Employee fringe benefits and incentives in form include various forms of monetary compensation offered to employees as well as their regular wages or salaries. Such instances where the employee exchanges regular wages for any other form of incentive is normally referred to as “salary buying.” Incentive pay is a system in which an employer compensates an employee for a performance evaluated by means of cash, merchandise, or services. There are many types of incentive pay schemes, such as performance bonuses, special bonuses, advancement awards, and the like.
The first fringe benefits to consider are health insurance. Many employers provide group or family health insurance to all of its employees. The employee needs to purchase a policy from the employer and this insurance is carried forward from one year to the next. Health care benefits may include coverage for in-patient, out-patient, emergency room, hospital, surgery, and outpatient care. Depending on the employee’s choice, coverage can be customized to meet his unique health care needs.
Another fringe benefit that most employers offer is life insurance. Life insurance provides a source of death benefits for employees who have retired or are experiencing retirement. Life insurance premiums are based on the employee’s life expectancy at the time of coverage and may be tax-qualified. Premiums may also be deducted by the employee in full upon retirement.
Travel fringe benefits are also offered to employees who travel to outside sites of business operations. These benefits are typically referred to as travel-oriented fringe benefits. Employees can choose from a wide variety of travel-related fringe benefits, including airfare, hotel stays, car rentals, and other related expenses. Such benefits are usually tax-qualified, and an employee must meet the threshold requirements to be eligible.
A final fringe benefit often offered to employees is disability payments. Disability payments provide money for the period of time during which an employee is unable to work. For some employees, disability benefits may be steady income. Other companies may pay benefits sporadically throughout the year. Either way, disability benefits are an important fringe benefit for many employers. If you are considering offering such a benefit, it is best to consult with a legal representative to make sure your company is in compliance with any applicable federal or state laws.
Some employers take fringe benefits further by providing supplementary cash to their employees for personal use. Examples of this would be car washes, hair salons, or restaurants. When considering such fringe benefits, keep in mind that not all companies allow these types of activities. Before permitting employees to take advantage of additional benefits, check with human resources or the employee handbook. Additionally, always check with your state’s labor laws to ensure your company follow any restrictions.