Salary and fringes definition

What is Salary and Fringes?

Salary and fringes is the total amount of compensation that will be paid to an employee . This amount includes not only base pay, bonuses and commissions , but also all fringe benefits, such as medical insurance, life insurance, and pension payments. When evaluating several job offers, a person should compile the entire amount of salary and fringes in order to derive a comparable amount of compensation being offered by each prospective employer . As part of the staffing evaluation, the human resources department should determine the salary and fringes figure for each position.

Components of Salary and Fringes

A salary and fringes compensation package will likely include a number of the following components:

Salary . This is the primary compensation paid to an employee, which is designated as a fixed annual sum, and paid out proportionally in each pay period, irrespective of the number of hours actually worked.
Commission . This is a percentage of the revenue, gross margin, or profit generated from the sale of a product or service.
Stock options . These options give the holder the right to purchase employer shares as of some future date at a fixed exercise price.
Pension . This is the employer’s contributions to an employee’s retirement account, or a fixed periodic payout during the retirement period.
Paid time off . This is the amount of time off allowed for all reasons, including vacations, sick time, and holidays.
Company car . The employer may grant an employee the use of a car; this is especially common for senior positions and salespeople.
Tuition assistance . This is reimbursement for training costs incurred by the employee, and may include the complete cost of earning a degree.
Medical insurance. This insurance covers health, dental, and vision care.
Life insurance . This is a fixed amount of insurance coverage paid to an employee’s beneficiaries if the person dies.
Disability insurance . This policy pays benefits to an employee who is disabled for an extended period of time.