Fringe Benefits, Need for Fringe Benefits, It’s Objectives And Types

Fringe benefits offered by BHEL to its employees:

 

Profit Sharing, Production Bonus, Club & Gym, Cell & its Bill, Subsidised Food, Interest Free Festival advance, Leave Travel Reimbursement, Leave Travel encashment, Car Loan, Travel Allowance, News Paper & Periodical, Professional Membership fee, free medical ( till life lasts), Computer at office, Lap top For home, Children Education Fee Reimb, Maternity/Paternity Leave, free medical for spouse, House Buliding Advance, Late Night snack allowance, apart from conveyance, pf, leave encashment, city compensatory allowance and a retirement pay plan etc. are some of the perks offered by BHEL.

Fringe benefits refers to the extra benefits provides to the employees in addition of normal compensation paid in terms of wages or salary. Many years ago these benefits and services were labelled ” Fringe benefits” because these benefits were relatively insignificant or fringe components of the compensation. But now a days the situation is not the same. Fringe benefits are now a days a great motivator to the employees.

Features of Fringe Benefits:

1. They are supplementary forms of compensation.
2. They are paid to all the employees ( unlike incentives which are paid only to the extra ordinary performers) based on their membership in the organisation.
3. Fringe benefits are indirect compensation because they are extended as a condition for employment and are not directly related with the performance.
4. These benefits may be statutory or voluntary. For example Provident funds are statutory but the transportation facility is voluntary.
5. These benefits help raise the living standards of the employees.

Need for Fringe benefits:

1. Employee demand: The employees now a days demand for fringe benefits rather than pay hikes because of reduction in tax burden on the employee’s side and in view of galloping price index and cost of living.
2. Trade Unions demand: Various trade union are competing with each other for getting more and more benefits for there members. If one union succeeds in persuading the management for a new benefit the other union will try to convince the management for an additional benefit.
3. Employer’s Preference: Employer may also wish to provide fringe benefits to the employees in a view of increasing productivity and motivating the employees.
4. As a social security: Fringe benefits are also provided to the employees to protect them from certain risk such as contingencies of life like accidents and occupational diseases.
5. To improve human relations: Improving human relation is a process of addressing the needs of the employees and satisfying them. Fringe benefit satiates employee’s economical, social and psychological needs.

Objectives of Fringe benefits:

• To create and improve sound industrial relations.
• To motivate the employees.
• To protect health of the employees and  safety to the employees against threats such as accidents and occupational diseases.
• To promote employee welfare.
• To provide security against social risks such as old age benefits and maternity benefits.
• To create a sense of belongingness among the employee and to retain them. Fringe benefits are also known as golden handcuffs.
• To meet the various legislative requirements relating to fringe benefits.

Types of Fringe benefits:

1. Payment for Time not worked:

• Hours of work:  Factory’s Act , 1948 specifies that no adult workers shall be required to work in factory more than 48 hours a week. In some organisations number of working hours per week are less than the legal requirements.
• Paid Holidays: According to Factory’s Act, 1948 an adult worker shall have a weekly paid holiday, normally Sunday. When a worker is deprived of weekly paid holidays he/ she is to be compensated with the same number of holidays in the same month. Some organisations offer two weekly paid holidays.
• Shift Premium: Workers working on odd shift are to be compensated with more than the normal wage rate, generally known as premium.
• Holiday Pay: Generally organisations offer double the normal rate to those workers who work on holidays.
• Paid Vacation: Workers in mining , manufacturing and plantation who have worked for 240 days in year are entitled for paid vacations at a rate of 1 day for every 20 days worked in case of adult workers and 1 day for every 15 days worked in case of child workers.

2. Employee Security:

Physical and job security to the employees should also be provided with a view to ensure security to the employee and his family members. When the employee’s services get confirmed, his job becomes secures. Further, a minimum and continuous wage or salary gives a sense of security to the life.

• Retrenchment Compensation:  The Industrial Disputes Act, 1947 provides for the payment of compensation in case if lay off and retrenchment.The non-seasonal industrial establishment employing 50 or more workers have to give one month’s advance notice or one month’s wages to all the employees who are retrenched after one year’s continuous service. The compensation is paid at the rate of 45 day wage for every completed year of service.  Workers are eligible for compensation as stated above in case of closing down of undertakings.
• Lay Off Compensation: In case of lay off the employees are entitled to lay off compensation at the rate equal to 50%  of the total of the basic wage and dearness allowance for the period of their lay off except for the weekly holidays. Lay off compensation can normally be paid up to 45 days a year.

3. Safety and Healthy: 

Employee’s safety and health should be taken care in order to protect the employees against accidents, unhealthy working conditions and to protect the worker’s productive capacity. In India, Factory’s Act, 1948 stipulated certain requirements regarding working conditions with a view to provide safe working environment. These provisions relate to cleanliness, disposal of waste and effluents, ventilation and temperature, dust and fumes, artificial humidification, overcrowding, lighting, urinals, drinking water, latrines, spittoons etc.

Provisions relating to safety measures include fencing of machinery, work on or near machinery in motion, employment of young persons on dangerous machines, self acting machines, casing of new machinery,hoists and lifts excessive weights, lifting machines, chains, ropes explosive or inflammable dust , gas etc.

4. Workmen’s Compensation:

In addition to safety and health measures, provisions for payments of compensation has also been made under the Workmen’s Compensation Act, 1923. The Act is intended to meet the contingencies of death and invalidity of worker due to employment injury and occupational diseases specified under the Act as the sole responsibility of employer. Under the Act the amount of compensation depands upon the nature of injury and and monthly wages of the employee. Dependants of the employee are are eligible for compensation in case of death of the employee.

5. Heath Benefits:

These benefits include

• Sickness benefits: Sickness benefit is roughly 50% of average daily wages and is payable for 91 days during 2 consecutive  benefit period.
• Medical benefit: The Employee’s state Insurance Scheme provides full medical care in the form of medical attendance, treatments, drugs and injections, specialist consultation, and hospitalization to insured person and also to members of their families where the facility has been extended to the families.
• Temporary Disablement benefits: TDB is payable to an employee suffers from employment injury or occupational diseases and is certified to temporarily incapable of work.
• Permanent Disablement Benefit: PDB is payable to an employee who suffers permanent residual disablement as a result of employment accident or occupational diseases. The maximum rate of PDB can be equal to TDB.
• Maternity Benefits: Maternity benefits is payable to and insured women in the following cases subject to contributory conditions: – (a) Confinement, (b) Miscarriage or medical termination of pregnancy (MTP), (c) sickness arising out of pregnancy.

6. Voluntary Arrangement:

However, most of the large organisations provide health services over and above the legal requirements to their employees free of cost by setting up hospitals, clinics, dispensaries, and homeopathic dispensaries. Company’s elaborate health service programmes includes:

1.  Providing health maintenance services, emergency care, on the job treatment for minor complaints, health counselings,  medical supervision in rehabilitation, accidents and sickness prevention, health education programmes, treatment in employee colonies etc.
2. Medical benefits are extended to employee family members and to the retired employees and their family members.
3. Small organisations which cannot setup hospitals provide the medical services through local hospitals and doctors. Sometimes they provides reimbursements of medical expenses borne by the employee.

7. Welfare and Recreational facilities:

These benefits include canteens, consumer stores, credit societies, housing, legal aids, employee counselling, welfare organisation, holiday homes, educational facilities, transportation, picnics and parties etc.

 

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