fringe benefit

fringe benefit

Any nonwage payment or benefit granted to employees by employers. Examples include pension plans, profit-sharing programs, vacation pay, and company-paid life, health, and unemployment insurance. Employers' payments for fringe benefits are included in employee-compensation costs and therefore are not usually taxed. If the cost of fringe benefits were paid directly as wages, the worker would pay taxes on this amount and therefore have less to spend when purchasing equivalent benefits independently.