What is Flexible Benefit Plan – FBP
Flexible Benefit Plan– FBP can be understood as a payment convenience tool for the employees. Employees are the greatest asset of a company. Conventionally every company had a predefined way of dispatching salary to its employees. But in the contemporary world, companies plan to grant much more liberty to their employees.
The Flexible Benefit Plan is one such means to authorize this liberty to the employees with respect to the restructuring of their allowances.
We will help you understand further –
Flexible Benefit Plan – FBP
A Flexible Benefit Plan enables the employees to have firm control over their salary and the package that accompanies it. With the help of FBP, an employee can structure the components of their pay as per their own requirement and will.
Many companies offer allowances for housing facilities, travel expenses, and other such benefits to their employees. These allowances are managed in a specific way and paired up in a salary package for the employees.
You may also like to read : What is CTC?
The Flexible Benefit Plan provides the employee with an option to avail the amount instead of the allowance. FBP also enables the employee to allocate the provision of allowance from one kind to another. Selecting the right platform for your FBP software is a very crucial step.
Components of Flexible Benefit Plan – FBP
Every company provides certain components under which the employees get their salary. These components are termed as FBP components, i.e., Flexible Benefit Plan Components.
These components are broadly divided into two subcategories named as Annual component and the Monthly component.
Monthly Component
Every employee receives a default amount of their salary every month. This amount is known as the monthly component. Companies pay employees for conveyance, Vehicle lease, and other such expenses under the category of the monthly component.
Annual Component
This component comprises of expenses that are claimed by the employees apart from their basic salary. This amount is only credited to the employee when they present the required claim along with other details of the expenditure. Until the claim is filed, the amount remains with the company.
Travel expenses, mobile bills, and similar expenditures related to the company’s working can be reimbursed via claims and fall under the category of Annual Component.
Policies of Flexible Benefit Plan
Every company has a specific cap to the extent of allowances that can be provided to an employee in a year. This amount is termed as the FBP total. The FBP plan refers to the structure decided by the employee about the amount of money that they wish to allot under the monthly and annual component.
You may also like to read : What is Sabbatical Leave?
Numerous companies present an FBP plan to their employees at the beginning of the FBP year or at the time of their joining. Flexible Benefit Plan come with predefined policies. Some of those policies are :
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Mutual Exclusion Policy:
Mutual Exclusion policy refers to the scenario where the employee and the employer mutually define the component to be exclusive. In such a state, all the related components which cannot be declared are also supposed to be defined. Depending on the mutual exclusion policy, the employee is entitled to declare any of the components as mutually exclusive.
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Quantity Based Policy:
When the admin mentions the specific base value of a component while declaring it, the component falls under the quantity based policy. Depending upon the base value declared by the manager, the employee can select the quantity. Addressing both, the manager declared and the employee selection, the final declaration amount is drawn out.
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Opt-In Policy :
The Opt-In Policy refers to the scenario when the manager recognizes a component as Opt-In. When an employee decides to opt for a component, the amount set for that component is declared automatically. The employee is not given the liberty to modify this amount as it is fixed by the admin.
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Dependent Policy :
This policy comes into action when the manager declares a component as dependent on the other component. A link between the two components is drawn by the company. In such scenarios, when one of the dependent components is declared, the other components linked to it must also be declared.
FBP Amount Allocation
The Flexible Benefit plan helps the employer frame a proper plan with specific amounts under different components. This is termed as a Flexible Benefit Plan allocation.
With the FBP allocation, the amount under each component is termed as allocation amount. This enables the company and the employer to present a tabulated format of all the components of the employee to structure and decide upon.
Conclusion
Flexible Benefit Plan enables the admin as well as the employee to exercise a better experience of dispatching and structuring salaries. With a good FBP, both the parties are entitled to easy functioning and hassle-free customization.
Along with FBP, you can also opt for other HRMS software like Expense Management Software and Employee Management Software offered by Juntrax Solutions, for a better working environment, enhanced management and convenient functioning.
Crafted by Aditi Srivastava
Optimised by Ayush Shukla
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