Such benefits are normally called fringe benefits. These are some of the extra benefits provided to employees in addition to the normal compensation paid in the form of salary and allowances. The situation now is different as these are included in a comprehensive compensation package offered by employers to employees.
Regular pay will have salary, Dearness Allowance, other regular Allowances, L.T.A., Medical expenses, Bonus etc.
These supplementary forms of compensation are included in the total package. These forms of payment are given to employees beyond certain levels in many organizations.
They are paid to all employees above the stipulated levels in each organization. They are not paid like incentives which are paid to employees whose work is above standard.
They are indirect compensation because they are usually extended as a condition of employment and are not directly related to performance.
They help raise the living conditions of employees. They are statutory or voluntary. Provident find is a statutory benefit whereas transport is a voluntary benefit.
Most organizations in India have been extending such benefits to their employees year after year, due to various reasons. They can be, Employee demands, Trade Union demands, Employer’s preference etc.
Employers also prefer fringe benefits to pay hike, as fringe benefits motivate employees to give their best to the organization. It improves morale and works as an effective tool to improve productivity.
Social security is a security against contingencies of life, accidents and occupational diseases. The employer has to provide various benefits like safety measures compensation in case of involvement of workers in accidents, medical facilities etc.
Human relations are maintained when the employees are satisfied economically, socially and psychologically. Consumer stores, credit facilities, canteen, recreational facilities etc., satisfy the worker’s social needs, whereas retirement benefits satisfy some of the psychological problems about the post retirement life. However most of the benefits minimize economic problems of the employee.
The important objective of fringe benefits are to create and improve sound industrial relations, to motivate employees, provide security to the employees against social risk, old age benefits and maternity benefits. These types of benefits are also given by employers to create a sense of belongingness among employees and to retain them.
In order to have a sound benefits programs there are certain essential requirements. The program should be based on specific objectives that are in line with the organizational philosophy and policies. It should be affordable and cost effective. Through surveys a benefit package can be developed to meet the employees’ needs.
The category includes: (1) hours of work, (2) paid holidays, (3) shift premium (4) holiday pay and (5) paid vacation.
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 secure. Further, a minimum and continuous wage or salary gives a sense of security to the life.
Employee’s safety and health should be taken care of in order to protect the employees against accidents, unhealthy working conditions and to protect the worker’s productive capacity. In India the Factories 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, drinking water, latrine, urinals and spittoons. Provisions relating to safety measures include fencing of machinery or near machinery in motion.
Today, various medical services like hospital, clinical and dispensary facilities are provided by organizations not only to employees but also to their family members.
Employees State Insurance Act, 1948 deals comprehensively about the health benefits to be provided. This Act is applicable to all factories, establishments running with power and employing 20 or more workers.
Sickness benefits: Insured employees are entitled to get cash benefit for a maximum of 56 days in a year under this benefit.
Maternity benefit: Insured women employees are entitled to maternity leave for 12 weeks (six weeks before the delivery and six weeks after the delivery) in addition to cash benefit of 75 p per day or twice of sickness benefits whichever is higher.
Disablement benefits: Insured employees who are disabled temporarily or permanently (partial or total) use to employment injury and/or occupational diseases are entitled to get the cash benefit under the head.