Page 175 - DMGT406_HUMAN_RESOURCE_MANAGEMENT

Human Resource Management

Notes 2. Trade union demands: Trade unions compete with each other for getting more and newer
varieties of fringe benefits to their members. If one union succeeds in getting one benefit,
the other union persuades management to provide a new one. Thus, the competition
among trade unions within an organisation results in more and varied benefits.
3. Employer's preference: Employers also prefer fringe benefits to pay-hike, as fringe benefits
motivate employees to give their best to the organisation. It improves morale and works
as an effective advertisement.
4. As a social security: Social security is a security that society furnishes through appropriate
organisation against certain risks to which its members are exposed. These risks are
contingencies of life like accidents and occupational diseases. Employer has to provide
various benefits like safety measures, compensation in case of involvement of workers in
accidents, medical facilities, etc., with a view to provide security to his employees against
various contingencies.

5. To improve human relations: Human relations are maintained when the employees are
satisfied economically, socially and psychologically. Fringe benefits satisfy the worker's
economic, social and psychological needs. 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 minimise economic problems of the employee.

10.7.4 Fringe Benefits

The term, fringe benefits, refers to various extra benefits provided to the employees, in addition
to the compensation paid in the form of wage or salary. These benefits can be defined as any
wage cost not directly connected with the employees' productive effort, performance, service or
sacrifice. It is also defined as those benefits which are provided by an employer to or for the
benefit of an employee and which are not in the form of wages, salaries and time-related
payments.

Different terms are used to denote fringe benefits. They include social security measures, social
charges, welfare measures, supplements, workers' benefits, etc.
ILO defined fringe benefits as, "Wages are often augmented by special cash benefits, by the
provision of medical and other services or by payments in kind, that form part of the wages for
expenditure on the goods and services. In addition, workers commonly receive such benefits as
holiday with pay low cost meals, low rent housing, etc. Such additions to the wages proper are
sometimes referred to as fringe benefits even though they may constitute a significant part of
the worker's total income.

We can thus conclude that fringe benefits include both monetary and non-monetary benefits
given to the employees during and post-employment period of the employee.

Coverage

The term 'fringe benefits' covers statutory bonus, social security measures, retirement benefits
like provident fund, gratuity, pension, workmen's compensation, housing, medical, canteen,
co-operative credit, consumer stores, educational facilities, recreational facilities, financial advice
and so on. Thus, fringe benefits cover a number of employee services and facilities provided by
an employer to his employees and in some cases to their family members also. The welfare of
employee and his family members is an effective advertising and also a method of buying the
gratitude and loyalty of employees. But, while some employers provide these services over and
above the legal requirements to make effective use of their workforce, some restrict themselves
to those benefits which are legally required.

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