In the workplace, we hear more and more frequently about "Fringe Benefit", also because this term is often reported on employees' pay slips.
But what is meant by Fringe Benefit?
In this article we will try to provide a clear definition of this type of benefit and highlight the pros and cons, both for the employee and for the company.
What are Fringe Benefits? Definition
Fringe Benefits, often abbreviated to "FB", represent a subset of corporate welfare and include all those additional benefits that the company can provide to collaborators - in addition to the salary - not in the form of money.
These benefits can take various forms and represent a useful tool for the company to improve the quality of life of its employees, both in the workplace and during private life, enriching the remuneration package offered and making its corporate image more attractive and competitive on the job market.
Is the advantage therefore mutual, both for the company and for the employee? Yes, exactly, and soon we will understand better why. But let's go step by step…
Examples of Fringe Benefits
To better understand what Fringe Benefits are, let's give some examples of which are the most common and appreciated.
- Company car: the Fringe Benefit Auto is one of the most popular
- Meal/purchase vouchers and vouchers
- Company phone/computer
- Properties for rent, use or loan: rare and highly valuable benefit. Some companies have "guest quarters" or properties that are assigned free of charge or at controlled costs to their workers. It is a measure that also has great results on employer branding, because it broadens the geographical area in which to attract new collaborators, perhaps specialized but not resident in the company area.
- Various types of policies and insurance, which can also be extended to the worker's family members.
Who pays for Fringe Benefits?
The responsibility for providing Fringe Benefits lies with the company or employer.
Companies can choose to offer these benefits as part of the compensation package and use them as a tool to reduce turnover and attract and retain talent.
However, the provision of Fringe Benefits is governed by specific laws and regulations, depending on the country or sector in which the company operates.
The correct management of Fringe Benefits can therefore prove complex; for this reason many companies take advantage of special specialized platforms - such as that of Eudaimon - to ensure that benefits are administered correctly and in compliance with current laws, but also to optimize the result.
Who is entitled to Fringe Benefits?
Your eligibility for Fringe Benefits may vary based on company policies and local or national laws.
However, in principle all employees hired on a full-time contract, or - in some cases - even part-time, can benefit from these advantages.
However, company policies can freely establish some specific criteria to manage access to Fringe Benefits, such as seniority or job title.
All parents are also entitled to have the fringe benefit threshold raised to €3,000; according to the legal conversion of Legislative Decree 48 2023, a new Fringe benefits threshold has been agreed only for employees with dependent children: up to 3 thousand euros without taxes.
However, laws relating to Fringe Benefits may be subject to change from year to year, so it is important to consult local laws periodically to determine who is entitled to which benefits.
How are Fringe Benefits taxed for the company?
The taxation of Fringe Benefits may vary based on the type of benefit and current tax laws.
Fringe Benefits are tax-free, for both the employee and the employer, which makes them a significant tax advantage for the company too.
However, it is essential to keep in mind that some forms of Fringe Benefits may instead be subject to tax, especially if they exceed certain thresholds or if they are considered taxable income.
In conclusion, Fringe Benefits represent an important part of the compensation package offered to workers by many companies.
These advantages - if well managed - can improve employee satisfaction, company productivity - in both qualitative and quantitative terms - and the company's competitiveness on the labor market.
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