What is statutory or mandatory benefits ?
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Fringe benefits are components of a company’s benefit package. They are usually considered as extra benefits on top of the mandatory benefits. They help, as supplemental benefits, the company to retain and attract high-quality talents.
The following article will help you understand what are fringe benefits and why businesses should offer a comprehensive benefit package to retain and attract high-quality talents. ⬇️
Fringe benefit meaning
Fringe benefits are additional and optional perks above regular salary that businesses can offer their team members. They supplement an employee’s normal salary.
Businesses usually offers them to create a competitive a comprehensive benefit package which help them to attract and retain the best talents.
As an employer, you can choose to offer fringe benefits to all your employee or to create specific benefits package depending on the position, seniority or even on the location the employee works.
Learn more about:
- Employee Supplemental Benefits
- Employee Mandatory Benefits
- Global Employee benefits – Our Guide
Differences between statutory, supplemental and fringe benefits
- Statutory benefits:
Employee statutory benefits are any forms of compensation, in addition to base salary, which are required by law. Statutory benefits are non-negotiable employee rights and varies by country, region, economic union membership, industries, or worker categories. They typically are related to basic employee rights as paid time off, leave entitlement, and other contributions to statutory social security schemes.
Know more about mandatory or statutory benefits.
- Supplemental benefits:
Employee supplemental benefits are optional benefits and complement the mandatory benefit package. They are offered by employers to improve employees’ quality of life and overall job satisfaction. Supplemental benefits can be health, dental and vision insurance, life insurance, disability insurance, and health and wellness programs.
Know more about supplemental benefits.
- Fringe benefits:
Unlike employee statutory benefits, fringe benefits are optional. They’re often referred to as benefits-in-kind and are designed to improve retention and attracts talents. Examples of fringe benefits include gym membership, house allowance, co-working space…
While there is some overlap between supplemental and fringe benefits, the main difference is their purpose. Indeed, supplemental benefits are usually designed to meet employee basic needs are may includes health, dental or vision insurance. On the contrary, fringe benefits are consideed as a plus and improve employees’ wellness.
Key differences
Common types of fringe benefits in Latin America
They vary from a country to another as each country has its own set of requirements. Let’s look together at the most common in Latin America
Wellness Programs
Some businesses in Latin America will provide their employees with wellness programs to keep their team happy and healthy. Wellness benefits would include gympass, free healthy food, fitness classes and so on.
Co-working space
Not everyone working remote is keen to work at home every day. That’s why the company can offer their tam members a subscription to a co-working space.
Professional Development stipends
Corporate training encourage employees to sharpen their skills and develop new ones. Investing in education will help to build trust and boost employee retention.
Work-from-home options
In the post-COVID workplace, remote work has become a common trend. And businesses can implement flexible policies regarding remote work. According to a Forbes Study:
37% of employees said the option to work from home is important even for an in-office role, echoing the need for work-life balance.
Benefits of offering non-mandatory benefits
The employees’ expectations of higher pay and richer benefits have raised in the wake of Covid-19. Offering fringe benefits has numerous advantages and can benefits both employers and employees. Let’s take a look at the outcomes:
Attract top talents
These days, businesses face numerous challenges as skills shortage or great resignation. Employees expect more from their employers, so organizations need to go beyond the standard competitive pay to hire the talent they need.
According to a Glassdoor survey, salary alone is no longer the primary motivator when evaluating a job offer. Non-mandatory benefits are often one of the most important factors for employees when considering a company. Prospective talents consider non-statutory benefits as a sign of a friendly workplace that supports work-life balance and professional growth.
By implementing strategic benefits packages, employers can stand out from competitors and give their business the edge.
Boost engagement
Before digging deeper into the link between benefits and engagement, let’s ensure we define properly the term “engagement”. Employee engagements is the emotional commitment that employees have toward their company.
As a matter of fact, the happier your employees are, more productive and engaged they’re likely to become. According to Benify employee benefits report, employee which are satisfied with their benefits package estimate their level of engagement 11.5% higher than the average.
When a business designs and offer a robust benefits package which fits employees’ needs, it fosters a positive loop of heightened engagement.
Improve retention
A business striving for long-term success knows that retention is an essential component of any workplace. One of the most effective tools to cutting down turnover rates is a well-plannedd benefit package.
According to the study Employee Retention: What Makes Employees Stay or Leave, most of the respondents pointed out their employer and benefits package as the primary reasons for leaving.
Another study conducted by Forbes points out that 1 in 10 workers would take a pay cut to have access to better benefits.
Increase employee satisfaction
Fringe benefits can significantly boost employee satisfaction. When your team members feel that their employer genuinely cares about their well-being, they are more likely to stay motivated and engaged.
According to the SHRM Employee Job Satisfaction and Engagement survey, 60% of employees rated benefits as a very important contributor to job satisfaction.
Enhance company culture and productivity
Fostering a positive workplace culture is extreamely important to employee wellness.
Designing benefits package is a large part of creating a strong and positive corporate culture. The result is a happier, more engaged, and more focused workforce that feels connected to their employer and believes in the work they are doing.
FAQ
Check out the most frequent questions !
Are fringe benefits taxable?
In most of Latin America countries, fringe benefits are not taxable.
Are fringe benefits mandatory?
No, fringe benefits are not required by law.
Handling fringe benefits for a global team with Europortage
Manage fringe benefits for a global team is complex especially when it comes to compliance. That’s why we recommend working with a direct and local partner like Europortage.
Our team of local experts is on hand to support you throughout the entire employee lifecycle, including time-off management. We can give you clear advice on fringe benefits, in addition to handling employment contracts, payroll, and benefits. That way, you can focus on growing a world-class team and business.
Get in touch to find out more and start hiring top talent in Brazil and Mexico!
