Happy and healthy employees can be your company’s best asset. A positive workplace culture can go a long way toward creating a space people enjoy and stay in for years to come.
It’s also important to provide the proper support for employees outside of work time. Fringe benefits can help your employees get the support they need when they need it and give them the compensation they deserve. With multiple coverages from eye care to general healthcare, life insurance, and tuition assistance, these benefits can make a huge difference in people’s everyday lives.
Your benefits package needs to comply with local labor and taxation laws and be competitive within the local market. By offering your employees an attractive benefits package, you can more easily acquire and retain top-quality talent, leading to better future success for all involved.
Are you wondering what fringe benefits you should include and how they work? Read on to learn more.
Fringe Benefits Meaning
Fringe benefits are benefits employees receive beyond their basic salary. The fringe benefits definition, however, can be rather loose as fringe benefits can include a multitude of things.
In most countries, typical workplace benefits include health, life, dental, and vision insurance. The advantage for employees receiving benefits over extra pay is that employers are looking for benefits for many people at once. This means they can take advantage of lower group rates for insurance policies, often providing employees with better coverage than they can obtain on their own.
How Do Fringe Benefits Work?
How fringe benefits work can depend on where you’re located. For example, in India, almost 100% of employers provide health insurance covering both employee and family, while in Austria, private healthcare is not commonly offered due to the exceptional social healthcare system. If an employee in Austria wants a private healthcare plan, they will pay for it themselves (not funded by the employer.)
Sometimes these benefits are required by law and must be granted to employees by employers. In other cases, fringe benefits may be granted by employers voluntarily.
Typically, workplace benefits cover all, or a significant portion, of the cost of a particular service. For example, insurance might cover 80% of dental cleaning while the employee must pay the rest.
With traditional routes, employers pay for benefits packages that are included in employee compensation costs. An employee may be able to use their benefits by showing their insurance card to their healthcare provider, for example.
Fringe Benefits Examples
There are numerous types of employee benefits, and your company can tailor yours to reflect market demand and the nature of your business. Here are some of the most common types of fringe benefits.
Healthcare is a common fringe benefit offered in many countries. This includes general healthcare coverage as well as vision and dental insurance. It’s crucial to ensure what you offer is in line with local laws and to know that health insurance coverage can become complicated.
For example, what employees are entitled to in terms of sick leave or medical leave varies from country to country. In the U.K., Statutory Sick Pay (SSP) is a benefit that’s regulated and paid by employers. In the U.S., however, employees can obtain medical leave, but it’s not offered in every U.S. state. Being in line with local laws and expectations is essential to ensure you’re covering your bases.
Paid Time Off
Depending on your location, paid time off (or annual leave) may be a benefit employees are granted or earn over time. As an accrued benefit, paid time off is often offered to employees after working with an organization for a certain period. Paid time off allows employees to take time off and still be paid their regular salary.
There are many different types of leave and paid time off. In addition, every country has different laws regarding which types of leave employers are required to offer, so these benefits can vary greatly depending on where your employees are located.
Many companies offer their employees benefits on the company's products or services. For example, if your company develops computer software, you might provide employees with access to your software at a discount or even for free.
Other Fringe Benefits
As previously mentioned, fringe benefits can encompass a wide range of benefits. Here are some additional types of fringe benefits.
- Life insurance
- Pension plans
- Child care assistance
- Tuition assistance
- Company-provided vehicle
- Below-market loans
- Employee stock options
Are Fringe Benefits Taxable?
Many types of fringe benefits are taxable; however, fringe benefits tax varies by country. Most countries have laws dictating which benefits are taxable and which benefits aren’t.
For example, the U.S. has a list of fringe benefits exclusion rules specifying which benefits aren’t subject to tax. It’s crucial to make sure you’re aware of any tax obligations and exclusions regarding benefits for your employees in order to remain compliant.
Other Fringe Benefits FAQs
Here are some additional questions regarding fringe benefits.
What Are Cafeteria Plans?
Cafeteria plans allow employees to pick and choose from various fringe benefits as they see fit - just as they would food from a cafeteria. These benefits are often deducted from employees’ pre-tax earnings and usually include things like health insurance, life insurance, HSAs, and more.
What Is an Accountable Plan?
An accountable plan serves as a guidebook for employees on a company’s benefits reimbursement policies. The plan should clearly outline both the taxable and non-taxable fringe benefits, how employees should claim their benefits, and how they should return any excess reimbursements.