FLEXIBLE REMUNERATION: THE KEY TO HR’S FUTURE

Today’s employees are looking for much more from a company than a high salary and exciting projects. As a result, research has begun to investigate ways to deliver more value to employees while maintaining the benefits to the business, and one way to deliver that value is flexible pay. One way to deliver that value is flexible remuneration – let’s see what it is and why it is so important!

Flexible remuneration: Savings, social benefits and talent retention

Flexible remuneration is a type of remuneration that employees can use voluntarily. It is similar to social benefits, but in this case the employee decides to allocate a part of his or her gross salary to subsidised products or services, such as: meals, childcare, transport or training. In this way, they can take advantage of services at a lower cost than the market. Flexible remuneration contributes to savings for the employee and the company, as well as to the retention of talent: offering subsidised services such as additional training for employees, childcare or transport increases the emotional salary.

Flexible Remuneration: 7 keys to understanding it

All matters to do with tax issues can seem confusing. Flexible remuneration is no exception, as it can also be confused with other concepts, such as social benefits. Here are 7 keys to understanding it:

  • The reason for this type of remuneration: the Administration considers that just for carrying out a professional activity, the employee has associated expenses that they should be able to deduct from their salary.
  • How it relates to personal income tax: this type of remuneration allows you to deduct the tax on the services provided from your gross salary, before tax. This means that the personal income tax on the total salary will be lower.
  • What percentage of salary can it be applied to: the amount corresponding to 30% of your gross salary can be used for flexible remuneration.
  • How it helps to save: the employee gets the services at a lower price than the market price because they are tax-free. While companies can offer better net salaries without having to increase costs.
  • What it subsidises: the products and services that flexible remuneration subsidises are meals, public transport, training, retirement plans, childcare or gymnasium, among others.
  • How to apply flexible remuneration to training: with this type of remuneration your company can offer interesting education for the employee, such as online training in soft skills or languages. Flexible remuneration and training for employees will increase talent retention.
  • Why it is so important to have these plans in place: you ensure that you can offer good and interesting training for employees, as well as improve certain aspects of the company that will make it better seen by employees.

Advantages and disadvantages of flexible remuneration

As you may have thought, this type of remuneration seems a very good one: it offers advantages for the company and for the employee, such as training. But, like everything else, it also has its disadvantages.

Advantages of flexible remuneration

Giving the advantages of flexible pay can lead to employee benefits such as: the possibility to use flexible pay for training, savings and improved work-life balance with an increase in their quality of life.

For companies, flexible pay translates into better retention of employees to be trained for further training, offering better pay conditions without increasing costs, and improving the working environment and productivity.

Disadvantages of flexible remuneration

However, HR will need to invest time in the creation of the flexible remuneration plan. It must be kept in mind that it must be subject to current legislation, so it will need to be updated with every change. In addition, the company will need to invest in a technological platform to manage the entire plan. All of this translates into an effort prior to implementation.

Flexible Remuneration Scheme: everything you need to know

In order to offer this kind of remuneration to your company’s employees, you must first create and implement it. Use this guide to help you structure your plan:

  • Start with a benefits strategy: define what flexible pay can bring to both the company and the employee to see what benefits to choose.
  • Design your plan: Once you’ve chosen your benefits, you’ll need to create a plan that fits your proposal.
  • Implementation and analysis: Finally, you will need to implement the proposal and analyse the results it is having in order to improve it.

One of the bonuses you can attach to flexible remuneration is training. Using it to offer your company’s employees online training in soft skills or languages can be very beneficial. Contact us and we will advise you on training for companies and bonuses!