Understanding Fringe Benefits, Employee Benefits, and FBT in the Workplace

Hi Everyone,

Could anyone explain to me what fringe benefits are? Also, what is FBT, and how is it calculated, and on what is it calculated?

Thanks,
Villis

Employee benefits, also known as fringe benefits or benefits in kind, are various non-wage compensations provided to employees in addition to their salary.

These benefits can include housing (employer-provided or employer-paid), group insurance (health, dental, life, etc.), disability income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation (paid and unpaid), social security, profit sharing, funding of education, and other specialized benefits.

The basic principle behind these benefits is as follows:

There are several advantages to employee benefits for both employers and employees:

Employer advantages:

- Helps attract and retain better-qualified employees.
- Provides high-risk coverage at low costs, easing the company's financial burden.
- Improves efficiency and productivity as employees feel secure for themselves and their families.
- Premiums are tax-deductible as a corporate expense, resulting in savings with quality coverage.

Employee advantages:

- Peace of mind leads to better productivity, as employees are assured of provision for themselves and their families in any mishap.
- Employees with personal life insurance enjoy additional protection.
- Confidence in the company's employee benefit schemes boosts staff morale and pride in the company.
- Employees enjoy cheaper rates negotiated through their employer than they could obtain individually.

Dear Villis,

Fringe benefits are compensations made to an employee beyond the regular benefit of being paid for their work. Some fringe benefits are fairly standard, such as offering a few days of sick time or paid vacation time. Others can be significantly greater and more rare. Key executives in large companies might also enjoy fringe benefits like the use of time-share condominiums, paid continuing education, use of a company car, use of a company credit card, discounted or free health club memberships, and a significant amount of paid vacation.

Sometimes the fringe benefits turn out to be greatly needed. For example, the rising cost of private health insurance often makes obtaining a job with a good health plan highly desirable. Programs like 401(k)s can help employees save money for the future. Where job compensation is not commensurate with the money needed to live comfortably, housing allowances, or company housing can often make the difference between being able to take a job and looking elsewhere.

Some companies also pay fringe benefits for those who work night or swing shifts. These fringe benefits may be in the nature of a 10-30% increase of base pay for working a non-standard shift. This is called a shift differential and is quite common in the medical field and in manufacturing.

Fringe Benefit Tax Statement

This statement is very useful.