Understanding the Different Types of Fringe Benefits
In general terms, employee fringe benefits and insurances are any payments or gifts that an employee may be entitled to, on the basis that he or she has rendered services to the employer. Typical fringe benefits include medical, dental, life, vision, disability, accident, unemployment, wrongful dismissal or pension plans. The employee’s entitlement to these normally depends upon the employment agreement. There are a number of different fringe benefits available to all employees of a company, irrespective of their age, rank or sex. In general, the longer the service of an employee, the more lucrative his or her chances of receiving certain benefits.
fringe benefits in the form include various kinds of non-wage compensation also given to employees as well as their usual wages or salaries. In instances where an employee trades away his wages for any other form of bonus, payment or benefit is usually known as a “payout”, “reward”, or “perkset” in corporate jargon. The value of such payments or bonuses are measured according to their financial value to the employer. Under most laws, an employee cannot be compensated or gain a perk based purely on his or her personal feelings or preferences. If an employee is fired, the employer may compensate him or her with the same amount of bonus, wage or perk regardless of the reason for the employee’s ouster.
Another type of fringe benefit typically awarded to an employee is a retirement plan. Unlike pension plans, which may be distributed according to an employee’s retirement age, retirement benefits are distributed according to the employee’s performance in the company. This plan allows the company to retain good employees at a relatively low cost while attracting the best employees by paying them higher wages in order to retain them.
Usually, companies do not contribute to their employees’ benefits. However, some employers do offer to pay a portion of employee’s pension and benefits upon retirement. This is especially true of senior executives who contribute a certain percent of their overall retirement pay. An employee should make sure to inquire about the extent of the employer’s contribution to his or her retirement plan. If the benefits depend on performance, the employee may actually lose some of the employer’s contributions during retirement.
One rarely considers the many types of fringe benefits that are available to employees. These include health care benefits, group-term life insurance, accident and health coverage, disability income, short term disability insurance, and vision insurance. Depending on the company, there are also various benefits packages for new and returning employees. Such packages can provide up to forty thousand dollars per year in life insurance, accident coverage, disability income, or vision insurance. These are just a few of the many benefits offered to employees.
Many benefits are accessible only to employees, whereas others are made available to all employees upon joining the company. Some fringe benefits may not be available to all employees, while others may be imposed as rules by the company. Some employees, especially those with more seniority, may be eligible for employer-provided benefits. These employees’ eligibility may be determined by the nature of their jobs or their contracts.