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.