or amenity, directly or indirectly

provided to employee by an employer

Any reimbursement for any purpose .

Any free or concessional ticket for private journeys of employees

and family members

Contribution to approved superannuation fund

The term Fringe benefits refer to various extra benefits provided
to the employees, in addition to the compensation paid in the form of
wage or salary. These benefits can be defined as any wage cost not
directly connected with the employees productive effort, performance,
service or sacrifice.
It is also defined as those benefits which are provided by an employer to
or for the benefit of an employee and which are not in the form of wages,
salaries and time-related payments.
Different terms are used to denote fringe benefits. They are welfare
measures, social charges, social security measures, supplements, subwages, employee benefits etc. In addition workers commonly receive such
benefits as holiday with pay, low cost meals, low-rent housing etc. Such
additions to the wage proper are sometimes referred to as fringe benefits.
Benefits that have no relation to employment or wages should not be
regarded as fringe benefits even though they may constitute a significant
part of the workers total income.
Thus, fringe benefits are those monetary and non-monetary benefits
given to the employees during and post employment period which are
connected with employment but not to the employees contributions to
the organization.
Coverage: Fringe benefits covers bonus, social security measures,
retirement benefits like provident fund, gratuity, pension, workmens
compensation, housing, medical, canteen, co-operative credit, consumer
stores, educational facilities, recreational facilities, financial advice and
so on.
The important objectives of fringe benefits are:
1. To create and improve sound industrial relations

2. To boost up employee morale.

3. To motivate the employees by identifying and satisfying their
unsatisfied needs.
4. To provide qualitative work environment and work life.
5. To provide security to the employees against social risks like old age
benefits and maternity benefits.
6. To protect the health of the employees and to provide safety to the
employees against accidents.
7. To promote employees welfare by providing welfare measures like
recreation facilities.
8. To create a sense of belongingness among employees and to retain
them. Hence, fringe benefits are called golden hand-cuffs.
9. To meet requirements of various legislations relating to fringe benefits.



Most organisation have been extending the fringe to their employees, year
after year, for the following reasons
EMPLOYEE DEMANDS:-Employees demand more the valued types of
fringe benefits rather than pay hike because of reduction in tax burden.
TRADE UNIONS DEMANDS:-Trades unions compete with each other for
getting more fringe benefits to their members.
EPLOYERS PREFERENCE:-fringe benefits motivate the employees for
better contribution to the organisation.
AS A SOCIAL SECURITY:-Fringe benefits provide social security to
employees against various contingencies.
TO IMPROVE HUMAN RELATIONS:-Human relations are maintained
when employers are satisfied economically, social and psychologically.


1. For Employment Security :

Benefits under this head include unemployment, insurance,
technological adjustment pay, leave travel pay, overtime pay, level for
negotiation, 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 and the like.
2. For Health Protection:
Benefits under this head include accident insurance, disability

insurance, health insurance, hospitalization, life insurance, medical

care, sick benefits, sick leave, etc.
3. For Old Age and Retirement:
Benefits under this category include: deferred income plans, pension,
gratuity, provident fund, old age assistance, old age counseling , medical
benefits for retired employees, traveling concession to retired employees,
jobs to sons/daughters of the deceased employee and the like.
4. For Personnel Identification, Participation and Stimulation:
This category covers the following benefits: anniversary awards,
attendance bonus, canteen, cooperative credit societies, educational
facilities, beauty parlor services, housing, income tax aid, counseling,
quality bonus, recreational programs, stress counseling, safety measures


1. PAYEMENT 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.
2. EXTRA TIME FOR TIME WORKED:-This category covers benefits such
as premium pay, incentive bonus, shift premium, old age insurance,
profit sharing, unemployment compensation, deewali or pooja bonus,
food cost subsidy, housing subsidy, recreation etc.
3. EMPLOYEE SECURITY:-Provided with 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 life.
4. SAFETY AND HEALTH:-In India, the Factories Act, 1948, stipulated
certain requirements regarding working conditions with a view to
providing a safe working environment.