Types and objectives of Fringe Benefits


What is Fringe Benefits?

Fringe benefits refer to the extra benefits provides to the employees in addition to normal compensation paid in terms of wages or salary. Many years ago these benefits and services were labeled ” Fringe benefits” because these benefits were relatively insignificant or fringe components of the compensation. But nowadays the situation is not the same. Fringe benefits are nowadays a great motivator to the employees. 

Objectives of Fringe Benefits

  • To create and improve sound industrial relations.
  • To motivate the employees.
  • To protect the health of the employees and safety to the employees against threats such as accidents and occupational diseases.
  • To promote employee welfare.
  • To provide security against social risks such as old age benefits and maternity benefits.
  • To create a sense of belongingness among the employee and to retain them. Fringe benefits are also known as golden handcuffs.
  • To meet the various legislative requirements relating to fringe benefits

Types of Fringe Benefits

Payment For Time Not Worked

 According to Factory’s Act, 1948 an adult worker shall have a weekly paid holiday, normally Sunday. When a worker is deprived of weekly paid holidays he/she is to be compensated with the same number of holidays in the same month. Some organizations offer two weeks of paid holidays.

Employee Security

Physical and job security to the employees should also be provided with a view to ensuring security to the employee and his family members. When the employee’s services get confirmed, his job becomes secures. Further, a minimum and continuous wage or salary give a sense of security to life.

Safety And Healthy

Employee’s safety and health should be taken care in order to protect the employees against accidents, unhealthy working conditions and to protect the worker’s productive capacity. In India, Factory’s Act, 1948 stipulated certain requirements regarding working conditions with a view to providing a safe working environment.

These provisions relate to cleanliness, disposal of waste and effluents, ventilation and temperature, dust and fumes, artificial humidification, overcrowding, lighting, urinals, drinking water, latrines, spittoons etc. Provisions relating to safety measures include fencing of machinery, work on or near machinery in motion, employment of young persons on dangerous machines, self-acting machines, the casing of new machinery, hoists and lifts excessive weights, lifting machines, chains, ropes explosive or inflammable dust, gas etc.

Workmen’s Compensation

In addition to safety and health measures, provisions for payments of compensation has also been made under the Workmen’s Compensation Act, 1923. The Act is intended to meet the contingencies of death and invalidity of worker due to employment injury and occupational diseases specified under the Act as the sole responsibility of the employer. Under the Act, the amount of compensation depends upon the nature of the injury and monthly wages of the employee. Dependants of the employee are eligible for compensation in case of death of the employee.

Welfare And Recreational Facilities

These benefits include canteens, consumer stores, credit societies, housing, legal aids, employee counseling, a welfare organization, holiday homes, educational facilities, transportation, picnics, and parties etc.


Fringe benefits are additional compensation provided to employees above and beyond an agreed-upon wage or salary. Besides helping employees, offering fringe benefits helps employers tremendously from a recruiting perspective. Among similarly focused companies, employers can find it challenging to attract desired talent based on salary alone. By offering fringe benefits, especially those not available through a competitor, an employer stands a greater chance of attracting the level of talent it needs or wants.