From performance bonuses to fringe benefits to corporate welfare plans: three levers to increase employees' incomes
With Professor Arturo Maresca (La Sapienza University of Rome), let's take a detailed look at the access criteria, amount limits and tax benefits of three important instruments that can be activated by negotiation, or at the employer's initiative
3' min read
3' min read
We discuss the tools to support employee income: productivity bonuses corporate welfare plans and fringe benefits with Professor Arturo Maresca (labour law at La Sapienza University of Rome).
Productivity bonuses with 5% flat rate
Let's start with productivity bonuses: more than 3.2 million employees benefit from them for an average amount of around EUR 1,500. How is it accessed? What are the limits?
"The number of recipients of variable bonus payments has been extended. These bonuses must be provided for by second-level collective bargaining, i.e. company or territorial contracts, and the recipients are workers who have an income in the year preceding the bonus payment of up to EUR 80,000, the bonus can go up to a maximum of EUR 3,000, in a special case it can be extended up to EUR 4,000 (in companies that involve workers equally in the organisation of work). The advantage is fiscal for the worker because there is a 5% substitute tax. So that bonus that is paid for an increase in profitability, quality, and efficiency provided for by company contracts is taxed at 5%. Then there is a further advantage that the law provides for, which is the possibility for the worker to transform this monetary bonus into welfare: in this case there will be a twofold advantage because the worker will not even pay the 5% tax and that bonus becomes welfare. So it is not subject to contribution by the company.
Fringe benefits tax-free
.Let us now talk about fringe benefits, which I recall originally had a limit of €258 equal to the old LIT 500,000 and were raised by the latest budget laws: how do you access them and for what?
"Fringe benefits are exempt from taxation and contributions, so they are transfers of goods or services that the employer can make to employees. Here, unlike performance bonuses, there is no source constraint that provides for this treatment. It is not necessarily the trade union agreement, although this is predominantly the case, but can also be the initiative of the employer. The important thing is that these goods and services that are given to the employee must not exceed a threshold, which is ordinarily EUR 248, but which is raised from year to year, or as was the case this time for a three-year period in higher values. The current rule provides that the exemption limit is one thousand euros for workers without children and two thousand euros for workers with children. Moreover, the legislator then adds to this monetary value of exemption also other appropriate units of exemption for the supply of goods or services, which are specifically mentioned: rent in the first home, electricity bills. So it is a basket that is interesting to examine because it means that all these supplies of these goods and services have a contribution advantage and a tax advantage'.
