What are fringe benefits? Fringe benefits are not wages but provide a benefit that the employer pays, rather than paying wages to. In other words, they are what add value to the job, but aren’t actually wages. Typical employee benefits and perks in the form include various forms of non-wages compensation offered to employees as well as their usual wages or salaries. Examples where an employee exchanges salary for any other type of fringe benefit is usually called a “pay for performance” or “pay for assignment” agreement.
Under what circumstances can an employee receive fringe benefits? There are many circumstances where an employer allows an employee to gain fringe benefits, but it has to be done in unusual or extraordinary circumstances. In the past, these types of agreements were quite common. For example, it used to be quite common for an airman to receive bonus miles for the flight they flew in a specific time frame (typically five hours) as a reward for good performance during an already-known scheduled flight.
The modern era has changed this, and now if an employee or former employee receives fringe benefits, they must be unusual and extraordinary circumstances only. Additionally, some employers will not pay these benefits unless the employee takes an extraordinary action such as quitting their job or if the employee does something like go after the employer’s business card or contacts them directly in an attempt to gain benefits. This is one reason that employees must be careful when approaching their bosses about these types of agreements. If you have questions, be sure to contact human resources or ask your boss about this type of agreement.
Who are the employers? There are several different types of benefits available to employers. A good rule of thumb is to assume that if you’re not the employer, then you’re most likely not getting these types of monetary or non-monetary benefits. Most often, this will be a good indicator that the employee is getting some type of retirement plan at work (whether through their employer or a third party) and/or healthcare benefits. Also, many times, you’ll see this with former employees who were laid off. Now, these employees have no one to turn to when it comes to fringe benefits, so they end up getting these benefits.
How are these benefits offered? There are several ways to give employees these benefits. One of the most common ways to offer healthcare benefits is to pay for employees to take a two or three day medical course. Depending on where you live, you may be able to find a center that offers free or greatly discounted medical courses for employees, which can help them to get training in new fields as well as familiarize themselves with various medical insurance plans.
The final fringe benefits, we’re going to discuss are retirement benefits. These benefits are typically not paid until an employee reaches their retirement age. However, if an employee has already retired, they may still receive some fringe benefits. Usually, this happens when an employee begins receiving payments from their annuity or 401(k) accounts.