Every organization follows a suitable remuneration policy with the sole intention of keeping the morale of it employees high and retaining the best talent. While structuring an appropriate remuneration package there are several important aspects which need to be taken into account. Apart from the regular benefits, there are several other benefits and services which provided to the employees. These are also known as fringe benefits which hold special attraction for them as these represent increased earnings. In fact, some employees prefer indirect remuneration to direct pay. From the Income Tax point of view any rise in direct components of a pay tends to entail a higher tax burden. On the other hand benefits of an indirect nature are advantageous to the employees. Besides, there are economic reasons why benefits are preferred by the employees. Health and life insurance policies can be subscribed by the employer at a lower premium which are also known group insurance schemes.


Employers too prefer method of remunerating through indirect payments. As employees associate themselves with any organization on a longer time horizon where not only his immediate economic needs are satisfied but also the future needs too are protected with attractive fringe benefits. Besides, vacations along with holidays and rest breaks help them to mitigate fatigue and enhance productivity during the working hours. Similarly retirement, health care and disability benefits may allow workers to be more productive by freeing them of concerns about medical and retirement prospects. Thus it can be said that the indirect remuneration helps in mitigating fatigue, guarding against labor unrest, satisfying employee objectives, aiding recruitment, reducing employee turnover and minimizing overtime costs.


These kind of beneficial payments also contributes in a great way in building up a good corporate image. Schemes like housing, educational institutions and recreational activities bring benefits to the society at large. In the case of some, the benefits are direct. For a sports event or a school run by the company, the company draws people not only from the employees but also from the surrounding communities. In others, such as housing, there are indirect gains in terms of reduced pressures on the limited living accommodation and release of public funds for additional housing programs. An organization with a remuneration policy structured on these welfare considerations can successfully introduce changes without much resistance.

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