Definition
Perquisite (Perk): A perquisite, often called a perk, is any additional privilege or benefit given to employees on top of their regular wages and salaries. These perks can range from common employee benefits like health insurance and pensions to exclusive executive benefits such as company cars, resort vacations, club memberships, reserved parking, and access to corporate aircraft.
Examples
- Company Car: Executives may be provided with a company car for personal and business use.
- Health Insurance: Employees often receive health insurance coverage as a part of their perks.
- Club Membership: High-level executives may be given memberships to exclusive clubs as part of their compensation package.
- Travel Benefits: Resort vacations or business-class travel tickets may be included.
- Reserved Parking: Special parking spaces allocated only for certain employees.
- Stock Options: Options to purchase company stock at a discounted price.
Frequently Asked Questions (FAQs)
What is the difference between benefits and perks?
Benefits are often necessary for employee well-being and employment retention and include things like health insurance and retirement plans. Perks, on the other hand, are supplementary and often tied to enhancing the employee’s lifestyle or convenience, such as gym memberships or company cars.
Are all employees eligible for perks?
No, perks are often tiered according to an employee’s role within an organization. Executive perks are generally more luxurious compared to those available to general employees.
How are perks taxed?
Most perks are considered taxable benefits by the IRS, and their value must be included in the employee’s taxable income. Specific taxation rules can vary depending on the nature of the perk.
- Fringe Benefits: Supplemental benefits provided to employees, which may include health insurance, life insurance, and retirement benefits.
- Employee Benefits: Various types of non-wage compensation provided to employees in addition to their normal wages or salaries.
- Compensation Package: The total of all remuneration and benefits an employee receives, including salary, perks, bonuses, and any other financial compensation.
- Stock Options: Financial incentives that give employees the right to buy company stock at a future date at a predetermined price.
Online References
- Investopedia: Perquisites
- IRS: Taxable Fringe Benefit Guide
- SHRM: Perks Program Checklist
Suggested Books for Further Studies
- “Total Rewards: Everything You Need to Know in 1 Hour!” by T. Willard Fair
- “Strategic Compensation: A Human Resource Management Approach” by Joseph J. Martocchio
- “The Compensation Handbook: A State-of-the-Art Guide to Compensation Strategy and Design” by Lance A. Berger and Dorothy R. Berger
Fundamentals of Perquisite (Perk): Human Resources Basics Quiz
### Which of the following is typically considered an executive perk?
- [ ] Regular health insurance
- [ ] Paid vacation days
- [x] Use of corporate aircraft
- [ ] Year-end bonus
> **Explanation:** Use of corporate aircraft is an executive perk provided mainly to high-level employees, unlike health insurance or paid vacation days, which are common employee benefits.
### Are health insurance plans considered a perk or a benefit?
- [ ] Perk
- [x] Benefit
- [ ] Neither
- [ ] Both
> **Explanation:** Health insurance plans are typically considered benefits rather than perks. Benefits are necessary for employee well-being, while perks are supplementary.
### What type of perk might include a membership to an exclusive club?
- [ ] General Membership
- [ ] Health Benefit
- [x] Club Membership
- [ ] Travel Perk
> **Explanation:** A membership to an exclusive club is considered an executive perk, aimed at enhancing lifestyle.
### Do perks usually form part of the taxable income?
- [x] Yes, most perks are taxable.
- [ ] No, perks are generally not taxed.
- [ ] Only travel-related perks are taxed.
- [ ] Only health-related perks are taxed.
> **Explanation:** Most perks are taxable benefits that must be included in the employee’s taxable income.
### Can stock options be considered a perquisite?
- [x] Yes
- [ ] No
- [ ] Only in certain industries
- [ ] Only for C-level executives
> **Explanation:** Stock options can be considered a perquisite, offering employees the right to purchase company stock at a future date.
### What is a common perk given to sales team members?
- [ ] Meal allowances
- [ ] Extended vacation time
- [x] Company car
- [ ] High-speed Internet at home
> **Explanation:** Sales team members often receive a company car as a perk to facilitate their travel to client locations.
### How are club memberships treated in terms of taxation?
- [x] Included in taxable income
- [ ] Exempt from taxes
- [ ] Varies by club
- [ ] Not considered in taxes
> **Explanation:** Club memberships provided as perks are usually included in the taxable income of the employee.
### What does the acronym 'perk' stand for?
- [x] Perquisite
- [ ] Perception
- [ ] Performance
- [ ] Professional Enterprise
> **Explanation:** 'Perk' is short for Perquisite, referring to additional benefits given to employees beyond their normal wages or salaries.
### Which is NOT an example of a perquisite?
- [ ] Resort vacation
- [ ] Use of corporate aircraft
- [ ] Club membership
- [x] Regular paid time off
> **Explanation:** Regular paid time off is a standard employee benefit, not a perquisite.
### Reserved parking spaces fall under which category?
- [x] Executive perks
- [ ] Standard benefits
- [ ] Volunteer benefits
- [ ] Statutory benefits
> **Explanation:** Reserved parking spaces are considered executive perks provided to higher-level employees.
Thank you for exploring the world of employee perquisites with us and enhancing your understanding through our detailed explanations and quizzes! Keep building your expertise in human resources.
