What Are Fringe Benefits?
By Marta Gongos Fringe benefits are additional compensation employers provide employees. These may include healthcare insurance plans, transportation allowance, and gym membership. Not all employees get fringe benefits as they’re not required by law. However, some companies choose various benefits to encourage employee retention.
In this blog, we aim to provide a comprehensive guide on fringe benefits. We’ll explore their examples, distinguish them from other employee benefits, and highlight the advantages they bring.
Fringe Benefits Meaning Defined
Fringe benefits are optional perks added on top of an employee’s regular salary. Employers have the right to decide whether or not they should add these benefits to their compensation packages. Most companies choose to have competitive compensation packages to attract and retain top talent.
Let’s explain the fringe benefits meaning further by giving you examples.
Health and Life Insurance
Health insurance packages may include eye or dental compensation, while life insurance covers accidental death—both may apply to you and your dependents. Employees prefer working for companies that offer health and life insurance.
Company Car or Transportation Allowance
High-level employees often receive a company car as part of their compensation package. Employers may also choose to provide transportation allowance for rank-and-file employees to cover their daily commute fees to the office.
Company Cell Phone and Laptop
Companies that rely heavily on sales and marketing ensure their employees receive free cell phones with plans. In some cases, the employer reimburses the expenses if you use your personal phone for work. Employees also enjoy the perk of having access to company laptops and office accessories, eliminating the need to purchase new gadgets for work.
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Unlimited Paid Time Off
Employees are entitled to have a set number of paid vacation days, but organizations may offer unlimited paid time off to attract highly skilled talent. This fringe benefit solely depends on employee performance or quota.
Performance Bonuses
Monetary bonuses are one of the most sought-after examples of fringe benefits. These keep employees engaged and motivated to work hard. Employers add these rewards above salaries at the end of projects or toward the end of the year.
Read more: How to Conduct an Employee Performance Review
Free Gym Membership
Companies with an onsite gym or one located nearby may offer free gym memberships to employees, encouraging them to become healthier and more active.
Mandatory Benefits Versus Fringe Benefits
Mandatory benefits are starkly different from fringe benefits. Ontario-based employers are required to provide some benefits like legislated leaves. Failure to comply may lead to hefty fines or an indefinite halt in operations. On the other hand, fringe benefits are given at the company’s discretion, including what is given and to whom.
Are Fringe Benefits Taxable?
Employers are responsible for determining if employee benefits are taxable or not. This allows them to compute their value for payroll deductions and tax returns.
Not all fringe benefits are taxable, but policies surrounding these benefits change frequently. The most common taxable fringe benefits are employer-paid life insurance, company car, gifts over $500, and gym memberships. If you want to find out whether or not your benefits are taxable, we suggest using this official online tool for direct answers.
Benefits of Including Fringe Benefits
Employers typically provide fringe benefits to cultivate an engaged and content workforce. Here are a couple of reasons why they exist.
Attract and Maintain Top Talent
The best way to attract new talent is by providing a competitive package of employee benefits. Job seekers ask about this during job negotiations. Employers know employees want a good total compensation package so often add more benefits to retain talent.
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Increase Employee Satisfaction
Employees are satisfied with their jobs when they’re fairly compensated. They tend to stay longer on the team if the company invests in employees.
Promote a Healthy and Balanced Lifestyle for Employees
Companies can show employees they care through fringe benefits, such as health and life insurance packages. These benefits support employee well-being, reducing the risk of severe illnesses or injuries. This fosters a thriving workforce moving cohesively toward a shared objective.
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With or without fringe benefits, Ad Culture will help you find the right candidates that fit your company. Working with the leading recruitment agency in Toronto can help you find unicorn employees who’ll tick all the boxes. Contact us today to learn more about how we can help your company thrive!
