The off-salary elements categorized within the cafeteria plan do not substitute the monthly regular wage, only complete it.
Most of the cafeteria elements almost function as cash but in certain cases the difficult use of the vouchers deriving from the limitation of use or the particularly difficult accounting of the health fund bill may lead to the growing concern among the employees. The majority of the employers probably met this kind of concerns already in one form or in another. Concerning the amendments of the act number CXVII of 1995 on the personal income tax coming to effect on 1 January 2010 the cafeteria elements that were tax-exempt before, became taxable – except for the internet support – with a beneficiary 25% or a normal 97,8% taxation system.
In connection with this most of the employers removed the elements of normal taxation from the cafeteria plans, so the gift, the culture and the cold food vouchers in order to reduce the tax burden. As a result of this the scope of the available cafeteria elements was reduced and so the satisfaction of the employees.
Let’s have a look at a few tools available for employers for making the cafeteria plan more popular.
Free choice
The cafeteria plan is a system containing supporting elements and offered by the company. This system ensures the free choice among the different forms of benefit for every employee. The target is to establish a system promoting the satisfaction of the employees that improves their work and life circumstances.
It is better to leave the use of the annual cafeteria plan amount entirely up to the employees and give them freedom when making their choice so that every employee can get the off-salary benefits most suitable for their personal needs. Young employees will tend to choose the hot food voucher or the holiday voucher contrary to the voluntary mutual pension fund contribution or the school starting support that can be popular among the older employees.
Special needs taken into account
You can find as many different personal needs and special wishes as many employees you have. Based on our experiences the creativity of the employees is unlimited in this field.
The accurate determination of the notes of the vouchers (the order of hot food voucher in the value of HUF 18.000 in 200, 500, 1.000 notes – the voucher ordering platform of the majority of the voucher providers grants this possibility), the reception of the vouchers in different phases of the year (for example holiday voucher in the summer months).
Buying the local travel pass in quarterly forms is also a frequent wish however in case of termination of employment you have to make sure that the employee receives cafeteria benefits in proportion with the time of his/her employment which means the employee cannot exceed the eligible limit.
It is no doubt that the above stated examples may enhance the administrative tasks of the cafeteria plan but at the same time it helps the employees to feel the cafeteria plan more personal and primarily regard these elements as a useful, additional benefits.
The possibility of changing elements chosen at the beginning of the year
In case of properly operated cafeteria plans the employees shall make a declaration concerning the division of their annual cafeteria amount at the beginning of the year, or in case of new employees this declaration shall be made in the days following the beginning of the actual work. However in certain cases changes arising in the employee’s life situation may result in need of changing the previously made declaration on the choice of cafeteria elements.
In this case it is better to leave the option of single time change. You shall make sure that the change is actually and reasonably needed and that it is properly administered with the help of a written claim for modification.
Holiday voucher can also be presented to close relatives
There are cafeteria plans that particularly and wrongly declare that there is no possibility to order holiday voucher for close relatives. It shall be noted that the statutory provisions grant this possibility and the employees like to use it in case the limits of their cafeteria amount make this possible.
Information shall be provided concerning the personal tax benefits of voluntary funds contribution
Personal tax-benefit can be claimed based on health and pension fund contributions paid from the annual cafeteria amount, so serious savings can be achieved by personal contribution to the voluntary funds account.
The member of a health or voluntary pension fund can claim a 30% tax return based on the cumulated amount of the fee, the occasional contribution paid by him/her and the sponsorship donations given to him/her. Many employees are not aware of this information so it is worth it to notify them. The biggest benefit of the cafeteria plans is their flexibility and the ability to meet the personal needs. The free choice of elements is a supplementary allowance beside the wage. A well planned cafeteria plan operated with accurate administration backgrounds can be managed in case of companies with more hundred employees even when taking personal needs into account. The possible additional work resulting from it can be decreased and the satisfaction of the employees can be enhanced.
János Nemes