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While employers often focus on the costs, i.e. the tax implications, of fringe benefits, it would be more useful to look at the employee's life situation, because in many cases even an internal service is more supportive of increasing engagement, benefits.
- expert László Fata told Connect Magazine.
"If I had to name one of the most important pieces of content that attracts the most interest, it is clearly the issue of the wage increase, which everyone reads on a poster, opens an email, goes to a personal briefing on it",
said Gergely Losonczi, Head of Communications at E.On Hungária, who was not quoted accurately, during a panel discussion on internal corporate communications content at this year's Connect Conference. Yes, it is safe to say that the Hungarian employee is "wage sensitive".
In comparison, the economic environment of the past few years has been nightmarish, with brutally rising energy prices, and skyrocketing inflation.
But what can employers do to keep real wages as balanced as possible, what tools do they have to do this, and how does this relate to engagement?
"Employers are cost-sensitive and therefore focus primarily on tax benefits, but today it is also worth looking at what can be offered to employees without necessarily incurring a cost, and thus a lower or higher tax burden"
- says László Fata, founder and CEO of Cafeteria TREND.
Typically, the regional managers of large companies determine at the end of the year the elements of the cafeteria allowance that can be given or opted for. One of the most important and widespread cases of permanent rethinking of benefit packages is when the employer provides cash support to the employee.
The tax consultancy RSM Hungary has compiled a 5+1 list of the currently available options (you can listen to the discussion here.)
As they write, "on the one hand, it is necessary to adapt to the ever-changing needs of employees, so that issues that were not previously considered (e.g. environmental awareness, rising housing costs) may come to the fore. In addition, potential changes in tax law, potential new tax-friendly opportunities to improve employee engagement, should also be taken into account".
RSM Hungary states that "the tax exemption in this case is conditional on the loan being disbursed through a credit institution or the Treasury. Another important condition is that the amount of the employee housing loan may not exceed HUF 10 million, including employer housing loans, in the 4 years preceding the disbursement. In addition to the construction and purchase of a dwelling, the interest-free loan for employees can also be used for extension, modernisation or accessibility purposes. It is also possible to repay a loan taken out for this purpose from another employer or credit institution".
It is also important to draw attention to what happens in the event of termination of employment, as it is worth setting out the terms and conditions of the loan at the time of granting, which can be a competitive advantage for the employer, as if, for example, the loan is converted into a market rate loan when the employee leaves, it can act as a deterrent for those considering termination,"
- explains László Fata.
For employees, the car allowance is popular, "which is tax-free for the employee even if he does not use the car for business purposes at all. Also exempt are tolls and running costs such as fuel," the tax consultancy says.
In addition, financing the cost of a car-sharing scheme is also a tax-free benefit, as is the use of a bicycle (conventional or electric), and the employer does not have to pay any extra tax.
The latter is particularly generation-specific, as Generation Z in large cities is the preferred cycling group.
"With regard to tax-efficient mobility grants, I would like to note that it can also be combined with team building, i.e. from the employer's point of view, it is equally beneficial to fill it with experiences"
- László Fata gives a tip.
"Imagine a team working flat out on a project, and when they finish it, they feel a sense of relaxation and joy, and the employer organises a night out in a mini cabriolet for them on the evening of the project as a token of appreciation. All this is an experience that can make a big contribution to their spending, while being a tax-free allowance."
Teleworking, which was widespread during the pandemic, quickly became popular among workers and now has a significant impact on attracting and retaining workers. It is important to know that a tax-free allowance of up to 10% of the minimum wage can be paid each month to cover the extra costs incurred by the employee (e.g. overheads, internet charges) without the employee having to pay any bills.
"The SZÉP card has been one of the most popular forms of benefit for years, with one of the lowest tax burdens (28%) and now - with the elimination of pockets - flexible use. The SZÉP card can also be used to buy season tickets for sports facilities, thus ensuring that employees can spend their leisure time in a useful and healthy way,"
says the RSM in a summary.
As the festive season approaches, many employers organise some kind of event for their employees, or even give them a small gift package. If certain conditions are met, the payer's total tax burden on the costs incurred is 33.04%.
"In addition, giving employees a baseball cap (on top of a one-off small gift), for example, is taxed at a higher rate, so it is better to combine the company gift with an internal company event, if only for the social experience, which is more cost-effective for the employer in addition to the experience,"
the expert suggests.
"The stock benefit is not a common form of benefit, but we think it is important to draw attention to it," RSM points out, adding that it has the "undeniable advantage of helping employees to develop a sense of ownership, as they can feel the company's success in their own pockets. In this way they identify more with the company's objectives and become more motivated. A larger stock-appreciation programme can also be a major attraction within the company, and can be the final argument in a recruitment process. The tax environment is also favourable in the case of various stock-based incentive schemes.
ERSTE Bank's employee share scheme was also discussed with Connect Magazine in this podcast.
In addition to the fringe benefits mentioned above, however, László Fata also stresses that employers often fail to explore options that may be cheaper or cost-free and can make a significant contribution to employee satisfaction and thus engagement.
"Most importantly, it is worthwhile for employers to define their objectives and then look at the individual circumstances of their employees,
he says,
Obviously this requires more time and effort, but personalised benefits are often more conducive to engagement than somewhat formulaic, uniform fringe benefit packages."
The benefits expert says that if, for example, an employer allows a pregnant woman to park directly at the main entrance of the workplace, it will help her to work more comfortably. Another specific example is when an employee can bring her adopted cat to work, which can make her feel much more positive than another type of cash benefit. It also solves a problematic situation in his life.
"The most effective ways of providing benefits should either be determined by looking at trends, or simply by asking employees who want time or organisation for any activity they are involved in,"
says László Fata, who says that the attitude and responsibility of managers is also important, as in many cases it is their direct managers who know their colleagues, their life situation and their needs.
