Flexible Remuneration Plan in Spain: everything you need to know
Flexible remuneration is that which allows the employee to pay part of his or her salary in services or in products, thus avoiding the payment of income tax on these. Specifically, up to 30% of the gross annual salary can be allocated to services such as childcare or transport. Having a flexible remuneration plan is particularly beneficial for both agents, as it allows employees to earn more money without increasing the company’s salary cost.
Advantages of a flexible remuneration
Flexible compensation brings benefits for both companies and employees.
Advantages for the employee:
Increased purchasing power and tax savings.
Customizable: choice of assets according to your needs.
Better management of work-life balance.
“This compensation model allows employees to save up to 10% in tax exemptions and discounts when managing products and services through the company.”
Advantages for the company:
Improved productivity (derived from increased employee motivation).
Increased attraction of talent.
Increase in net salary without salary expenses.
Free choice of services offered.
Improved brand image.
Disadvantages of a flexible remuneration
Despite having many advantages for both parties, flexible compensation also has disadvantages that any company should consider when setting up a plan:
- Lack of knowledge about its existence.
- Risk of misconfiguration and disestablishment.
- Comparisons between plans with other companies.
How to work out a flexible remuneration plan
As previously mentioned, the limit is set at 30% of the gross annual salary. Therefore, by calculating the percentage of this, the employee can know how much he/she is entitled to and distribute it among the services offered on a voluntary basis.
For example, an employee with a gross salary of €30,000 can access a flexible compensation of up to €9,000.
What to include in a company's compensation plan
There are a wide variety of products and services that companies can include in the flexible compensation plan they offer their employees. When it comes to developing a flexible remuneration plan, these are the possibilities:
- Health insurance.
- Meal or restaurant tickets (subsidized on working days and up to 9 euros).
- Day care centers.
- Transportation card.
- Courses and training.
- Pension plan.
- Resources for working from home.
- Company shares.
- Housing rental (for those who commute frequently).
- Car rental and parking.
- Life insurance
A good flexible compensation plan has consequences that indirectly impact the employee and his or her performance. As we have mentioned previously, having access to flexible remuneration motivates the employee by having access to their benefits. This is because they get benefits without compromising their salary.
Similarly, taking the time to develop and offer a flexible compensation plan demonstrates the organization’s commitment to the employee. Engagement with employees is key to optimizing their profitability, as an employee who feels connected to the company is not only more satisfied with his or her job, but also more productive.
“Those employees with the highest engagement scores have an average productivity 18% higher than those with the lowest engagement scores.”
Another of the most effective ways to increase employee engagement is by installing HR software. It facilitates greater focus on employee well-being by eliminating repetitive tasks and automating time-consuming processes.
Want to learn more about how to streamlining people operations? Request a free demo at niikiis.