Workplace Wellness

What are Fringe Benefits, 10 Popular Examples & Why You Should Consider using them for Your Company

Written by Kate

What exactly are fringe benefits? They sound pretty cool. And they probably aren’t going anywhere soon, either. When employees talk about their benefits or the types of employee benefits, or types of fringe benefits they would like, they usually mean things like paid vacation or health insurance. These are called core benefits. Core benefits are essential, but fringe benefits are extras that employers provide beyond the basic salary.

Fringe benefits are also known as noncash compensation programs. These rewards can often be very valuable and can increase employee loyalty, productivity, and commitment to their employer.
They also offer added company perks, including free food, gym memberships, or even company cars. The point is that fringe benefits aren’t always there, and you should take advantage of them whenever possible.

Read on to learn more about this topic! Click on the sections below to jump right to your specific question.

What are Fringe Benefits?

Fringe benefits are extra perks that companies give to their employees. They are not required by law, but many companies choose to offer them anyway. This is a great way to increase employee satisfaction and build loyalty among your workers.

These benefits may include the following:

Certain employee benefits are granted equally to all employees regardless of level on the corporate ladder. However, some benefits are offered to compensate employees for specific needs, while others serve to promote employee well-being. Also, there needs to be said that there are some fringe benefits given to the higher-ups.

Overall we can all agree that having fringe benefits in place for employees of all levels is a great motivation to work harder and to keep valuable people interested in the job. This is a great tactic that not a lot of companies offer, but if you’re in one of them, that does consider yourself lucky. 

Those who get fringe benefits often have better employee morale and motivation than those who don’t. For example, companies that compete for the best talent in their fields tend to offer big bonuses and perks.

Some of the most common fringe benefits include things like health insurance, life insurance, and disability insurance. However, some of these benefits are taxable, but at least at a fair market value. 

How do Fringe Benefits Work?

The main idea behind fringe benefits is to make sure that employees feel valued and appreciated. It’s important to note that fringe benefits are not mandatory. Some companies will offer them, but it’s up to each individual company to decide whether or not to offer them.

If an employer offers fringe benefits, they typically come in two forms. There are core benefits, which are the minimum requirements that every employee must receive. Then there are optional benefits, which are additional perks that the employer chooses to offer.

Core benefits are generally mandated by federal law, so they are legally required. But this doesn’t necessarily mean that they are necessary. In fact, many companies choose to offer these benefits because they want to show appreciation to their employees.

Optional benefits are completely voluntary and depend on what the employer feels would benefit their workforce. These benefits are usually chosen based on the type of industry the business operates in.

For example, if a company sells food, then offering free lunches might be a good idea. If a company makes medical equipment, then providing healthcare benefits could be beneficial.

There are also fringe benefits that are unique to certain industries. For instance, some employers provide childcare assistance for parents with children under 18 years old. Others may give out free gym memberships.

Employers at Google have many great benefits, such as the free gourmet cafeteria, which is great to have. But more importantly, they get the free commuter bus service, which will make life work a lot easier. Other examples we have Ben & Jerry, which offers ice cream to their workers, and Dogtopia, which allows you to bring your pet to work. 

What is the Purpose of Fringe Benefits?

Fringe benefits are designed to motivate employees to stay loyal to the company. They help increase productivity and reduce turnover rates. It’s a great way of showing that the company values its employees and it does that by offering these benefits.

When employees know that they’ll be taken care of financially, they’re less likely to leave. And when they see that their coworkers are getting similar benefits, they’re more likely to stick around too.

It’s important to note that not every company needs to offer fringe benefits. Some of them can function comfortably without them. So if you don’t need them, then don’t worry about it. Just make sure that you are getting paid fairly and that the core benefits are there.

What is the Difference between Benefits and Fringe Benefits?

Benefits are the basic things that everyone gets from working at a company. This includes salary, health insurance, retirement plans, etc. Fringe benefits are extra perks that only certain people get.

These include things like free meals, childcare, transportation, etc. Companies offer fringe benefits for several reasons. The most obvious reason is to retain talent. Employees who feel appreciated and valued are much more likely to remain loyal to the company.

But another reason why companies offer fringe benefits is to create a positive workplace culture. When employees feel comfortable and secure, they’re more productive.

And finally, fringe benefits can be used as an incentive to encourage employees to perform better. For example, if a company wants to improve customer satisfaction, it can offer discounts or even free services to customers who refer friends.

Who Doesn’t Benefit from Fringe Benefits?

Companies should definitely consider offering fringe benefits. However, there are some groups of people who shouldn’t receive them. You can check the employer’s tax guide to fringe benefits published by the IRS to learn more.

The first group is freelancers. Freelancers often work alone and therefore don’t really need any kind of benefits. They already have all the financial security they need.

Another group of people who shouldn’t benefit from fringe benefits is those who work in temporary positions. These types of jobs usually last for short periods of time. Therefore, the employer doesn’t want to invest money into providing benefits because they might not be able to use them.

On some occasions, a person who’s normally considered an employee may be classed as a non-employer under the law. In this case, they won’t qualify for employer benefits. Let’s look at what makes an employee a non-employee under the eyes of the law. 

Below you will find a short list of employees who are not going to get fringe benefits as by the law:

  • Someone who holds more than two percent of the shares of a closely held corporation.
  • Highly Compensated Employees (HCEs) include officers, shareholders who own more than 5% of a company’s voting power, HCEs based on the circumstances, and spouses or dependents of any of these people (officers, shareholders, etc.)
  • Someone who has been designated an officer, owns more than 10% of the company’s stock, or is one of the top 25% earners of all employees.
  • An officer has annual pay of at least $185,000.
  • An employee who was an officer, director, partner, managing general partner, managing member, or 5% owner at any time during the previous year, or $150,000 in compensation for the prior year.

How do Fringe Benefits Motivate Employees?

Fringe benefits are great motivators. They help employees understand how their contributions matter to the success of the company. It makes them feel more important and, at the same time, valued for their work. 

For example, when a company offers its employees a discount on gym memberships, they know that they’re getting help from the company to stay healthy. And when a company provides free lunches, they know that they’ll be eating well while also saving money. Many employers also use fringe benefits to tackle population health outcomes, which in turn motivate employees as well.

It helps build a better relationship knowing that the higher-ups value you, and that is reflected by the fringe benefits that are offered.

In addition, fringe benefits make employees feel appreciated (some employers also offer employee lifestyle benefits as part of their fringe benefit offerings). When a company gives out gifts, such as free meals, free cafeteria, or other benefits that we’ve talked about above, it shows that they care about their workers. This type of gesture is very meaningful to most people.

Finally, fringe benefits give employees a sense of belonging. If your company offers perks like free food, health insurance, or flexible hours, then you’re giving them a service that value and they want to repay you in more ways. 

Why should Fringe Benefits be offered to Employees?

The main reason why companies offer fringe benefits is to attract and retain good employees. The benefits are meant to show appreciation for the hard work that employees put in every day.

Companies also offer fringe benefits to keep their employees happy. For instance, if a company wants to increase productivity, it can offer incentives to employees. Or if a company wants to reduce turnover, it can provide training programs and educational opportunities for its employees.

Companies also offer fringe benefits because they want to reward their best performers. A company might offer bonuses to those who have excelled in sales or customer service.

They offer fringe benefits because they need to compensate their employees fairly. Some companies offer benefits to their employees so that they don’t have to pay overtime. Others offer benefits to encourage their employees to take vacations.

They offer fringe benefits because they believe that offering these benefits will improve morale among their employees. That’s a great thing since people who are happy with their work tend to work better and harder and think more about finding solutions for whatever problem may arise.

10 Fringe Benefit Examples

Here are some examples of fringe benefits:

Paid Time Off (PTO)

This benefit allows employees to use paid time off whenever they need it. PTO is usually given after working 40 hours per week. However, there are some employers who allow employees to use PTO even before they reach this threshold.

Some employers offer many PTO days. Other employers only allow one week of PTO per month. Still, others offer two weeks of PTO per month but limit how much an employee can use each week.

Some employers offer PTO at different times throughout the year. For example, some employers offer PTO during the summer months and not during the winter months.

Health Care Coverage

If you work for a large company, chances are you already receive health care coverage through your employer. But what happens when you get sick? Do you just go without medical treatment until you can afford it on your own?

No! Employers often offer health care coverage to their employees. They do this either through private plans or public plans. Private plans are typically less expensive than public plans.

Gym Membership

Many companies offer gym memberships to their employees. This way, employees can exercise while saving money. It’s also a great way to motivate employees to stay healthy.

Employees who participate in regular physical activity tend to be happier and healthier. So by offering gym memberships, employers are encouraging their employees to live a healthier lifestyle.

Free Meals

Some employers offer free meals to their employees. These meals could include breakfast, lunch, dinner, snacks, etc.

The idea behind providing free meals is to make sure that employees eat well. And eating well means staying healthy.

In addition, employers sometimes offer free meals as part of a wellness program (or as a stand alone wellness reimbursement). This way, employees aren’t forced to spend extra money on food. Instead, they’re encouraged to eat right and stay fit.

Discounts on Products or Services

Companies sometimes offer discounts on products or services to their employees.

For example, if you’re a member of a certain club, you might receive a discount on your membership fees. Or maybe you’ll receive a discount on your cable bill.

You might also receive discounts on products or services from vendors. For instance, if you buy office supplies from Staples, you might receive a 10% discount.

A Company Car Allowance

Some employers provide a car allowance to their employees. The amount varies depending on the size of the company.

An employer might give an employee $500 every month so that he/she can drive home after work. Or perhaps the employer gives an employee $1,000 every month so that she/he can purchase a new vehicle.

Tuition Reimbursement

Some employers will pay for tuition costs for their employees’ children or even new hires. This way, employees don’t have to worry about paying for college expenses.

It’s important to note that employers must follow specific guidelines when giving out tuition reimbursement benefits. For example, employers cannot reimburse more than 50% of tuition costs. 

401(k) matching contributions

Most employers match 401(k) contributions made by their employees. This way, employees save money while still having access to retirement funds. This is one of the best fringe benefits that an employer can have for its employees.

Childcare Assistance

If you need childcare assistance, some employers will cover those costs. This helps parents who want to return to work but don’t have enough time off to take care of their kids.

This benefit is especially helpful for working mothers. Many women choose to go back to work because it allows them to earn additional income. But taking care of their kids at the same time isn’t always possible.

So by covering childcare costs, employers are helping these moms get back into the workforce.

Employee Discount

Many companies offer discounts to their employees. Some of these discounts may apply to things like clothing, groceries, restaurants, hotels, entertainment, etc.

These types of discounts help employees save money. They also encourage employees to shop around for deals. 

7 Benefits of using Fringe Benefits at your Company

Fringe benefits are great for companies in many ways.
Here are just a few:

They increase productivity. Employees are happier when they know that they’re getting something valuable from their jobs. That way, they’re more likely to work better and more.

They improve morale. When employees feel appreciated, they tend to be more productive. Also, it’s a great thing to see happy faces all around the office. 

They reduce turnover rates. If employees enjoy their job, they’re less likely to quit. We as humans have the psychology in mind to find comfort in life, and when we do, it has to be something really big to change that. 

They attract better talent. Companies with good fringe benefits often have higher-quality workers. When the word gets out that a certain company is offering great benefits, people may want to join even more.

They make employees loyal. Employees appreciate knowing that their employer cares about them and wants them to succeed. That’s why they feel a certain level of loyalty to the company that offers these benefits.

They keep employees happy. Happy employees are more productive; it’s simple as that. When people go happy to work, they’re more likely to solve problems quicker, work harder and perform better.

They create a positive culture. A positive workplace encourages creativity and innovation. That’s why having happy faces for everyone and genuinely happy people is crucial for companies.

Closing Thoughts

There are many different types of fringe benefits available to employees. It’s up to employers to decide which ones they’ll use.

But whatever type of fringe benefits you decide to implement, remember that they should be designed to benefit both your employees and your business.


What are fringe benefits?

Fringe benefits are perks that an employee receives from his or her employer. These can include anything from free lunches to paid vacation days.

How does this benefit affect my business?

There are two main reasons why fringe benefits are important for businesses. First, they help employees stay motivated. Second, they help retain employees.

Do I need to pay for fringe benefits?

No! Many employers choose to provide fringe benefits without charging any fees.

Can I give my employees a discount on products or services?

Yes! Discounts are one of the most popular fringe benefits offered by employers. This perk helps employees save money while still receiving quality goods or services.

What are some fringe benefits that I could offer?

There are many other fringe benefits that you can offer to your employees. Some examples include:
• Free meals
• Paid vacations
• Free gym memberships
• Paid sick leave
• Health insurance
• 401(k) matching contributions
• Employee discounts
• What are some fringe benefits that aren’t worth it?

Corporate Wellness Benefit Managers having a discussion while looking at an electronic tablet.

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