Which statement about fringe benefits is true?

• A. Cheaper for businesses and employees to be motivated
• B. More staff turnover
• C. Higher taxes for the business
• D. Longer working hours

Answer: (A)

Fringe benefits are extra rewards given to employees beyond their cash pay, like pension contributions, private health cover, a company car, or meal vouchers. They can be a cheaper way to motivate and retain staff because the value of these benefits is often high to the employee while the direct cash cost to the business can be lower than a wage increase. The employer can also claim these benefits as business expenses, and some benefits have favorable tax treatment for employees, making the overall value feel greater without a big cash hit. So, it’s common for fringe benefits to deliver motivation and loyalty at a lower cost to both sides compared with paying higher salaries. The other statements don’t fit: fringe benefits don’t inherently cause more staff turnover, they don’t automatically raise a business’s taxes, and they don’t force longer working hours.