Page 177 - DMGT406_HUMAN_RESOURCE_MANAGEMENT

Human Resource Management

Notes 6. To create sense of belongingness among employees.
7. To meet the requirement of various legislation relating to fringe benefits.

Benefits of Fringe Benefits to Employees

1. Rising prices and cost of living have brought about incessant demand for provision of
extra benefit to the employees.

2. Employers too have found that fringe benefits present attractive areas of negotiation
when large wage and salary increases are not feasible.
3. As organizations have developed or elaborated fringe benefits programmes for their
employees, greater pressure has been placed upon competing organizations to match
these benefits in order to attract and keep employees.

4. Recognition that fringe benefits are non-taxable rewards has been major stimulus to their
expansion.
5. Rapid industrialization, increasingly heavy urbanization and the growth of a capitalistic
economy have made it difficult for most employees to protect themselves against the
adverse impact of these developments. Since it was workers who were responsible for
production, it was held that employers should accept responsibility for meeting some of
the needs of their employees. As a result, some benefits and services programmes were
adopted by employers.
6. The growing volume of labour legislation, particularly social security legislation, made it
imperative for employers to share equally with their employees the cost of old age,
survivor and disability benefits.
7. The growth and strength of trade unions have substantially influenced the growth of
company benefits and services.
8. Labour scarcity and competition for qualified personnel has led to the initiation, evolution
and implementation of a number of compensation plans.
9. The management has increasingly realized its responsibility towards its employees and
has come to the conclusion that the benefits of increase in productivity resulting from
increasing industrialization should go, at least partly, to the employees who are responsible
for it, so that they may be protected against the insecurity arising from unemployment,
sickness, injury and old age. Company benefits-and-services programmes are among
some of the mechanisms which managers use to supply this security.

Types of Benefits

The fringe benefits offered by various organisations in India may be broadly classified into
different categories. These are discussed below:
1. Payment for Time not Worked: This category includes: (a) hours of work (b) paid holidays,
(c) shift premium, (d) holiday pay and (e) paid vacation.
2. Employee Security: Physical and job security to the employee 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. The Industrial Disputes Act,
1947, provides for the payment of compensation in case of lay off and retrenchment this
provides income security to the employee.
3. Safety and Health: Employee's safety and health should be taken care of in order to
protect the employee against accidents, unhealthy working conditions and to protect the

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