Perquisites (Perks)
Special privileges or benefits beyond standard compensation packages, ranging from executive-level perks like company jets and club memberships to everyday workplace perks like free meals and flexible schedules.
- What Are Perquisites (Perks)?
- Categories of Workplace Perks
- Perks vs Benefits: Understanding the Difference
- Tax Treatment of Perks
- How to Design an Effective Perks Program
- How Perks Have Changed Over the Decades
- Executive Perks and SEC Disclosure Requirements
- Measuring the Impact of Your Perks Program
- Frequently Asked Questions About Perquisites (Perks)
What Are Perquisites (Perks)?
Key Takeaways
- ✓Perquisites, commonly called perks, are non-salary benefits and privileges that go beyond standard compensation, ranging from free coffee to corporate jets.
- ✓The word comes from the Latin "perquisitum," meaning something acquired or gained, and has been part of employment terminology since the 17th century.
- ✓68% of employees consider perks a top factor when evaluating job offers, making them a real recruitment tool, not just a feel-good expense (Glassdoor, 2023).
- ✓Executive perks (cars, housing, club memberships) must be disclosed in SEC proxy statements for publicly traded companies.
- ✓The best perks programs align with company culture and employee demographics rather than copying what other companies offer.
Perquisites are special privileges or advantages that come with a position. In HR, the term covers everything from executive-level benefits like company-provided vehicles and first-class travel to everyday workplace extras like free snacks, flexible work hours, and employee discount programs. The line between perks and fringe benefits isn't always clear. Generally, fringe benefits are formal, structured elements of the compensation package (health insurance, retirement plans, paid leave), while perks are more informal or discretionary. Free lunch is a perk. Health insurance is a fringe benefit. A gym membership sits somewhere in between. What matters more than the label is the impact. Perks signal what a company values. A company that offers unlimited PTO values autonomy. A company that provides free meals values keeping people in the office. A company that pays for conferences values professional growth. Employees read these signals clearly. That's why 68% of job seekers say perks matter when evaluating offers.
Categories of Workplace Perks
Perks fall into distinct categories based on their cost, target audience, and purpose. Understanding these categories helps HR teams build balanced programs.
Executive perks
Senior leaders often receive perks that aren't available to the general workforce. Common executive perks include company cars or car allowances ($10,000 to $25,000 annually), club memberships (golf, social, business clubs), first-class or private air travel, executive health programs with concierge medical services, financial planning and tax preparation services, supplemental executive retirement plans (SERPs), and severance packages with extended benefits. For publicly traded companies, the SEC requires disclosure of executive perks exceeding $10,000 in aggregate in annual proxy statements. The SEC has been tightening its scrutiny: in 2023, several companies faced enforcement actions for failing to disclose executive perks like personal use of corporate aircraft.
Workplace environment perks
These perks make the physical work experience better. Free or subsidized meals and snacks, on-site fitness centers or gym subsidies, game rooms, nap pods, and relaxation spaces, standing desks and ergonomic equipment, on-site childcare or childcare subsidies, laundry and dry-cleaning services, and pet-friendly office policies. Google famously pioneered many of these. But smaller companies can offer workplace perks without Google's budget. A weekly catered lunch ($15 per person) costs about $780 per employee per year, and teams consistently rate it as one of their favorite perks.
Flexibility and lifestyle perks
Post-2020, flexibility perks have become the most requested category across all age groups. Remote work options (fully remote, hybrid, or flexible office days), flexible work hours or compressed workweeks (four 10-hour days), unlimited or generous PTO policies, sabbatical programs after a set tenure, summer Fridays (half-days or days off during summer months), and "no meeting" days or weeks. Buffer's 2024 State of Remote Work report found that 98% of remote workers want to continue working remotely at least some of the time. Flexibility isn't a perk for many workers anymore. It's an expectation.
Development and growth perks
Learning-focused perks attract ambitious employees and build long-term capability. Conference attendance budgets ($1,500 to $5,000 per year), book allowances or learning stipends, internal mentorship programs, rotation programs across departments, paid time for side projects or innovation (Google's "20% time" model), and speaker series or lunch-and-learn events. LinkedIn's 2024 Workplace Learning Report found that 94% of employees would stay longer at a company that invests in their learning and development.
Financial perks beyond standard benefits
These perks address employees' financial lives outside of retirement and insurance. Employee stock purchase plans (ESPPs) at discounted rates, referral bonuses for successful hires ($1,000 to $10,000 depending on role), spot bonuses and recognition rewards, commuter benefits (transit passes, parking, bike stipends), employee discount programs (corporate rates on phones, travel, entertainment), and relocation assistance for new hires. Some companies get creative: Airbnb gives employees annual travel credits. Spotify offers free premium accounts. Patagonia provides on-site childcare and encourages employees to go surfing when the waves are good.
Perks vs Benefits: Understanding the Difference
The terms are often used interchangeably, but there are meaningful distinctions that affect how HR teams plan, budget, and communicate them.
| Dimension | Perks (Perquisites) | Benefits (Fringe Benefits) |
|---|---|---|
| Formality | Informal, discretionary | Formal, contractual |
| Legal requirements | Rarely mandated | Many are legally required |
| Administration | Simple to set up and change | Requires compliance, enrollment, reporting |
| Tax treatment | Varies (many are taxable) | Many have specific tax exclusions |
| Cost to employer | Usually lower per-item cost | Typically higher cost (health insurance, retirement) |
| Employee expectation | Nice to have | Expected as standard |
| Recruitment impact | Differentiator | Table stakes |
| Examples | Free meals, game rooms, flexible hours | Health insurance, 401(k), PTO, disability |
Tax Treatment of Perks
The IRS has specific rules about which perks are taxable and which aren't. Misclassifying a perk can create problems during an audit.
Tax-free perks (de minimis benefits)
Under IRC Section 132, certain small-value perks are excluded from taxable income as "de minimis" benefits. These include occasional snacks, coffee, and soft drinks, occasional personal use of a company copier, holiday gifts of low value (not cash or gift cards), occasional meal money or taxi fare for overtime work, and flowers or fruit for illness or family events. The key word is "occasional." A daily free lunch might cross the line from de minimis to a regular benefit that needs to be reported. The IRS doesn't set a specific dollar threshold for de minimis benefits, but $75 per occurrence is a commonly used guideline.
Taxable perks
Most perks with significant value are taxable as compensation. Personal use of company vehicles (reported on W-2 using IRS-approved valuation methods), gym memberships paid by the employer, gift cards of any denomination (always taxable, regardless of amount), personal travel on company aircraft, and club memberships used for personal purposes. Employers must track the fair market value of taxable perks and include them in the employee's W-2 income. Failure to report taxable perks is a compliance risk that the IRS actively audits.
Working condition fringe benefits
If a perk is something the employee could deduct as a business expense if they paid for it themselves, it's generally tax-free. Professional development (conferences, courses, books), work-related subscriptions and software, business travel (flights, hotels, meals during travel), and professional association memberships all qualify. The benefit must be directly related to the employee's job duties. A marketing manager's Canva subscription is a working condition benefit. Their Netflix subscription is not.
How to Design an Effective Perks Program
The best perks programs aren't built from a list of trendy offerings. They're designed around what employees actually want and what the company can sustain.
Survey before you spend
Before adding any new perk, ask employees what they'd value most. A simple survey with 10 to 15 options ranked by preference will reveal surprises. Many HR teams discover that employees would rather have an extra PTO day ($0 cost beyond lost productivity) than a ping-pong table ($2,000 cost). Qualtrics' 2024 Employee Experience Trends report found that the top three desired perks were flexible work arrangements (78%), additional PTO (65%), and professional development support (52%). Free food ranked 8th.
Align perks with culture
Perks should reinforce what the company stands for, not contradict it. A company that claims to prioritize work-life balance but only offers perks that keep people in the office (meals, gym, dry cleaning) is sending a mixed message. A company that values health might offer gym stipends, healthy meal options, and mental health days. A company that values learning might offer conference budgets, tuition support, and internal mentorship programs. A company that values community might offer volunteer days, matching charitable donations, and team experiences.
Set a sustainable budget
WorldatWork's 2024 survey found that the median per-employee spend on non-insurance perks ranges from $2,000 to $5,000 annually. Start with a budget you can maintain for at least 3 years. Giving a perk and then taking it away is worse than never offering it. Employees anchor on perks quickly. Removing a perk feels like a pay cut, even if it was technically free. Some of the most valued perks cost nothing: flexible scheduling, work-from-home options, casual dress codes, and meeting-free days.
How Perks Have Changed Over the Decades
Workplace perks have evolved dramatically. What counted as a generous perk in 1990 looks ordinary today.
1990s to 2000s: The basics era
Company cars for managers. Holiday parties. A coffee machine in the break room. Maybe casual Fridays. Perks were simple and mostly reserved for senior employees. The idea that every employee deserved perks beyond their salary and benefits was still emerging.
2005 to 2015: The Silicon Valley arms race
Google, Facebook, and other tech giants turned perks into a recruiting weapon. Free gourmet meals, on-site laundry, nap pods, game rooms, on-site haircuts, and even shuttle buses with Wi-Fi. The perks became part of the employer brand. "Come work at our amazing campus" was the message. Other industries followed, though usually with smaller budgets. The problem: these perks were designed to keep people at the office longer, blurring the line between benefit and manipulation.
2020 onwards: The flexibility revolution
The pandemic changed everything. Employees stopped caring about office perks and started asking for remote work, flexible hours, and mental health support. Companies that couldn't or wouldn't adapt lost talent. Today's most valued perks aren't things. They're freedoms: the freedom to work from home, the freedom to set your own hours, the freedom to take time off without guilt. Physical perks still matter for in-office workers, but they've dropped below flexibility in every survey since 2020.
Executive Perks and SEC Disclosure Requirements
For publicly traded companies, executive perks aren't just an HR decision. They're a legal and governance matter with specific disclosure obligations.
What must be disclosed
SEC rules require companies to disclose all perks and personal benefits provided to named executive officers (CEO, CFO, and the three other most highly compensated officers) if the total value exceeds $10,000 in a fiscal year. Each perk worth more than $25,000 or 10% of the total must be identified and quantified individually. Common disclosures include personal use of corporate aircraft (often the largest item, valued at $100,000+ per year for frequent users), security services, company car or car allowance, club memberships, financial planning services, and tax gross-ups on perks.
Recent enforcement trends
In 2022 and 2023, the SEC brought enforcement actions against several major companies for failing to disclose executive perks. The message was clear: the rules aren't optional. Companies now need better internal controls to track executive perks, calculate their value accurately, and ensure they appear in proxy statements. Compensation committees should review executive perk policies annually and ensure legal counsel signs off on proxy disclosures.
Measuring the Impact of Your Perks Program
Perks cost money, so you need to know whether they're delivering results. Track these metrics to evaluate your program's effectiveness.
Metrics that matter
Utilization rates tell you whether employees actually use each perk. If only 12% of employees use the gym membership subsidy, it might not be worth the cost. eNPS (Employee Net Promoter Score) changes after introducing or modifying perks show impact on satisfaction. Exit interview data revealing whether departing employees mention perks (or their absence) as a factor. Offer acceptance rates before and after enhancing your perks package. Glassdoor ratings and employee comments about perks provide qualitative feedback from the people who matter most.
Frequently Asked Questions
What's the difference between perks and fringe benefits?
Are perks taxable for employees?
How much should a company spend on perks?
Do perks actually help with recruitment?
What are the most popular perks employees want in 2025?
Written by Adithyan RK