An SMB Guide To Employee Fringe Benefits

Employee Benefits

Fringe benefits are considered as compensation given to employees that go beyond their basic pay. These benefits don’t necessarily have to be in the form of cash as they can also include other non-monetary incentives like clothing, property, gym membership, grocery allocations, cash equivalents, or other services.

For SMBs who are still trying to find their way through this whole business concept, it’s important to understand as much as you can about employee fringe benefits. Having adequate knowledge can prevent those sticky legal situations later on, often due to some misunderstanding between the employer and employee.

Let this article walk you through that guide.

How Fringe Benefits Work

There’s no universal equation to follow for how fringe benefits work. They can vary from one company to another, and employers can also choose to offer different fringe benefits for different business years or periods. Often, the employee is also given the liberty to choose what fringe benefit they’d like to avail themselves of, from a given set of pre-determined options by the company.

Because fringe benefits serve as additional compensation for employees, they’re not an absolute requirement for all businesses. However, the companies that do offer such use it as a means to stand out to their employees.

When employees are well-compensated and happy, they’re more likely to work for the company for a longer period. This, in turn, translates to higher returns and income for the company when your employee turnover rate is low. Get more help here to understand more in-depth insights on how fringe benefits truly work.

Objectives Of Giving Fringe Benefits

As each company will have their respective set of standard fringe benefits to give out, it follows that they also come up with their objectives as to why they’ll offer certain fringe benefits to their employees.

Notwithstanding those differences, however, there are certain objectives of fringe benefits that may lie universal among various companies. These objectives should be more than convincing enough to prove that offering such to employees is, in fact, meritorious.

Some of these objectives are:

* To retain employees and encourage long employment

* To serve as a kind of compulsion to other companies that don’t offer fringe benefits for them to start if they want their business to be competitive in the current business sector

* To attract talented potential employees from a specific pool of applicants

Examples Of Fringe Benefits

Employers are given latitude by the law as to how and what fringe benefits they’ll offer their workforce. Generally, however, there are certain examples of fringe benefits that continuously make it the common types of fringe benefits offered.

With that, a few of the most popular fringe benefits given by companies include:

* Worker’s compensation

* Meal vouchers or discount coupons at restaurants

* Unemployment insurance

* Retirement contributions

* Family and medical leave

* Health assistance

* Bonuses

* Educational assistance

* Employer-provided vehicles

* Gym and resort memberships or stays

Features Of Fringe Benefits

To be able to give fringe benefits to employees, it’s important for small business owners to get a gist of the features of fringe benefits. These may be confusing especially to new entrepreneurs, so you can gain more information on that by hiring a labor lawyer.

To that end, these are some of the features of fringe benefits that business owners have to familiarize themselves with:

* Fringe benefits are given to employees not for specific work already done but as a motivational incentive. This is to stimulate their interest to be more productive and do more for the company, given how fringe benefits are technically an increase in their basic salary.

* Fringe benefits are accounted for as labor expenses to the company as the monetary value of those fringe benefits are technically attached as an added salary on the employee’s payroll.

* A fringe benefit should be one that’ll be universally enjoyed by all employees. For example, a company that offers vegan products and meals to vegetarians in their workforce can’t give the same benefit to non-vegans. Otherwise, this latter group will never enjoy such an offer as a benefit, given how they don’t necessarily lean towards vegan meals as their first choice.


The guide above should form a good start for small businesses on understanding fringe benefits. Because this is extra on top of their salary, it’s normal for startups to still be on the fence about whether they should offer such to their employees. You don’t have to start with big and costly benefits—start small if you must. Then, as your business grows in stability, give your employees that chance to grow with you as well. For more sound advice on this matter, it’s a good recourse to speak with a labor law professional or lawyer.