More and more companies are using a flexible remuneration and transportation plan as part of their efforts to win the war for talent. Fringe benefits make them more attractive as an employer. This alternative remuneration requires a clear and correct framework.
More and more companies are converting part of their employees' gross salaries to alternative remuneration, such as an electric bicycle, an internet connection and a smartphone. Such a flexible cafeteria plan even offers non-statutory child benefit, pension savings and supplementary hospitalization insurance.
We have noticed that our customers are more and more interested in offering cafeteria plans and transportation options that are meeting employees' actual needs. Companies use these options as a powerful recruitment and retention tool. No employer can still afford to lag behind. A digital solution such as the KPMG Flex Reward Tool is very useful for such a policy. Companies use it to automate all administrative aspects of their cafeteria plan and to keep everything up-to-date in a legal sense.
Legal framework
Thanks to this technology, a flexible payroll and transportation plan are easy to implement in companies, but the legal framework behind cafeteria plans is challenging and complex. A multidisciplinary approach is therefore not a luxury, but a necessity: legal, tax, HR and IT aspects must be combined in a single solution that is easy to apply for both the employer and the employee.
For example, many companies give their staff the choice between a traditional end-of-year bonus and the conversion of all or part of that gross pay into alternative remuneration that will result in a higher net income for the employee. "You may hear some people say that employees build fewer long-term entitlements if they opt for alternative end-of-year bonuses," Alexis Ceuterick says. "It is extremely important that organizations inform their employees clearly and correctly about their individual flexible remuneration and transportation options and their tax and legal consequences. For example, investing in the third pension pillar allows employees to build their pension."
Like the employee organizations, KPMG considers good communication indispensable. The Flex Reward Tool can also partly automate communication. It is equally important that employees can simulate the alternative remuneration's impact on their net salary. "Properly informed employees can make the best choices based on their personal needs," Alexis Ceuterick adds.
Support and expertise
There is currently no fixed, clear legal framework for traditional cafeteria plans.
"Correct support is indispensable in order to roll out a flexible payroll and transportation plan," Alexis Ceuterick says. "Only with the right framework can companies successfully award extra benefits without additional costs within their employees' pay and transportation package. This results in a valuation based on the actual cost price, including the applicable employer social security contributions, the impact of non-deductible VAT and the effect on corporate income tax."
"In the past, cafeteria plans were preferred mainly by forward-thinking technology companies, KPMG has noticed a growing interest in all companies and in nearly all industries. Because of this great demand, I expect cafeteria plans to become legally entrenched in the coming years," Ceuterick concludes. "In that case, the right tax and legal support will remain crucial. It guarantees that every company can implement a tailor-made cafeteria plan within budget".
