Fringe employee benefits: definition, and examples
Table of contents
- What are fringe employee benefits?
- Why do organizations offer fringe employee benefits?
- Examples of fringe employee benefits
- What’s next?
What are fringe employee benefits?
Ben & Jerry’s, a Vermont-based ice cream company, offers a famous perk: each employee gets three free pints of ice cream daily.
From August 1, 2022, under the current system in Finland, both parents are entitled to parental leave of 164 days each after the child is born.
You may have heard of various kinds of benefits employees receive from organizations. The technical term for any type of non-monetary compensation provided to an employee is fringe benefits. Compensation outside the stated salary is a major part of reward and recognition packages. Fringe benefits might include wellness programs, free recreational vouchers, and educational assistance.
Let’s take a look at how fringe employee benefits differ from core benefits.
Why do organizations offer fringe employee benefits?
Any kind of reward scheme can help employees feel that their hard work is recognized, improving their self-esteem and sense of self-worth. While it may seem the only motivation for adding fringe benefits would be that happier employees will produce better results, there’s more to it. Take a look at how organizations can benefit from offering fringe employee benefits.
Attract a larger talent pool
Often, employers offer unique fringe benefits to attract candidates. For example, employees at Zappos, an online shoe and clothing retailer, get an impressive 40% off across the entire store. One of the main ideas behind fringe employee benefits is that they make companies more attractive for potential employees. fringe employee benefits appeal to new talent, so advertising a company’s perks can make the company appeal to more potential employees.
Increase the retention rate
Fringe benefits act as additional compensation, making an organization stand out and be seen as employee-friendly. Worthy benefits contribute to increased employee retention and minimize hiring costs. According to research by TalentLMS in collaboration with Enrich and Tapcheck, 78% of employees reported being more likely to stay with an employer because of their benefits program.
Improved employee experience
An important reason organizations should consider fringe benefits is that they can help to improve employees’ experience at work. Fringe benefits have been proven to alleviate some of the most common causes of stress among employees, such as healthcare and financial security. According to a MetLife Employee Benefit Trends study:
- 61% of employees say having access to emerging benefits would reduce their stress
- 53% say it would improve their financial wellness
- 52% say it would make them more loyal to their employer
- 49% say it would make them more interested in working for a company
- 49% say it would help them be more successful in both work and life
Examples of fringe employee benefits
Modern work conditions
Today, improving business productivity doesn’t mean limiting employees’ access to mobile devices or eliminating distractions in the office. Many of today’s most successful organizations have extremely modern work environments and happy employees. These environments may include flexible work hours, remote options, lenient dress codes, office ping pong tables, free snacks, team events, employee recognition programs, and more. A modern business is centered around the employee experience, which inevitably leads to a more successful, profitable, and productive organization.
Educational benefits and tuition assistance are highly desired by employees. These options have been found to aid employee retention and recruitment. Employees are excited to increase productivity when they receive opportunities for career development through training or other forms of learning.
Many companies offer their employees benefits related to their products or services. For example, Fandango, a movie ticketing company, offers promo codes that employees can use to watch movies for free at home or in theaters.
Body and mind wellness programs
A trending fringe benefit since 2020 is a wellness program that gives employees free or discounted access to tools and programs to maintain their physical and mental health. These could be a free gym membership, access to a meditation app, or a smoking cessation program, to give a few examples.
Free or discounted meals
Employers may offer meals to employees while at work for free or with a discount. This can include breakfast, lunch, or dinner, as well as snacks or drinks such as coffee throughout the day. Companies sometimes offer this type of fringe employee benefits for special events or host free lunches monthly to encourage employees to communicate with each other.
Other fringe benefits
Other fringe employee benefits include employee stock options, product or service discounts, adoption assistance, achievement awards, retirement planning help, or things that cost very little like occasional parties or picnics for employees and seasonal tickets for entertainment or sporting events.
Employee engagement will become crucial in 2023. Employees are looking for a company that understands their needs and supports them with benefits. Employers who take a proactive approach will be in a better position to move forward with the employee benefits trends we’ve mentioned here. At HRForecast, we help companies implement employee development seamlessly and benefit from the results. Contact our consultants to learn how we can help your organization make better workforce and business decisions.