The flexible compensation is much more than a trend in the workplace; it is a key strategy for optimising employee pay and strengthening companies' compensation policies. In this comprehensive guide, we will explore what flexible pay is, how it works, its benefits, practical examples and how to implement it effectively in your organisation.
Flexible remuneration is a remuneration system that allows employees to choose how much of their salary they want to receive in cash and how much in products or services. (i.e. payment in kind) tax exempt.
Flexible remuneration covers everyday expenses that the employee would need to pay for anyway, such as food, childcare or public transport. Thus, The employee is able to save up to 40% on these types of expenses because these payments are exempt from personal income tax.
This system allows teams to get more out of their salary without the company having to increase its salary costs.
A good working environment, future prospects, training programmes and the possibility of reconciling work and family are undoubtedly very important motivators for any employee.
However, Pay remains a key aspect of employee motivation. Unfortunately, it is not always possible to add that extra motivation by raising our employees' salaries, so we are 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 for both companies and employees:
Among the most common examples of flexible remuneration are:
These same services can also be offered in the form of social benefits. Discover the difference between flexible compensation and social benefits.
Flexible remuneration generates many doubts due to misconceptions. The table below clarifies the most common myths versus the realities of this model:
| Myths | Truths |
| ❌ It is very difficult to manage | ✅ A flexible remuneration scheme can be manage internally, without dedicating resources extra. All you need to do is set up a system communication and petition gathering, as an easy and intuitive online platform |
| ❌ Payroll cannot be parametrised | ✅ Payroll changes are very straightforward to apply |
| ❌ Your employees are not interested in | Around 40% of the employees are end up signing up, as long as the offer is appropriate to their needs and communicate effectively |
| ❌ Requires long administration time | ✅ All you need to do is spend a little time time at the beginning. Once in place, the operation is very simple |
Creating and implementing a flexible remuneration scheme effective involves several steps:
Contracting the services of the chosen provider and communicate this to the team, making sure they understand the benefits of each product.
Implementing a flexible remuneration plan may seem challenging, but with the right tools it is a simple and efficient process. An all-in-one platform such as Edenred Flex for the management of flexible remuneration is key to ensuring intuitive set-up and use for both 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 recruit new team members, calculate their tax savings, check the percentage of adherence to the plan and consult key performance indicators in real time.
Another advantage is the comprehensive support throughout the implementation process, This makes it easier to manage complex tasks such as onboarding new employees, administering groups and recharging benefit cards.
Flexible remuneration is reflected in the payroll as a deduction from gross salary for 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 of payroll with flexible remuneration!
Services purchased through flexible remuneration are generally exempt from taxation, but it is important to be aware of the legal limits to avoid surprises in the tax return.
Read our article on how flexible remuneration is taxed on income tax returns!
Use a simulator or a flexible remuneration calculator is essential for employees and companies to be able to assess the impact of this model on take-home pay.
These tools allow you to calculate tax savings and determine which benefits are most cost-effective 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!
