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Employee benefits and compensation plans determine what worker receives both in the form of wages and various non-wage benefits in addition to their normal salaries. Non-wage benefits can include health and/or life insurance, income protection, retirement benefits, tuition reimbursement, child daycare, vacation, sick leave, bonuses, and other benefits. The purpose of these benefits is to increase the financial security of employees, which serves the dual purpose of increasing worker effectiveness and loyalty while reducing turnover. Employee benefits are also sometimes called fringe benefits, perquisites, or perks. Some non-wage employee benefits are excluded from the employee's gross income, and therefore are not subject to income tax.
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