Flexible remuneration is the offer of a good or service by the company to its employees free of charge or at a cost below the market price. This concept, also known as salary in kind, has gained importance in recent years, since it allows companies to improve employee conditions without increasing their personnel costs.
The cost of this compensation is reflected in the salary of the employee, who can see how his or her conditions improve thanks to these benefits without this increase entailing an additional cost for the company. In fact, the only cost to the company of offering this flexible compensation is, in most cases, only the cost of managing these plans.
How does Flexible Compensation work?
The flexible salary is included in the Workers’ Statute, which limits this type of payment to 30%:
“In no case, including employment relationships of a special nature referred to in Article 2, may the salary in kind exceed thirty percent of the worker’s salary payments, nor give rise to a reduction in the full amount in cash of the minimum interprofessional salary.”
The most common flexible benefits are meal vouchers, childcare, transportation or health insurance. These special payments can be established by collective bargaining agreement, in the contract or at the employer’s discretion. However, the unions insist that the worker himself must decide whether to accept them or not.
It is important to emphasize that the company does not benefit financially from flexible remuneration, but, nevertheless, the employees can make an annual saving if they were thinking of contracting these services anyway. For example, if they obtain more advantageous prices on childcare services for their children or a cheaper health insurance policy.
What services are included in a flexible compensation plan? Benefits
Salaries in kind usually include tax-advantaged products that are not income taxable for personal income tax purposes.
On the other hand, there are also others such as the social benefit of health insurance, in which the company also offers much more economical prices, for the volume contracted, than if the worker were to contract it on an individual basis.
We are going to study in which cases flexible remuneration can be given.
1. Food vouchers
Tax exempt up to 11 euros per day and worker.
Childcare for children up to 3 years of age
No tax exemption limit (with the exception of the Basque Country, where the annual maximum is €1,000).
3. Transportation card
Tax-free up to 1,500 euros per year, with a limit of 136.36 euros per month.
4. Health Insurance
Exempt up to 500 euros per person per year for the employee, spouse and children. On the other hand, life insurance does not have tax advantages in this case, but it does allow for important discounts.
5. Life Insurance
As we discussed some time ago, the implementation of group life insurance in companies allows the application of economies of scale. That is to say, workers would pay much less for it than by contracting it individually.
6. Vehicle leasing
It allows to offer employees the purchase of a car with tax benefits and all the advantages and services of a leasing.
7. Training
Training is also one of the services that benefit from the advantages of flexible remuneration, as long as the subject to be studied is related to the professional activity.
PIB Group Iberia helps companies to implement flexible remuneration and loyalty mechanisms such as these insurances, which in addition to benefiting workers, are a deductible expense and, in the case of health insurance for companies, reduce absenteeism of the workforce.
