Why Limit the Number of Employees Who Can Receive Fringe Benefits?
Employee benefits and perks in the form include various forms of non-wage compensation offered to employees as well as their regular wages or salaries. Common examples where the employee exchanges regular wages for any other form of monetary benefit is called a “Salary exchange or salary package.” These are very common in certain industries and companies like those that provide medical, dental, legal and coding schools, technical institutes, accounting or finance related services, automotive companies, shipping and logistic companies, financial institutions and insurance companies among many others. Companies are usually free to bargain over the amount of salary they offer their employees in exchange for other forms of perks and incentives. However, this negotiation process is normally done by a payroll department, which is then handled by an external firm.
The actual cost of giving out these benefits to employees depends on the nature of the company. Usually, it is considered a worthwhile investment when the benefits are directly channeled to the employees themselves. In turn, they become loyal to the company. However, there are also cases when giving out perks is just a marketing strategy. This is especially true in the case of large scale companies that hope to increase their sales figures through these employees. Many businesses see this as a viable option for increasing productivity.
Before opting to implement any of these benefits schemes, it is important for a company to carefully consider the pros and cons. This is because not all benefits offered are necessary. For instance, not every employee needs dental and medical benefits which can be very expensive.
Some employees may prefer to get fringe benefits only on special occasions. They feel that they are entitled to them since they have worked hard for the company. On the other hand, employers can also be accused of treating employees unfairly if they offer benefits like these on a regular basis. These employees will feel that they are being devalued and this is why they are making demands for these benefits. Most employers use these benefits as an employee retention tool. They feel that these benefits will help them retain good employees.
Another reason why employers should limit the number of employees receiving fringe benefits is the legal implications of doing so. In the US, employees are allowed to receive these benefits as long as they don’t have a legitimate claim to them. This is different from other countries where these employees must have a specific pension or health insurance policy to be able to receive fringe benefits. There are also cases when employees lose their benefits when they retire. This happens especially if the employee was a member of the company from the very beginning. The company may be charged with collecting payments for them even if the employee no longer works for the company.
Limiting the number of employees who can get fringe benefits is not only cost effective, but also has a lot of other benefits. For one, it ensures that the employees receive only the best retirement plans that they can have. It also helps the employees to maintain a healthy working environment because only the best are being offered by the company. Employees should also be assured that these benefits are legal and their rights are protected. Employers need to remember that there are a lot of lawsuits that have been filed against companies for offering illegal fringe benefits.