La flexible compensation It is a remuneration scheme that allows employees to allocate up to 30% of their gross annual salary towards the payment of goods and services that are fully or partially exempt from income tax, such as meals, transport, childcare, training or health insurance. It is governed by Article 42 of Law 35/2006 and enables employees to increase their take-home pay without the company incurring additional wage costs. In this guide, we explain how it works, its benefits and how to implement it.
remuneración diferida que permite a los empleados elegir un conjunto de beneficios para maximizar su renta neta. Benefits in kind, regulated by the article Article 42 of Law 35/2006 on Personal Income Tax. The key difference to a social benefit it is that it is the employee who voluntarily decides dedicate part of their gross salary to the payment of the plan's products, formalising this decision by means of a document salary renegotiation Signed with the company.
The fiscal mechanism is simple: amounts allocated to exempt products are deducted from gross salary before to calculate the personal income tax (IRPF) retention. As the taxable base is reduced, the employee's monthly retention also decreases. The result is a higher net salary at the end of the month, without changing the gross salary agreed in the contract or the Social Security contribution base.
It is worth distinguishing two figures that are often confused: the 30% is the maximum amount of gross salary that can be contributed to the scheme, not the savings. The real savings depends on the employee's marginal income tax rate and the chosen products, and is usually around 15% on amounts allocated to fully exempt products.
Having a good working environment, a clear career path, training programmes, or the possibility of balancing work and family life are undoubtedly highly important motivators for any employee.
However, The salary remains a key aspect in employee motivation. Unfortunately, it's not always possible to add that extra bit of motivation by increasing our employees' salaries, so we're forced to look for other alternatives to achieve it.
A simple and effective solution to achieve this is to introduce a flexible remuneration system.
Flexible remuneration offers significant benefits to both companies and employees:
Among the Flexible benefits products are:
These same services can also be offered in the form of social benefits. Discover the Flexible remuneration and employee benefits.
Flexible remuneration raises many doubts due to misconceptions. Below, the table clarifies the most common myths versus the realities of this model:
| Myths | Truths |
| It is very difficult to manage | ✅ A flexible remuneration plan can be manage internally, without dedicating resources All that needs to be done is to establish a system of communication and petition collection, as an easy, intuitive online platform |
| ❌ Payroll cannot be configured | The payroll changes are very straightforward to apply |
| ❌ Your employees aren't interested | ✅ Around 40% of employees are end up signing up, as long as the offer is appropriate to their needs and communicate effectively |
| ❌ Time-consuming to administer | It only takes a little time at the beginning. Once in place, the operation is very simple |
To create and implement a flexible benefits plan effective involves several steps:
Contracting the services of the chosen provider and communicate it to the team, ensuring they understand the advantages of each product.
Implementing a flexible benefits plan can seem daunting, but with the right tools it is a simple and efficient process. An all-in-one platform like Edenred Flex For the management of flexible remuneration, it is key to ensure an intuitive configuration and use for both company managers and employees. These platforms allow adapt the benefits to the changing needs of your team, providing total freedom and flexibility.
With this type of solution, it is possible to massively onboard new team members, calculate their tax savings, verify plan adherence percentage, and consult Key Performance Indicators (KPIs) in real-time.
Another advantage is the comprehensive support throughout the entire implementation process, which makes it easier to manage complex tasks such as onboarding new employees, administering collectives and topping up benefit cards.
Flexible remuneration appears on the payslip as a deduction from gross salary allocated to selected benefits.
This does not affect the basic salary or social security contributions, but reduces the personal income tax base, This translates into further savings for the employee.
Discover now a Example payslip with flexible benefits!
Services acquired through flexible remuneration are usually exempt from taxation, but It is important to know the legal limits to avoid surprises in the Tax return.
Read our article about How flexible remuneration is taxed in the income tax return!
Use a simulator or a Flexible benefits calculator is essential for employees and companies to be able to assess the impact of this model on take-home pay.
These tools enable the calculation of tax savings and the determination of which benefits are most profitable according to each employee's needs.
If you want to know more about how to have happy employees with flexible remuneration, Download our e-book!
Human Resources professional with a solid track record in talent management and a strong commitment to optimising the employee value proposition. Throughout my career, I have had the opportunity to develop my expertise in international environments and consulting firms, specialising in talent attraction and retention through advanced strategies such as flexible remuneration. Currently, as Key Account Manager (KAM) at Edenred, I collaborate closely with major clients to design and implement strategic compensation and benefits solutions that enhance corporate well-being and organisational engagement.
