End-of-year bonus, bonus, mobility budget, training budget, remote working budget,... A whole range of possible budgets in a flexible remuneration plan!
Benefits can be found in all relevant areas of your HR policy, such as well-being, work equipment, mobility, and work-life balance.
Very popular benefits in a flexible remuneration plan are, for example, vacation days, training, bike leasing,....
Benefits in flexible remuneration plans are often chosen based on their popularity among employees (such as smartphones) or their advantageous tax treatment.
Thus, the choice for the benefit "individual pension savings" only has very concrete advantages in a flexible remuneration plan:
In a cafeteria plan, an employee can purchase extra vacation days. These are extra-legal vacation days 🏖 that you get in addition to the legally established number of annual vacation days.
When an employee takes unpaid leave, these days do not count as worked days. The extra vacation days that one purchases through their flex reward plan have no negative impact on the number of effectively worked days.
In a cafetaria plan, an employer can offer the Multimedia benefit. This allows an employee to purchase devices with the budgets in their flexible remuneration plan that can be used for work and personal use.
The types of devices that can be chosen are the following:
During the depreciation period, the employee remains the owner of the device and it is made available to the employee against the charging of a benefit in kind on the payslip. After the depreciation period, the employee has the option to purchase the device for the residual value.
There are 3 'pillars' of pension savings:
The reimbursement of pension savings premiums in the flexible remuneration plan concerns this third pillar: individual pension savings through your bank or insurance broker.
For 2021, the maximum amount of premiums for this type of pension savings was 990 euros or 1,270 euros. An employee can have their individual pension savings premiums reimbursed with a budget in their flexible remuneration plan.
A warrant is a financial instrument that gives the right to buy shares at a predetermined price and time. It is often used in salary packages as a way to reward and motivate employees.
Warrants can be part of the cafetaria plan benefits package because this is a very advantageous system for paying out individual bonuses.
An employee can always choose to have the budgets paid out in a flex income plan under the same conditions as the budgets would normally be paid out if they were not flexibilized.
For example, an employee can always choose to have an end-of-year bonus paid out as usual.
In a flexible compensation plan, the car can be added as a benefit in two ways.
The bicycle can be chosen as a benefit in a flexible compensation plan and is one of the most interesting benefits that can be offered. This is due to the combination of the very favorable tax regime that is attached to it, the larger amounts involved in leasing or purchasing a bike, and the increasing popularity of cycling.
The condition for including a bike lease in a flex income plan is that the employee regularly uses the purchased or leased bike for commuting.
Shared mobility such as car sharing (Cambio, Poppy,...), bike sharing, and scooters can be included in the flexible compensation plan in the context of the legal mobility budget, where the budget for the car to which an employee is entitled but not chosen can be used for expenses in different pillars within which the shared mobility benefit fits.
Subscriptions and tickets for public transport can be included in the flexible compensation plan in the context of the legal mobility budget. The mobility budget is a budget in the flex income plan where the budget for the car to which an employee is entitled but not chosen can be used for expenses in different pillars within which the public transport benefit fits.
Within the legal mobility budget, the option can be chosen to reimburse housing costs with the budget of a non-chosen car to which an employee is entitled in their salary package.
Housing costs include rent and mortgage payments and interests.
Health insurance or an extension thereof (e.g. for family members) can be paid through the flexible compensation plan. This provides greater flexibility in the salary package because the employee can decide to join a hospitalization insurer.
If your hospitalization insurance offers to also insure outpatient care, this can also be included in the flexible compensation package. This outpatient care insurance covers medical expenses that are not covered by the mutual insurance and the hospitalization insurance. This is therefore a very interesting benefit.
Social rights
Using the end-of-year bonus for benefits (such as reimbursement for individual pension savings, IT, bicycle, health insurance) affects the employee's social rights. This is because these benefits (except IT) include an exemption for the employee to pay 13.07% social security contributions (contribution on salary).
This contribution of 13.07% consists of 7.5% for the 'pension fund', 4.70% for the 'sickness and disability fund' and 0.87% for the 'unemployment fund'. Each 'fund' has its own ceilings, which are maximum amounts above which no further rights are accrued. For pensions, this is at a gross salary of approximately EUR 5,000 per month, for sickness and disability it is approximately EUR 3,700 per month, and for unemployment it is approximately EUR 2,700 per month.
It is up to the employee to assess whether the financial benefit obtained with one or more choices in the plan is worth this (minimal) loss of rights.
🤓 For completeness:
Income tax
The end-of-year bonus is heavily taxed.
Example: the employee is entitled to a gross end-of-year bonus (including employer's cost) of €1,000. What about the taxes?👇
By making tax-efficient choices in the cafeteria plan, the employee will to some extent pay less income taxes because with the same budget, he is entitled to one or more benefits in the cafeteria plan. These benefits are more profitable than the mere payment of the end-of-year bonus. ✨
A flexible remuneration plan is a plan in the remuneration package in which certain budgets are selected over which the employee can decide how to use them. But what are the rules surrounding the budgets that can be chosen?
Firstly, it is important to understand that cashing out the budgets, which is always possible in a flexible remuneration plan, comes with a high taxation. It is therefore important to realize which budgets are taxed the highest when selecting a budget.
This often leads us to the End of Year Premium and Individual Bonuses. These fall under the highest extraordinary prepayments. By including these budgets in the flexible remuneration plan, you will therefore gain the greatest advantage.
If an end-of-year premium is paid out in cash, approximately 62% of the budget will go to taxes. Whereas, when purchasing the most advantageous benefits in a flexible remuneration package, no taxes are paid. Below you can find an example of the difference between cash payment of an end-of-year premium and the purchase of a bicycle lease benefit.
Secondly, there is an important condition for making an end-of-year premium flexible. The employee must sign an addendum to the employment contract, in which the employee gives the right to convert that budget into benefits. You can have this done completely in the Payflip platform.
