PONDICHERRY UNIVERSITY, KARAIKAL CAMPUS

COMPENSATION MANAGEMENT PRESENTATION

SUBMITTED BY
AHAMED UVAIS.J.H.
(21397202)
 FRINGE BENEFITS

Submitted To:
Dr. D.H.MALINI, M.B.A., Ph.D., FDP (IIMA)
Assistant Professor
Department of Management
Pondicherry University
Karaikal Campus, Karaikal
 CONTENT

Introduction
Objectives of Fringe Benefits
Features of Fringe Benefits
Reason for offering fringe benefits
Types of fringe benefits
Recent practices of fringe benefits
Principles of fringe benefits
Definition of Fringe Benefits

According to the International Encyclopedia of social sciences “A

fringe benefits has to meet two tests, it must provide a specific
benefit to an employee and it must represent a cost to the
employer”
Objectives of Fringe Benefits

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.
To provide security to the employees against social risks like old age benefits
and maternity benefits.
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.
Features of Fringe Benefits

They are the payments and benefits to an employee by his employer in

addition to his normal earnings
Fringe benefits are not linked to performance or efficiency of any employee
Fringe benefits may be statutory or voluntary in nature
Difference in fringe benefits may exist due to classification of employees
based on organizational status
Fringe benefits are paid to all the employees based on their membership in
the organization
Fringe benefits are indirect compensation because these are usually
extended as a condition of employment and are not directly related to
performance.
Reason for offering fringe Benefits

To meet
increase of
cost/price

Competitive Social
consideration security

Reason for
To utilize offering To fulfill legal
leisure time Fringe requirements
Benefits

To motivate Tax
employees consideration

To attract
and retain
employees
Types of Fringe Benefits

Mandated (Statutory) and Optional (Voluntary) Benefits:

Mandated benefits include social security and employee welfare,
optional benefits include health insurance, life insurance, retirement
plan, leave, welfare and recreational plans.
 Accounting Purpose Classification:
• Payment for the time on the job. It includes overtime payment and cost
of living increases
• Payment for time not on the job. It involves paid holidays, vacations, sick
leave, unemployment insurance, vacations and holiday’s sick leave,
paternity leave, maternity leave, severance pay, supplemental
unemployment benefits.
• Payment for varied benefits
(a) pay for time not worked
(b) insurance benefits
(c) Retirement benefits
(d) Employee services
 Classification Based on its Objectives:
Those providing for employees security such as retirement programme,
unemployment compensation, workmen’s compensation, insurance and
allied provisions.
Those purporting to increase employees’ job satisfaction causing
reduction in labour turnover and improvement in productivity. It includes
vacations, holidays, sick leave, discounts on company goods and services
and allied intangible and tangible benefits.
 Deferred Benefits and Immediate Benefits:
Pension scheme, insurance cover, sick pay are some of the deferred
benefits, whereas providing company car to an employee constitute
immediate benefits
 Different forms of Non-monetary Rewards:
Treats Knick- Awards Environment Social Tokens On-the-job
knacks acknowledgement Rewards
Free lunches Decorative Trophies Renovation Information Movie tickets More
recognition responsibility
Festival bashes Company Plaques Music Recognition of office Vacation trips Job rotation
watches get together

Coffee breaks Brooches Certificates Flexible Friendly greetings Coupons Special

Hours redeemable at arrangement
stores

Picnics Diaries Scrolls E - Mail Solicitation of advice, Early time offs Training
suggestions

Dinner with Calendars Letters of Membership of clubs Anniversary/ Representing the

Boss Appreciation birth day company at public
presents fora

Birthday treats Wallets

T-Shirts
Current Fringe Benefit Practices

Currently three main approaches are in vogue in the area of fringe

benefits:
Innovation: organizations are offering many new types of fringe
benefits to their employees
Flexibility in fringe benefits: employees are allowed to choose
from an array of benefits within certain cost limits and
Harmonization is tried to be attempted to give a feeling of equity
and fair play to employees
Principles of Fringe Benefits

Benefits and services must be provided to the employees on the basis of a

genuine interest in the protection and promotion of their well-being. The
management should not feel that the fringes are thrust upon them. Nor should
the management feel that they are providing the benefits as a matter of charity.
The benefits must satisfy a real need. Employees resist or are indifferent to any
benefit which is not like by them
The benefits must be cost-effective
The benefits should be as broad based as possible
Administration of the benefits should be preceded by sound planning
The wishes of employees expressed by their union representatives and the
bargaining power of the union must be considered
 Employees should be educated to make use of the benefits.