The outbreak of the COVID-19 health crisis has negatively affected the labour market.

As companies have been unable to conduct business as usual, it is not surprising that they are looking for new ways to attract and retain talent in their workforce, especially thinking about the coming months. Many variables influence which employer people choose to work for. Undoubtedly, salaries have always been a key factor, but other aspects that contribute to the employee’s quality of life are also taken into account. Work-life balance, flexibility, a good working environment or a clear career path are factors that candidates often value very positively.

Against this background, there has been renewed interest in payment in kind. Far from being disregarded due to the impact of the pandemic, it is being seen as a creative alternative for supporting employees. We consider all the options and see how they have been adapted to today’s circumstances.

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Flexible Remuneration Plan

What exactly do we mean by flexible remuneration?

With flexible remuneration, a company can give its employees the opportunity to swap part of their monetary remuneration for a series of tax-free products or services by joining an employee benefit scheme.

Employees can allocate part of their gross salary to pay for products that are free from tax, such as nursery schools, restaurant vouchers, medical insurance or transport allowances, etc. With this type of remuneration in kind, employees can acquire services they need as part of their salary, effectively increasing their net salary because of the reduced tax liability.

The advantageous tax treatment of flexible remuneration is established in Law 35/2006, of 28 November, on Personal Income Tax and the partial modification of the laws governing Corporation Tax, the income of non-residents and Wealth Tax.

Article 42 stipulates that “the use, consumption or acquisition, for private purposes, of goods, rights or services free of charge or for less than the normal market price constitute income in kind, even if they do not involve a real expense for the person who grants them“. The regulations subsequently state that “when the payer of the income gives the taxpayer amounts in cash for the latter to purchase the goods, rights or services, the income will be considered monetary“.

Health Insurance

Health insurance is one of the commonest services offered by companies and it is highly valued by employees. In the current context, overshadowed by the pandemic, RibéSalat has detected increased interest in this type of policy to facilitate faster and more efficient access to the healthcare system. People are also fearful of contagion when physically attending a medical centre.

Companies are also more eager to contract collective health insurance, because of the high infection rates and the consequent risk of having part of their staff on sick leave. Although taking out and paying for health insurance for employees and their families can be a costly investment, nowadays companies can use flexible remuneration plans to offer this and other services without incurring additional costs.

Health insurance has become established as a useful ally in recent months, especially policies with specific cover linked to the virus. For example, users value highly policies which allow them to take a PCR or antibody test or which provide cover for home care.

Similarly, the rapidly expanding use of digital technology during this period has also been reflected in health insurance. Services that had previously not been especially popular have seen remarkable growth. A clear example of this is the use of video consultation, which has played a central role in removing the need to be physically present, so reducing exposure to the virus and saving time and travel costs.

The added value of collective health insurance can also be seen in the availability of home care, especially if the user is isolated at home. Having someone to collect the children from school or to take care of cleaning the house is a great relief.

Other services provided by policies include the cost of pharmaceutical products, some even offering the possibility of having drugs delivered to the company.

At this point we should clarify the main differences between individual and collective health insurance policies. The main difference is that collective insurance covers employees and may extend to their spouse and descendants, as established in Article 42.3.c of Law 35/2006, of 28 November. Moreover, the premiums or fees paid cannot exceed 500 euros per year per person or 1,500 euros for each person with disabilities.

Restaurant vouchers

In the case of restaurant vouchers, it is important to distinguish between specific benefits with tax concessions, negotiated between the employee and the company, and daily subsistence allowances.

  • If a worker has requested restaurant vouchers from the company in exchange for a reduction in net salary, because they usually eat out, thus obtaining a tax benefit, the company must make up the employee’s net salary if it decides to withdraw the service.
  • In the second case, if the company offers its workers restaurant vouchers as a daily allowance, it can withdraw them when the worker does not need them or cannot use them.

Teleworking is not incompatible with offering restaurant vouchers as part of a flexible remuneration programme, as food can be delivered to the employee’s home, although the choices available are limited.

Article 42 of Law 35/2006, of 28 November, establishes that it is legal for the company to withdraw restaurant vouchers, provided that it compensates the worker in monetary terms. However, companies that have offered vouchers as a daily allowance are not obliged to continue to provide this service.

Article 42. 3.a also stipulates that “products supplied to employees at discounted prices in canteens, company dining facilities or company stores are exempt. Indirect formulas for the provision of the service, for an amount which does not exceed that legally established, will be treated as the supply of products at discounted prices in company dining facilities.

Transport allowances

Logically, transport allowances are not relevant to employees who work from home.

Unlike restaurant vouchers, where the employee can continue to use them for home deliveries in those autonomous communities that have not closed bars and restaurants, there is no such option for transport. Transport vouchers are thus withdrawn and the corresponding amount is added to the employee’s monetary remuneration.

As established by law, the tax benefits are only valid for public transport, so there is no provision for tax concessions when employees use a private means of transport, such as a car.


Childcare has also been in the media spotlight since the outbreak of the pandemic. By law, when the state of alarm was declared last spring, all nurseries closed, and employees no longer paid for this service. In the current situation, which is constantly changing, employees can continue to enjoy the tax benefits of flexible remuneration in this area, provided that they continue to pay fees.

Double benefit: for the company and for the employee

In this new scenario, companies must reinvent themselves and offer employees new options to complement their salaries. There are numerous advantages associated with flexible remuneration programmes, for both the company and its staff, although there are five that are particularly noteworthy:

  • Attracting and retaining talent. People are increasingly influenced by the emotional salary when choosing a job. Improving employees’ quality of life through concepts such as flexible remuneration programmes helps to adapt employment to the needs of today’s society.

  • Salary costs. This win-win approach enables companies to increase employees’ net salaries without increasing costs. This is especially valuable for organisations that cannot afford to increase salaries. Employees save proportionally on tax, as they can allocate up to 30% of their annual gross salary to services that are exempt from Personal Income Tax. It is also positive for the company, as employees develop a sense of belonging and gratitude towards it.

  • Improved reputation. The company’s image and reputation also benefit from applying a flexible remuneration programme, flagging it as a sector leader, not only in comparison with competitors but also in the eyes of its own employees.

  • More motivated employees. Employees are more motivated if they perceive that the company is responsive to their needs, and this has a direct impact on their productivity and commitment to the organisation .

  • Improved work-life balance. It is very important for the entire flexible remuneration scheme to be accompanied by a policy on work-life balance. Indeed, all these measures are intended to help employees achieve a better work-life balance.

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