This flexibility is motivated mainly by the wide variety of lifestyles and, consequently, the needs among employees. An employee who has children , for example, can opt for daycare assistance, while a single employee can exchange it for another benefit. Now, if an employee is married and is already included in the spouse’s health plan, he can give up this service and choose another one that he needs most. In this way, the flexible benefits system allows employees to select packages that best suit their realities. The current trend of increasing personalization in companies shows that organizations care about their employees individually and give importance to their needs.
How it works in companies
The flexible benefits system emerged in the 1970s, became popular in the United States and is now gaining momentum in Brazil. In European countries and Mexico, flexibilization extends even to the remuneration of employees. Here, it is usually focused exclusively on benefits.
Normally, the company defines the value of each benefit and establishes a certain amount for each employee to spend within the options available, according to their salary range. The employee then selects the types that are best suited to their needs. Some of the benefits that can be offered are:
- Health and dental plan
- Medication aid
- Life insurance
- Food or meal vouchers
- Transportation vouchers
- Chartered transport
- Fuel voucher
- Childcare assistance
- Cell phone
- Private pension plans
- Club or recreational activities
- Reimbursement for courses and education
The choice of benefits can be made annually or even more frequently, every six months. Usually plans can only be changed at the end of the duration of each contract with the service providers, so the period of choice may vary in different benefits. In the meantime, the company can analyze and redefine its priorities with the service providers, then update the options and prices.
Some companies have implemented points and credit systems for benefits. In this case, each employee has a number of credits to purchase the options available according to their monthly income. Factors such as the size of each employee’s family can also be taken into account.
In some organizations, if an employee does not use all of their points or credits in one year, they can be accumulated and used in the following year. This, as well as advancing the use of points not yet available, is usually allowed mainly in the case of health problems or expenses with education.
It is also possible to offer employees pre-established benefit packages, from which they can choose the best one for their needs. There are companies that divide packages into categories, such as health and wellness, protection from catastrophe and savings, and retirement. The choice system varies and can be adapted according to the policies of each company.
In Brazil there are more and more examples of companies that invest in the diversity of benefits for their employees. The Ericsson has implemented in its subsidiary in São Paulo a club for the families of employees, which already has 1500 members who use gyms, swimming pools, sports courts, sauna, aesthetic salon and place for social events. The Boticário group , in which 70% of the employees are women, offers babysitting assistance, assistance for early childhood education and has a breastfeeding support room for use by the employees. In addition, the company invested in projects to support pregnant women , offering courses, lectures and practical classes not only for employees, but also for the community.
How to implement a flexible benefits system
The flexible benefits system can be adopted by companies of any type or size, but it can be more advantageous for medium and large organizations due to the greater number of employees with different needs and the possibility of offering a greater variety of benefits. In small companies, the cost of offering various types of benefits may be higher and not compensate for the smaller number of employees and also for the extra operational time that is required to manage these different packages. This implementation needs to be well planned to avoid future problems.
Here are some important steps to do this:
Know what your employees want
The first step in adopting a flexible benefits system is to conduct a survey with company employees. This internal survey aims to discover the profiles and the main interests of people in each salary range.
It is important to research factors such as age, sex and marital status and number of dependents. Among a list of benefits, ask employees to answer what types they would like to have.
Assemble the benefit packages
Analyzing the research information, it is possible to think about the benefit packages that will be offered. Consider the employees’ preferred options, research the providers of these services and assemble the packages.
One of the most difficult parts of this implementation is putting together benefit packages that, even though different from each other, have equivalent values. This is essential to avoid accusations of discrimination in the company. Knowing the current value of the benefits provided, it is advisable to create a flexible benefits package at an equivalent value to avoid any harmful changes to employees and possible processes for that.
That done, analyze the feasibility of the change. Compare current costs and flexibilization costs, checking the financial impact for the company. Remember that the possible extra expenses can be reversed in greater employee satisfaction, attracting and retaining talent and reducing the company’s turnover. In the medium term, flexibilization tends to generate savings because it reduces the pressure of employees for new benefits and wage values.
A very important part of the process is to agree with the benefit providers, so that the contracts are in accordance with the new system. Be aware of the terms of the contract, which must coincide with the moment of redefining employee choices for packages.
Define how to choose and manage benefits
The company may want to work with a points or credits system, or simply offer closed package options for employees to choose from. In any case, it is important to think about how all of this will be managed.
The implementation of this system is easier if a specialized platform is used for viewing, choosing and managing these benefits, both by the company and by the employees themselves. If it is not possible to develop its own management system, there are platforms that allow companies to implement and manage flexible benefits in an integrated manner.
Introduce and officialize the new system
It is important to communicate the changes clearly and explain to employees how the new benefits system works. All aspects must be registered in a collective agreement that will need to be signed by everyone. In this way the change becomes more transparent and there is greater legal certainty for the parties.
A good practice is to provide simulation models of the system before deploying it. In this way, employees get in touch with the options and platforms that will be used in the process of choosing and managing benefits. The company may also have an early sense of what works and what aspects need to be rethought.
When choosing benefits, employees must sign a term with the details of the chosen plan. The company may or may not allow the option to be changed within a certain period. In the case of discounted payroll benefits, this must be made clear in the term and be authorized by the employee. The document must be attached to your medical record to avoid future problems and questions.
Some necessary care
In addition to taking care that the changes do not result in losses to employees, it is important to redouble the attention with the offer of benefits that have a salary nature. The company must pay attention to the financial impact that the implementation of the plan will have on its budget, since the benefits with a salary nature defined by Article 458 of the CLT reflect the payment of FGTS, INSS and payment of 13th salary, for example.
Another recommended practice is to test the new benefit management system for a while before putting it into operation. A pioneer in offering flexible benefits in Brazil, HP tested its model for one year before making it official in 1977. Thus, it is possible to anticipate possible problems without affecting employees and harming the company financially or legally.
It is also important to pay attention to the principle of equal treatment , which applies not only to salary issues, but also to the granting of benefits to employees. It does not oblige the employer to guarantee the same benefit to all employees: it is permitted to adopt a differentiated benefits policy for employees in strategic positions or when it is convenient to retain talent. However, it is mandatory to offer the same benefit options to employees who perform the same function, so that there is no discrimination or concession of privileges in an unjustified way.
In addition, for companies participating in the Worker´s Food Program (PAT), the benefit amount granted to employees must be the same for all, and there can be no distinction. As for medical assistance, if the employer decides to offer this benefit or if it is provided for in a collective agreement, it is indicated that the offer of the plans and any changes to them are made equally, so that in the future this will not be questioned in court by the employees. It is also recommended to always check specific union requirements for the categories involved.
The importance of flexible benefits
Following the instructions and taking the necessary care, the flexible benefits system can be an important innovation for employee motivation, attraction and retention of talent.
Employees will have greater understanding and choice over their remuneration, while the company also has greater control over program costs in the long run. As the various options seek to meet the needs of employees, this ends up reducing the pressure for new benefits over time. Thus, flexible benefits benefit not only employees, but also the company itself.