The flexible remuneration is the offer of a good or service by the company to its employees free of charge or at a cost below market price. This concept, also known as salary in kind, The new "employee mobility" system has gained importance in recent years, as it allows companies to improve the conditions of their employees without increasing their personnel costs.
The cost of this remuneration is reflected in the employee's salary, which can be seen in the following way their conditions are improved by these benefits without this increase entailing an additional cost for the company. In fact, the only cost to the company of offering flexible remuneration is, in most cases, only the cost of managing these plans.
How does Flexible Remuneration work?
Flexible pay is included in the Workers' Statute, which limits such payments to 30 %:
«In no case, including the special employment relationships referred to in Article 2, may the salary in kind exceed thirty per cent of the worker's wages, nor give rise to a reduction in the full amount in cash of the minimum interprofessional wage.»
The most common flexible payments are vouchers for food, childcare, transport or health insurance. Such special remuneration may be established by collective bargaining agreement, in the contract or at the employer's will. However, the unions insist that it is up to the worker to decide whether to accept it or not.
It is important to stress that the company does not profit financially from flexible remuneration, However, employees may be able to make annual savings if they were planning to take out these services anyway. For example, if they get better prices on childcare for their children or a cheaper health insurance policy.
What services are included in a flexible remuneration plan? Benefits
Wages in kind most often include products that count with tax advantages and that are not income taxable for personal income tax purposes..
On the other hand, there are also others such as the health insurance social benefit, In addition, the company offers much cheaper prices, due to the volume contracted, than if the worker were contracted individually.
Let's look at the cases in which flexible remuneration can be given.
1. Food vouchers
Tax exempt up to 11 euros per day per worker.
2. 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. Transport card
Tax-free up to €1,500 per year, with a limit of €136.36 per month.
4. Health Insurance
Exempt up to 500 euros per person per year for the employee, spouse and children. On the other hand, the life insurance has no tax advantages in this case, but it does allow for significant discounts.
5. Life Insurance
As we talked about some time ago, the implementation of the group life insurance in companies allows economies of scale to be applied. In other words, workers would pay much less for it than if they were hired individually.
6. Vehicle leasing
It allows employees to buy a car with tax benefits and all the advantages and services of 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.
From PIB Group Iberia we help companies to implement flexible remuneration and loyalty mechanisms such as these insurance policies, which, in addition to benefiting workers, are a deductible expense and, in the case of health insurance for companies, reduce staff absenteeism.
