Perks

Perks are perquisites that come in the form of additional benefits beside regular remuneration, primarily expected by senior employees such as company cars, private health insurance, and gym memberships.
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Definition

Perks are informal terms for perquisites, which are benefits arising from employment in addition to regular remuneration. These are often considered privileges mainly expected by senior employees. Examples of perks include a company car, private health insurance, gym memberships, or even free meals and travel allowances.

Examples

  1. Company Car: A senior manager at a corporation may be provided with a company car for both professional and personal use.
  2. Private Health Insurance: A director is offered private health insurance coverage that extends to their immediate family, improving their overall wellness.
  3. Gym Memberships: As part of an employee wellness program, certain managerial positions come with free memberships to high-end gyms.
  4. Stock Options: Senior executives might receive stock options as part of their compensation package, allowing them to purchase company shares at a future date and at a locked-in rate.

Frequently Asked Questions (FAQs)

Q1: Are perks considered part of the taxable income?

A1: Yes, many perks are considered as taxable income. For example, a company car used for personal reasons is often subject to taxation.

Q2: How do perks differ from regular employee benefits?

A2: Perks are additional benefits beyond regular employee compensation, often targeted at senior or high-ranking employees, whereas regular benefits, like health insurance, may be available to all employees regardless of rank.

Q3: Can perks influence employee retention and satisfaction?

A3: Absolutely. High-quality perks can significantly increase employee satisfaction and loyalty, making the organization a more attractive place to work.

Q4: Are there any downsides to offering too many perks?

A4: Offering excessive perks may lead to perceptions of inequality among employees and can be costly for the company to maintain. There’s also the risk of employees becoming entitled.

Q5: Are perks operational in all industries?

A5: While perks are common in many industries, especially in corporate and tech sectors, their prevalence and types may vary across different fields.

  1. Benefits In Kind: These are additional non-cash perks or compensations employees receive from their employer, often adding to their taxable income.
  2. Shareholders’ Perks: These are benefits or privileges granted to shareholders of a company, such as discounts on the company’s products or services.
  3. Retirement Benefits: Compensations received post-retirement in the form of a pension, gratuity, or provident fund.
  4. Performance Bonuses: Financial rewards linked to the successful meeting of performance targets or objectives.

Online References and Resources

  1. IRS Guidelines on Fringe Benefits
  2. Investopedia: Perquisites
  3. Glassdoor: Employee Benefits Reviews

Suggested Books for Further Studies

  1. Employee Benefits and Executive Compensation by Adam N. P. Sabath
  2. Employee Benefits Design and Planning: A Guide to Understanding Accounting, Finance, and Tax Implications by Bashker D. Biswas
  3. Compensation by George T. Milkovich, Jerry M. Newman, and Barry A. Gerhart

Accounting Basics: “Perks” Fundamentals Quiz

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