Employers and employees are facing rising (energy) prices: how can they meet one another halfway?
Money worries can seriously impact the (mental) health of employees. This ultimately increases the risk of absenteeism due to sickness and employees who are off work for extended periods of time. A setback in an already tight labor market. Persistently high inflation, caused partly by high energy prices, means that employers are looking for ways to financially support their employees. What are the measures available to employers and what are their tax consequences?
The most obvious solution is to index salaries. Or to pay all or a specific group of employees a one-off or temporary allowance. But free meals, discounts on healthy food or offering the assistance of a budget coach are also options.
Companies themselves are also facing rising prices as a result of sky-high inflation. Employers are therefore not particularly keen to incur additional employer costs. After all, benefits arising from employment are regarded as salary. And salaries are not only subject to payroll tax and social security contributions, which must be withheld and remitted to the Dutch tax authorities, but also to social insurance contributions and the employer’s levy under the Healthcare Insurance Act. That also applies to any perks employers offer to compensate for high inflation.
Don’t let taxes hold you back
It’s therefore important to identify the tax consequences of the various options available. And don’t forget that more income for employees may mean that they lose their entitlement to allowances. That can be prevented.
Employers can use the work-related costs rules to pay reimbursements and provisions tax-free to employees. Subject to certain conditions, this may even include a one-off allowance or food that is offered free of charge at the workplace.
We would be happy to look into options for both employers and employees. Not only financial compensation for energy prices, but also in terms of sustainable employment and vitality and well‑being. There’s more possible than you might think!