Fringe benefits

What are fringe benefits?

Fringe benefits are essentially perks offered by employers to add an extra incentive for employees. For example, a business might offer dental care or optional mental health days as part of its fringe benefits package. 

Benefits like these are provided on top of employees’ salaries (and often go beyond the legal requirements of salaries and bonuses). Think of them as a sweetener and a way for a business to go above and beyond – fringe benefits are an increasingly common feature in modern job descriptions. 

Fringe benefits in business are usually provided on a discretionary basis, meaning employees can access additional reward and recognition schemes if they want to, but it’s not mandatory. Bear in mind that fringe benefits are different from contractual benefits (such as pension and parental leave) which are a legal requirement of a job offer.

Thinking of providing your workforce with extra benefits on top of their salary? With the Ben Mastercard and Marketplace, employees are free to choose the benefits that work for them.

The different types of fringe benefits

It’s up to the organisation which fringe benefits they provide. Maybe you’re a sustainable business and would prefer to offer eco-friendly benefits, or perhaps you want to provide a comprehensive benefits package for new parents. The range is endless, from discounts and vouchers to entertainment and home insurance. 

Here are some of the most popular fringe benefits:

  • Discounts and vouchers - You could offer these on products or services from local businesses, such as money off haircuts at hair salons or barbers.

  • Entertainment and recreation - It’s common for companies to offer free or subsidised gym memberships, tickets to local events, or even hotel discounts.

  • Home insurance - Offering home insurance (which protects you if something happens to your home) is a great way to give employees peace of mind and help them save money on yet another outgoing.

  • Company-funded pension - Many employers offer a company-funded pension scheme to reward their employees with a retirement fund. This helps to give workers peace of mind over their future, knowing that they’re making valuable contributions.

  • Childcare - With the price of childcare being a considerable barrier for parents looking to return to work, some companies now offer childcare benefits as a fringe benefit. This could come in the form of financial help with childcare costs, or a workplace nursery scheme either onsite or near the office.

  • Flexible working - As employees proved themselves to be productive while working from home during the covid pandemic, more and more businesses are offering flexible working as a permanent benefit. This helps to show workers that they’re trusted and means they can invest more time into working or essential life admin when they’d otherwise be commuting.

Not sure which benefits your employees would actually appreciate? Ask them! Use our internal survey and narrow down the perks that would bring the most value.

How do fringe benefits motivate employees?

Fringe benefits are an effective way to motivate employees and create a culture of recognition. Offering an incentive shows employees that they’re valued and appreciated, and it demonstrates the business’ commitment to a happy and rewarding working environment. 

But the power of fringe benefits begins before an employee even joins a company. They can be a great way to differentiate a company from its competitors and to encourage loyalty from employees. Fringe benefits can be particularly attractive to potential candidates when recruiting new staff. For example, studies have shown that over 70% of prospective applicants would be more likely to apply for a job if the ad showed the benefits on offer.

Why should companies offer fringe benefits?

From a financial perspective, fringe benefits can be tax-efficient for a company. They enable employees to save money on things like medical expenses, childcare costs and life insurance. However, it’s worth finding out which fringe benefits are taxable, as this cost will be deducted from the employee’s gross salary and could make a difference as to whether they opt into the benefit or not. Perks like employee stock options, health benefits and gym facilities are exempt from tax.

If you’re wondering how much budget you need to offer fringe benefits in the UK, try Ben’s employee benefits calculator.

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