Fringe Benefits – Additional 'perks' given to an employee by an employer in addition to a wage/salary
To remember what fringe benefits means, use the following mnemonic:
I got my fringe cut for free, that was one of the benefits (fringe benefits) of working in a hairdressing salon in addition to my wages.
Fringe benefits are any non-salary compensation that an employer provides to an employee. They are also known as “benefits in kind” or “perks”. Fringe benefits can be used to attract top talent, improve employee morale and reduce staff turnover. However, a company will first need to weigh up the costs and benefits of offering certain fringe benefits, as although they can improve a business in the ways listed above, the cost could be too much and lead to a reduction in profit.
Some examples of fringe benefits include:
- Private health care
- Private dental care
- Life insurance
- On-site childcare
- Gym membership
- Company car
- Public transport subsidies
These are just a few general examples, but fringe benefits can entirely depend on what industry the company you work for is in. For example, if you work in retail, you may get an employee discount when shopping at the company’s stores.
Fringe benefits are usually taxed, which the employee must pay at their normal tax rate. One of the most common taxable fringe benefits is a company car. In the UK in recent years, the government has clamped down on fringe benefits to ensure that increased levels of tax are being paid for them.