Need of the Fringe benefits:

1. Employer's preference for the Fringe benefits than the Hike: employers also prefer Fringe benefits to play Hike, as the Fringe benefits motivate the employees for better contribution to the organization. It improves morale and works as an effective advertisement.

2. Pressure from the trade unions: A trade union competes with each other for getting more and new variety of the Fringe benefits to their members such as life insurance, beauty clinics. If one union succeeds in getting one benefit, the other union persuades management to provide a new morale fringe. Thus, the competition among trade unions within an organization results in more and varied benefits.

3. To improve human relations: human relations are maintained when the employees are satisfied economically, socially, and psychologically. Fringe benefits satisfy the worker's economic social and psychological needs. Consumer stores, credit facilities, canteen, recreational facilities etc. satisfy the worker's social needs, whereas retirement benefits satisfy some of the psychological problems about the post retirement life. However, most of the benefits minimize economic problems of the employees. Thus the Fringe benefits improve human relations.

4. As a social security: social security is a security that society furnishes appropriate organization against certain risks is contingencies of life are exposed. These risks are employees has to provide various benefits like safety measures, compensation in case of involvement of workers in accidents, medical facilities etc. with a view to provide security to his employees against various contingencies.

5. As per the employee demands: employee demand a more and varied types of the Fringe benefits rather than pay hike because of reduction in tax burden on the part of employees and in view of the galloping price index and cost of living.