Thanks to flexible remuneration, the worker receives a remuneration in the form of services and products at below market prices. Furthermore, workers can benefit from a total or partial tax exemption, whereby they can avoid or reduce the personal income tax (IRPF) payable on these products and services, since they pay for them from their gross salary.
In Keys for understanding flexible remuneration (I), we looked at what this type of remuneration is, what the requirements for flexible remuneration are, and what products might be included in such a package.
Who can request a flexible remuneration package?
When a company offers the option of requesting a flexible remuneration arrangement, this offer may be made to different groups of workers. For example, the company may offer a flexible remuneration package to office workers, but not to factory staff. It may also offer a set of particular products. This is why thinking about offering a flexible remuneration package is very often more of a delicate matter in practice than on paper.
Opting for the arrangement is entirely voluntary. Workers will be able to choose their package (services and products) which the Human Resources department has selected, since not all companies offer the same services.
Advantages of flexible remuneration
Flexible remuneration offers a number of advantages for both the worker and the company.
Advantages for the employee
Short and long-term saving
Workers who opt for flexible remuneration (never more than 30% of their salary) notice the saving immediately. These savings may be made in regular, everyday expenses such as meals, or in long-term expenses such as a pensions plan.
With flexible remuneration, many salaries can benefit from a more favourable IRPF withholding; since this tax is calculated by brackets, the worker should pay less. For example, if a worker earns just a little over 23,000 euros a year, with flexible remuneration a saving of almost 2,300 euros could be made. This is because the IRPF withholding would fall from almost 12% to 4%, thanks to a decrease in the gross annual salary and the corresponding taxable amount.
Assistance with reconciliation of family and working life
Workers with a flexible remuneration arrangement who have childcare vouchers can take advantage of the tax benefits of these vouchers, and they will also find it easier to reconcile family and working life.
Freedom of choice of products and amount allocated
Opting for a flexible remuneration package is always voluntary. Therefore, it is the worker who decides if they wish to take up the package offered by the company and what products or services they wish to take advantage of.
A sense of belonging to the company
When the worker senses that they really form part of the company, in other words, that the company is making an effort to offer them better conditions, this is when their commitment and their sense of belonging increases.
Advantages for the company
Talent is attracted and retained
When a company offers a flexible remuneration arrangement, it attracts more candidates (especially in some sectors). In fact, for many workers this may very often be a decisive factor when negotiating and deciding which company to choose.
The purchasing power of the worker increases without them losing any of their salary
Flexible remuneration does not represent an additional salary cost for the company. On the other hand, the company can offer its workers a higher salary.
Productivity is increased and absenteeism is reduced
When workers feel looked after by the company and they are happy with the way they are treated, absenteeism at work falls, as does the employee turnover rate.
Employer branding is improved
When a company offers flexible remuneration, it is providing added value and it reinforces the company culture among the workers. Furthermore, flexible remuneration leads to greater employee commitment, increasing their motivation and well-being. (And consequently the employee turnover rate decreases).
Wage competitiveness improves
Flexible remuneration enables the worker to earn more without it costing the company more. Furthermore, remuneration efficiency is achieved, that is to say, not only does the company not pay any more, but it pays better through an optimized system.
Now that you know what flexible remuneration is and what advantages it has, the question is: How is it implemented?
How to implement a flexible remuneration arrangement
Define the benefits strategy
The Human Resources department is responsible for implementing a flexible remuneration arrangement. To do so, it must take account of the following points:
• The budget: An SME does not have the same clout as a multinational when it comes to negotiating a life assurance or health insurance policy.
• Profile of the company
• Characteristics of the workforce: for example, sales staff usually have a flexible remuneration package, since their work is linked with the achievement of sales and commercial targets.
Choose the benefits
It is the company that chooses what benefits it wishes to offer its employees.
Design the package
Experts in charge of creating the package and offering it to the employees must look for the tool that best suits their needs. There are centralized platforms that bring all the benefits together in a single solution, which is quick, automated and easy to use. In this way, unnecessary workloads and contracts with intermediaries are avoided.
Communication inside the company
For the package to be a success, the best thing is to talk to the workforce and sound them out to learn of their needs. In this way, the benefits in the package created will be the most appropriate for the team of staff (and the most requested).
Evaluation and analysis
The success of the flexible remuneration package will be measured by the demand for it among the workers.
Flexible remuneration and the payslip
When a worker opts for the flexible remuneration package, this is shown on their payslip. To be specific, in the accruals and earnings section. At Rosclar, we help companies ensure that flexible remuneration is correctly applied to workers’ payslips, because we are aware that through our payroll services we can help you with one of the most valuable assets of your company, your employees.