How to Explain Flexible Remuneration to Your Employees

Flexible remuneration is a form of remuneration that allows employees to allocate part of their salary towards the purchase of specific products or services at a price lower than the market rate. By deducting directly from the gross salary or payroll, expenses such as meals at restaurants, public transportation, or childcare are exempt from the Income Tax (IRPF).

Despite offering significant savings, many employees are unaware of the benefits. According to our latest Employee Trends Report, only 2.5 out of every 10 employees are familiar with the annual economic value that a social benefits plan adds to their salary. Specifically, 1 out of 6 does not fully grasp the concept of Flexible Remuneration.

Here’s how to easily explain Flexible Remuneration to your employees:

Table of Contents

• 1. Why Nobody Understands Flexible Remuneration
• 2. What Employees Should Know About Flexible Remuneration
• Employees’ Main Concerns
• 3. Lack of Education and Communication by the Company
• 4. How to Explain Flexible Remuneration to Employees
• 5. Why Explain Flexible Remuneration to Employees?

1. Why Nobody Understands Flexible Remuneration

One of the main barriers hindering the return on investment in benefits plans is the lack of knowledge. An employee is unlikely to appreciate a compensation plan if they are unaware of its advantages and value. The company is investing significantly in the well-being of its staff with an economic investment that has minimal impact.

Considering that benefits plans nowadays rely on Flexible Remuneration models in over 70% of cases, the dilemma becomes clear – employees do not know what Flexible Remuneration is. Lack of information, the perception that it’s an outdated term with little impact on the economy, and a lack of communication from the company or benefits provider are the main reasons why most employees are unfamiliar with its meaning.

2. What Employees Should Know About Flexible Remuneration

It’s not about handing employees a report on Flexible Remuneration and expecting them to study and absorb concepts. Instead, create a communication and information plan that clarifies at least:

1.  What Flexible Remuneration adds to their benefits plan.
2. Why it’s beneficial for their professional development.
3. How it improves their daily and future purchasing power. Include many examples, such as how the daily menu that usually costs €12.50 can be reduced to €7.25 with Flexible Remuneration.

At Cobee, we believe that providing in-depth information about benefits is a fundamental part of the employee onboarding process. That’s why we offer an automated onboarding process that includes training, webinars, and presentations on everything related to social benefits.

Employees’ Main Concerns

Some people, upon hearing “Flexible Remuneration,” might look puzzled and say, “Oh, yes… I think my company offers something like that,” or “I see that term on my paycheck, but I don’t really know what it means.”

To eliminate such situations, effective communication and training channels need to be established. Both the company and, more importantly, the benefits platforms should convey all the necessary information to explain that Flexible Remuneration:

– Is a compensation system with a significant impact on the employee’s economy.

– Has a significant impact on the paycheck and annual savings.

– Allows employees to pay for daily services and products at a lower-than-usual price.

– Enables employees to benefit from significant savings by reducing taxes when paying directly from their paycheck.

3. Lack of Education and Communication by the Company

Flexible Remuneration is not an easy product or service to understand. Perhaps it is for a Human Resources professional or an expert in accounting or personnel management, but not for any worker outside of that field. In fact, Flexible Remuneration is like a paycheck – all members of a workforce can have one. But who really knows how to decipher all the concepts of a paycheck correctly? In both cases, employees’ lack of interest and the limited information provided by the company mean that only the most curious resolve their doubts.

In addition to the direct impact on the employee’s economy, the benefits derived from Flexible Remuneration for the company are numerous. Among all the advantages of Flexible Remuneration, it is worth highlighting that it improves the company culture, increases motivation and productivity, helps attract and retain talent, and the best part is that implementing a Flexible Remuneration plan does not require a large budget.

Employees who believe that the information provided by their company is sufficient (12.3%) rate their satisfaction higher regarding their benefits plans and the company.

4. How to Explain Flexible Remuneration to Employees

With commitment. It’s not just about implementing a transparency policy with the workforce. It’s about making employees participants in the benefits, just as they are in the challenges that the company faces and assumes.

Through explanatory content: videos, manuals, guides, computer applications, graphic elements – everything adds up and helps improve employee engagement.

Through a pre-designed annual plan and specific channels of information and communication between the company and employees.

Seeking support from specialized companies in flexible compensation that make things easy for both the company and the workforce: automatic management of this service, immediate access through mobile applications, guidance on the benefits most demanded by professionals in our country, etc.

5. Why Explain Flexible Remuneration to Employees?

Companies still questioning whether it’s worth making an additional effort to explain Flexible Remuneration will find a quick answer: it is worth it. Here are the effects that corroborate this:

– Facilitates the daily life of the worker within their Employee Experience.

– Flexible Remuneration equals a better-paid, better cared for and valued workforce, more emotionally and physically balanced.

– Flexible Remuneration achieves greater loyalty to the brand and improves employees’ opinion of the management.

– It is one more element to attract external talent and thereby increase the potential of its human capital.

– It is an economical, effective measure, highly valued by professionals.