13.09.2022
Sabrina Ludwig
37903
8 alternatives to a salary increase: benefits for employee retention
Benefits in kind, recreational allowances, social funds: employerscan support their employees financially with benefits without increasing their salary. This has advantages for both sides.
From employee retention to employer branding: employers can only benefit if they offer their employees benefits. Employees feel appreciated, save on bus tickets, for example, and thus also save themselves from having to reach into their own wallets. Young professionals in particular attach great importance to an attractive benefits package when looking for a job.
Study: The most important employee benefits
In view of drastically rising energy prices and the cost of living, benefits are becoming even more important and form an important building block for retaining and supporting employees - especially those on low incomes.
"People on low incomes generally don't have economical electrical appliances either, often have draughty windows, old gas boilers and poorly insulated homes, which exacerbates the whole problem."
Caritas spokesperson, report by RedaktionsNetzwerk Deutschland (rnd)
Alternatives to a salary increase
1. social fund in financial emergencies
The company's own social fund is a financial subsidy in emergency situations or acute emergencies that can be paid out to employees who find themselves in financial difficulties through no fault of their own, e.g. due to serious illness, death of a partner, accident, imminent loss of housing, etc.
The amount paid out from the fund does not have to be repaid by the employee. The amount available each year is determined by the company itself.
Important: The company must conclude a company agreement and define the criteria according to which the social fund is paid out to the applicant(s).
In addition, an autonomous and trustworthy body is needed to manage the social fund, check the applications and pay out the amount to the employee - such as the works council or, alternatively, the employee representative body.
You should clarify the details in advance with your own legal and tax department.
When is the social fund paid out?
Approval and payment usually take place in 3 steps:
- Employees in an emergency situation submit an application in which they describe their emergency situation and state what the money from the fund is needed for.
- The application is reviewed by an independent body (works council, employee representative body), taking into account income and family circumstances.
- If the application meets the internally defined criteria and the legal requirements, the amount is transferred once, in addition to the salary.
The employer is not informed of any of this: neither the amount, nor who the applicant is, nor the reasons given.
"If someone obviously gets into an emergency situation through their own fault, which could have been avoided, for example, by taking personal precautions, then we are not allowed to pay out anything. However, if there is a sudden threat of losing your home due to flooding, death or serious illness, for example, then this is an acute emergency situation that the person has got into through no fault of their own. With the social fund, we can help quickly, discreetly and unbureaucratically in serious emergencies."
Peter Fischer, employee representative, pme Familienservice
Would you like to find out more about the Social Fund?
If you are interested in setting up a social fund in your company, please contact Peter Fischer for further information.
2. employer loan
The employer loan can also be an alternative to the usual bank loan and help employees in financial difficulties out of trouble.
A loan can be granted in emergencies or crisis situations, but not as regular financial support.
The loan is a voluntary benefit provided by the employer. If the company is prepared to grant loans, this can be agreed in a loan agreement .
In justified emergencies, a loan must be distinguished from remuneration, advances and deductions from remuneration and is not directly related to the employee's work and employment contract. It therefore does not constitute consideration for the work performed.
When is the employer loan paid out?
Three steps to an employer loan:
- Employees submit an application, which is then submitted to the HR department together with the manager.
- The HR department will review the application together with the applicant and the manager.
- If the loan is approved, payment is made via the accounting department. The amount is paid out independently of the salary.
If employers wish to grant a loan with interest , this must be expressly agreed in the contract. If no interest is agreed in the contract, the loan must be repaid without interest.
"The company must of course check whether it has the means to offer its employees an interest-free loan. The main effort involved is talking to the HR department and the manager to check the application."
- Nils Hofert, Head of Human Resources, pme Familienservice
Further information: Hasselbach law firm
3. tax-free recreation allowance
Recreation allowances are voluntary financial benefits that employees can receive from their employer.
The maximum amount and frequency of payment of this benefit is defined by law.
A company is free to decide whether to pay out the maximum amount of currently 156 euros for the employee and 104 euros for partners and 52 euros for each child - or less.
How the employee in question spends their vacation is irrelevant. The employer can also subsidize a vacation stay at home for its employees.
How is the recovery allowance paid out?
Whether working student, mini-jobber or permanent employee: all employees are entitled to a recreational allowance.
- The recovery allowance is tied to a calendar year and cannot be transferred.
- The allowance may only be paid within three months before or after the start of the leave.
- The money from the recreation allowance may only be spent for the purpose of recreation.
Further links:
www.impulse.de/recht-steuern/rechtsratgeber/erholungsbeihilfe
www.haufe.de/erholungsbeihilfen
4. non-cash benefit value of 50 euros per month
Another alternative to a taxable salary increase are benefits in kind.
Every company can give employees up to 50 euros a month free of tax and social security contributions . If the amount is exceeded, income tax and social security contributions are payable.
The benefit in kind may only be granted once per employee per month.
Benefits in kind are, for example:
- Employer's contribution to accommodation costs
- Meals
- Work clothes
- Petrol or other vouchers (no marketplace vouchers, e.g. from Amazon and Kaufland)
- Admission tickets
Gifts for personal occasions
Gifts for birthdays, anniversaries or a personal occasion can be given by an employer in addition to benefits in kind . The maximum tax-free amount for gifts is €60 per personal occasion.
Further information:
www.edenred.de/sachbezug-2022
www.smartsteuer.de/online/lexikon/s/sachbezuege
5. job tickets & monthly passes
In view of the current very high gasoline and diesel prices, this topic is likely to be of particular interest to many employees.
The job ticket category includes monthly or annual tickets that companies purchase from public transport companies and then pass on to their employees free of charge or for an additional payment.
The job ticket must be provided in addition to the salary already owed.
The tax exemption has applied to both the job ticket and the employer subsidy for journeys on public transport since 01.01.2019.
6. leasing bike
There are now many providers of leasing company bikes. Employers can lease bicycles from them for a predefined period of time.
Such contracts usually run for 36 months. At the end of the contract, the leased bike must be returned - or can be purchased by the employee. It is also possible to extend the contract, return the old leased bike and get a new model.
This also pays off for the employer: According to a study, employees who cycle to work all year round are sick around 1.4 days less per year and also feel better.
How does the employee receive the leased bike?
The employer leases the bike. The employee rides it whenever he or she wants, whether for work or leisure. The employee pays the monthly leasing rate by converting his or her salary.
This means that the employee's gross salary is reduced by the leasing installment. This benefits both sides: Both employees and employers pay less social security contributions thanks to the employee's lower gross salary. Journeys between home and work must be accounted for in the same way as a company car.
"Administrative work arises above all when the leasing contract is interrupted by employees, for example due to a long illness, pregnancy or if the team member leaves before the 36-month leasing period expires."
Anke Bechler, Human Resources, pme Familienservice
Further links:
www.impulse.de/recht-steuern/dienstfahrrad
7. private insurance at special conditions
The company pension scheme is great, but having the additional opportunity as an employee to take out further discounted insurance makes this offer even more attractive.
At pme Familienservice , team members can use an insurance service to take out the most important private insurance policies, such as liability, accident, residential buildings, household contents, motor vehicle and more.
On request, employees can receive individual offers for additional insurance (e.g. Riester pension, supplementary health or long-term care insurance).
How does the employee get the insurance?
Employees can access all the relevant documents for concluding a contract via a dedicated insurance website for your company. A special bonus: spouses or life partners can also benefit from the special conditions.
"We pre-selected the insurance companies. And then the biggest effort was to inform our team members about it - via flyers, the intranet and the employee magazine, for example."
- Nils Hofert, Head of Human Resources, pme Familienservice
8. lunch and drinks
To help employees with their living expenses, employers can provide their employees with lunch and drinks free of charge.
The company can tax the non-cash benefit at a flat rate of 25 percent. The big advantage of this is that no social security contributions are due for flat-rate taxation.
"At the Berlin headquarters, we get lunch delivered by a caterer and the team members also eat here in the office. The work consists of accepting the food, preparing it, clearing and washing the dishes and keeping the kitchen clean. The team members also get fresh salad, which I chop and prepare every day. I spend 4 to 5 hours a day doing this."
Anke Brennecke, housekeeper, pme Familienservice
Further information:
Meal allowance tax-free - All information 2024
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