Perquisites: Overview, definition, and example
What are perquisites?
Perquisites, often referred to as "perks," are additional benefits or privileges provided to employees, executives, or board members beyond their regular salary or compensation. These benefits may include company cars, stock options, housing allowances, club memberships, or travel reimbursements.
For example, a company may provide its senior executives with corporate credit cards and first-class travel allowances as part of their perquisites package.
Why are perquisites important?
Perquisites are important because they serve as incentives to attract and retain top talent, enhance job satisfaction, and reward employees for their contributions. They can also provide financial and lifestyle benefits that complement an individual’s salary.
For businesses, offering perquisites can help maintain a competitive edge in recruitment and employee retention. However, they must be clearly defined in contracts or policies to avoid misunderstandings or disputes over eligibility and conditions.
Understanding perquisites through an example
A company hires a new CEO and includes a perquisites package in the employment contract. The package provides a company car, executive healthcare coverage, and an annual housing allowance. These perks are in addition to the CEO’s base salary and bonus structure, making the role more attractive.
In another example, a law firm offers equity partners exclusive perquisites such as private office spaces, club memberships, and priority case selection. These perks distinguish senior partners from junior associates and serve as incentives for career advancement.
Example of a perquisites clause
Here’s how a perquisites clause might appear in a contract:
“The Employee shall be entitled to perquisites as outlined in this Agreement, including but not limited to a company-provided vehicle, reimbursement for business travel expenses, and an annual housing allowance. The availability and continuation of such perquisites shall be subject to the Employer’s policies and discretion.”
Conclusion
Perquisites are additional benefits provided to employees or executives beyond their regular salary, offering financial and lifestyle advantages. Clearly defining perquisites in employment contracts ensures transparency and prevents disputes over eligibility. Businesses use perquisites to attract, reward, and retain talent, making them a key component of competitive compensation packages.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.