Fringe Benefits

CHAPTER II

Review of Related Literature

Introduction

The goal of this chapter is to give information that is related to Fringe Benefits, Employees Productivity and Effect of Fringe Benefits on Employees Productivity. A Theoretical Review (with reference to the Expectancy Theory, Need Theory and Total Reward Model), Realistic Literature Review and a Conceptual Framework that shows the relationship between the variables stated in the study.

Fringe Benefits

Philippines is one those countries who spend a lot in giving fringe benefits to their employees, according to the 2013 Asia Pacific Benefits Trend conducted by Towers Watson. Based on their survey 74% of those who participated make strategy for the benefits that they offer, those organizations use fringe benefits to retain and attract most qualified employees and further enhance their productivity (Caren, 2014). Some recent studies also consider the effects of fringe benefits to employee turnover, unemployment and wages (Dalse-Olsen, 2004), while others also study on specific fringe benefits (Ommeren & Guttiérez, 2010).

Fringe benefits main goal is to help their employees on living a quality life that includes protection and financial security for their workers including their family members. As indicated by Long (2006), benefits are a type of unusual pay inside a pay framework. They are rewards (other than wages, compensations or execution related installments) that employees get as an end-result of their continued service in the organization. They are intended to shield representatives and their families from loss of salary due to medical issues or other business related monetary interruptions, and can enhance the employees’ general personal satisfaction through unique projects and administrations in the working environment. These are some of the fringe benefits offered in the Philippines as stated by Caren (2014): housing, vehicles, expense allowance, foreign travel expenses, vacation and holiday expenses, education, health or light insurance, and household personnel.

Pros and Cons: Offering Employee Benefits

        Fringe benefits may still bring disadvantage and advantage to the company. As stated by FindLaw (2013), a Thompson Reuters Business, we should consider these pros and cons before having the benefits in the company:

THE PROs

• Fringe benefits can help attract and retain employees, especially the benefits about health insurances.
• There will be tax advantage from the fringe benefits after plan contributions.
• Businesses can have their savings because employees will often  take the benefits offered instead of salary.
• Business owners may be able to get their personal benefits for less compared when they will acquire them from third parties.
• Because of the fringe benefits offered, employee absenteeism and health issues have been reduced.

THE CONs

• On small employers, it became costly to them in higher prices due to greater administration costs.
• Retirement plan design in small businesses has lesser option because of higher cost of administration.
• Administrative overhead cost arises if more benefits is offered by an organization.
• Financial planning became difficult from year to year since the cost of health insurance kept on rising.
• The company may incur some legal expenses because the fringe benefits offered might create legal compliance.
• Inappropriate benefit plan may lead the organizations to costly litigation or to regulatory fines.

PRODUCTIVITY

        According to Price Waterhouse Coopers (2013), productivity is important an economic progress of any country. It is said that productivity is one of the measurement of nation's prosperity and of the well-being of every person.