The success and progress of any business organization depend on the hard work and capabilities of the workforce. So, to motivate and appreciate the employees, organizations offer handsome salary packages. At times, that is not enough to acknowledge the contribution of the workforce, and the organizations offer fringe benefits to win over them.
If you are not much aware of what fringe benefits are, here is an opportunity for you. Dig deeper into this article and explore everything you should know about it.
What are Fringe Benefits?
Fringe benefits are the perks, facilities, or rewards offered to the employees in addition to their fixed salary. It can be in the form of monetary gifts or other facilities. The basic purpose is to ease the life of employees in one way or the other.
Common Types of Fringe Benefits
There are the following two common types:
i. Mandatory benefits:
Mandatory benefits are those which are required by law and are not taxable. These include:
- Health insurance
- Unemployment insurance
- Medical leave
- Worker compensation
ii. Voluntary benefits:
Voluntary benefits are those that employers offer out of their own will. These benefits are taxable and include the following:
- Achievement awards
- Fitness benefits
- Commute benefits
- Employee discounts
- Meal benefits
Calculation of Fringe Benefits:
The voluntary fringe benefits are taxable under the law. Therefore, the organization needs to pay attention to their accounts and calculate them according to set standards.
Top 7 Reasons Organization Offer Fringe Benefits to Employees
Apart from the mandatory fringe benefits like health insurance and medical leave, business organizations do not hesitate to offer voluntary fringe benefits to their workers. Although it makes the organizations eligible to pay taxes, they prefer to offer more perks to the workers. There are numerous reasons behind this which you will get to explore in the section discussed below.
Here are some of the key reasons organizations offer fringe benefits to the employees even though they have to pay taxes for it.
1. Boosts Productivity
The very first reason organizations offer fringe benefits to employees is that it boosts their productivity. When employees know that they will be rewarded for their hard work, they work even more diligently. It makes them more productive and focused, which adds to the progress of the organization.
2. Make Employees Feel Valued
The second reason organizations offer fringe benefits to the employees is to make them feel valued. When the employees utilize their efforts and capabilities to the fullest for the progress of the organization, then the employers have the responsibility to return the favor. Employees feel that their efforts and hard work are not going unnoticed but are being acknowledged.
3. Boost Health and Well Being
Health insurance and medical leave are among the most common yet important fringe benefits that the organizations offer to their workforce. The reason behind offering such benefits is to boost the health and wellbeing of the employees. When the employees focus on their health, they will be able to work more efficiently, which will, in turn, benefit the organization.
4. Open Career Advancement Opportunities
Another key reason organizations offer fringe benefits to the employees is to open career advancement opportunities for them. For instance, if an organization offers benefits like high educational support or short courses, training benefits to some worker, it will not only improve the career opportunities for him but allow the organization to utilize his expert skills.
5. Save Extra Expenses of Employees
One of the most important and thoughtful reasons organizations offer fringe benefits to the employees is to save their extra expenses. It can be that of medical bills, meal payments, tea and coffee expense, or fuel expenses. However, to manage all these expenses of employees, the organization will need to pay more attention to the accounts department and taxation.
6. Increase Employee Satisfaction
Another important reason behind offering fringe benefits to the organization is to increase employee satisfaction. When the employees are rewarded for their contributions, in addition to their fixed salary, it adds to their satisfaction that they are utilizing their capabilities perfectly.
7. Boost Job Motivation
Lastly, there is no better job motivation than fringe benefits. If you are offering perks like an apartment, vehicle, and paid holidays, it will surely motivate employees to work harder. However, you also need to take care of accounts and taxation. You can hire the best accounting firms in Dubai to let the experts take care of accounts while you offer fringe benefits and earn more success by the dedicated effort of your workforce.
Offer employee benefits but manage your accounts too!
At times, the business organizations offer too many benefits to the employees that their tax ratio gets higher than that of revenue. You have to balance both to maintain your profitability, which is impossible without the help of professionals. So, contact accounting experts and ensure to offer suitable perks to your employees and manage your taxes in a balanced manner.