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Dear Community,

Inflation and recession have probably been the most frequently used terms in the last few months. Everyone has witnessed it, and everyone has experienced the effects first-hand. Increasing costs of living and taxation affect how much is left of the net wage at the end of the month. However, SMEs in particular, which are trying to keep their costs as low as possible due to the unstable economic future, cannot always offer a salary increase.
 

You’re probably asking yourself what other alternatives are there. No need to look further, we got the perfect answer: “Net wage optimisation” 💡


What does “Net wage optimisation” mean?

With net wage optimisation, employees give up part of their gross wages, but in return receive additional benefits or allowances - which are, under certain conditions, tax-free. For the company itself, this form of benefit also means that there are no non-wage labour costs - which is advantageous for both parties, isn't it? 👍


What can I do as an employer?

🍝 Food subsidies

With this non-cash benefit, the employer can subsidise the employee for meals. Depending on the country, the amount that can be contributed varies. Feel free to share how this is regulated in your specific country.

 

🚘 Mobility subsidies

These make the trip to work a little more "comfortable". 😀
Anyone who uses the bus, train or car every day to get to work knows that this involves high costs. The travel allowance is a voluntary initiative by employers, which can be provided, for example, in the form of subsidies for a job ticket or a company bicycle.


Do you have thoughts that you would like to share regarding this topic?
✍️ Feel free to post them in the comments! I am also interested in whether and to what extent your company supports the optimisation of net wages.

Best,
Melissa

 

This is very country specific.

In some countries there are some Travel allowances, but for several these would be counted as Income and Taxed.
 

Sadly the same for Food - there are specific regulations on what can count as Food and a company can claim back or justify is not Income.

 

I suggest that it might be better to write on this topic with a focus on a specific country and their specific regulations and allowances.

 

I can speak to UK and Ireland.

UK - Food - You can provide meal vouchers, on-site catering - but only if this is provided for all employees at a designated location. This cannot be used for Remote employees for example

Ireland - Food - There is no provision for this legally

 

UK - Travel - You cannot offer any voucher - you can offer an interest-free loan / so no subsidy.
You can sign up for salary exchange on Bikes and EVs - but these require contracts and need to be carefully managed

Ireland - Travel - You can get some forms of travel incentive for public transport but limited.

 

In some countries there are specific subsidies and allowances - but I would be very careful in promoting it unless you have verified the financial and legal implications.

They sound great but can lead to Tax and Legal issues - even when undertaken with the best intentions.

As an ex. Global Benefits Manager I am happy to speak on this topic in more detail.

But please proceed with caution in this area - I have seen too many times companies coming unstuck as they didn’t realise the Tax implications on things like ‘providing meals’ where it was not specifically possible to relate it to a business purpose…

Expenses need to be tied to Business work - they cannot be freely given or they will count as Income.

There are some thresholds in many countries (the value of which differs) that a Manager/Company can award to an employee without additional Taxes applying - but you need to be fully aware of this before proceeding. This is why ‘Rewards’ are a complex area and best suited for dedicated expert specialists.

Good morning @JHBEM ☀️
Thanks for sharing your thoughts on the subject. As you said, the benefits are country specific and treated differently especially from a tax perspective. 
Thank you for your insights and experiences in UK and Ireland. 

I am looking forward to what other community members like to share about their experience in wage optimisation! As the country plays a big role in the options - as mentioned - it's very interesting and insightful to hear and read about it from all our international community members, maybe @Edda van der Ende and @BEATRIZ BERNABEU can share their country specific experiences. 👀😊

Have a great start to the week,
Melissa

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