Welfare aziendale vs fringe benefit
10 October 2023

Fringe benefits and corporate welfare: the difference

Fringe benefits and corporate welfare, the difference is not obvious.

When we talk about benefits we sometimes tend to confuse the two categories, which although similar in the eyes of end users, have different characteristics.

In this article we review both realities to understand what they are, what they include and what opportunities they offer, to the employee and the company.

Definition of Corporate Welfare and general benefits

When we talk about "corporate welfare" we are referring to a set of policies, programs and benefits offered by a company to its employees beyond the classic economic remuneration.These initiatives aim to improve the quality of life of employees and promote their well-being, both in the workplace and outside of it.

The benefits we are talking about can be customized depending on the sector in which the company operates and/or the specific needs of the employees.

The advantages in adopting company welfare plans reflect positively not only on one's collaborators, but also on the company itself, which will potentially see a reduction in absenteeism and an improvement in social reputation (and therefore the ability to attract talent - employer branding), and generally enjoy greater productivity at work.

Furthermore, corporate welfare typically means tax advantages, which vary depending on laws and regulations, both for the employee and for the company.

Among the services that fall within corporate welfare we find:
● personal and family support services;
● services relating to well-being and physical health;
● potentially also fringe benefits.

The types of services typically available in welfare plans

After having seen what corporate welfare is, let's see in practice what services are available in the most classic welfare programs.

Most of these services are part of the category of personal and family support services:
● babysitting services;
● assistance to non-self-sufficient family members;
● coverage of children's education expenses;
● scholarships;
● nurseries, etc.
● medical check-ups
● supplementary pension: we can define it as a supplementary pension program that companies make available to their employees to help them save for retirement, offering greater financial security after retirement.

Other benefits instead refer to the well-being of the person:
● nutritional consultancy;
● consultations with psychologists;
● courses of different disciplines (yoga, pilates, etc.)

Definition of Fringe Benefit and general benefits

At this point it is natural to ask: "what exactly are the fringe benefits" that we mentioned earlier and how are they distinguished from welfare plans?

It is easy to say: fringe benefits represent advantages provided to collaborators, voluntarily by the company or provided for by national contract, as a stand-alone measure or even within company welfare.

They are goods or services provided in the form of non-monetary benefits (so-called "compensation in kind"), provided by the employer as part of the employee's overall compensation package.

These benefits can take different forms and are intended to improve the employee's overall compensation, as well as contribute to their personal and professional well-being.

Since they are part of the set of compensations, fringe benefits concretely contribute to the determination of the income deriving from employment, but do not contribute to the generation of income from a tax point of view.

From a fiscal point of view, however, the entry into force of the Aid-bis Decree on 10 August 2022 has changed some aspects. During 2022, the limit below which fringe benefits do not affect employee income has been increased from 258.23 euros to 600 euros.
Subsequently, in the same fiscal period, the Quater Aid Law Decree, published in the Official Journal on 18 November 2022, further increased this limit to 3,000 euros.

In 2023, the tax-free threshold returned to 258.23 euros, but with an exception for employees with dependent children. For them, the Labor Decree has extended the increase in the exemption threshold to 3,000 euros, valid for the entire year.

Also in this case, the advantages of fringe benefits extend to both parties, company and collaborators.

On the one hand there are the advantages for the employee, who obtains:
● greater economic security, immediately and in the long term;
● very practical discounts and benefits that can be used in everyday life;
● indirectly, a better quality of life;
● more professional development opportunities, thanks to training plans potentially offered as fringe benefits;
● as regards fringe benefits assigned within the established limit, there is no taxation in terms of IRPEF, nor is there any increase in social security contributions.

On the other hand, the company also benefits from offering fringe benefits to employees, with a series of advantages including:

● talent attraction: benefits can be a key element in attracting and retaining qualified talent, an increasingly crucial aspect in the competitive scenario, in each sector.
● Increased employee productivity: Satisfied and well-motivated employees tend to be more productive in their work.
● Reduce staff turnover: offering fringe benefits can help reduce staff turnover, which is costly in terms of training and finding new employees.
● Improved corporate image: companies that provide fringe benefits - and that offer tangible support to workers in general - also enjoy a more positive image among consumers (being workers themselves).
● Tax advantages: for the employer, these are amounts that are fully deductible from business income, pursuant to art. 95 TUIR.

Types of services included in Fringe Benefits

Among the various types of services that can be found in the category of fringe benefits there are:

● Training courses: access to training courses is often considered a fringe benefit, as it helps employees improve their skills, with the possibility of future career advancement. Tools for learning a second language are a good example of this.

● Company meals: meals can be provided in the company canteen, or through meal vouchers in affiliated restaurants.

● Company transport: this category translates into discounts on public transport, or transport services organized by the company itself.

● Company car and fuel vouchers, among the most appreciated fringe benefits.

● Fitness and well-being: fringe benefits may also include access to company fitness/wellness facilities or discounts for joining affiliated gyms.

● Shopping vouchers: finally, this category includes any type of shopping voucher in various capacities. To name a few examples, travel vouchers, fuel vouchers, supermarket vouchers and many others.

● Material support for the payment of utilities (electricity, water, gas). This support is in fact a reimbursement, included for the first time in the fringe benefits from 2022 ("bill bonus").

What is the difference between Fringe Benefits and Corporate Welfare?

In conclusion therefore, "fringe benefits" and "corporate welfare" are two related, but distinct, concepts which concern advantages and benefits offered by employers to employees.

Fringe benefits are a series of specific, tangible advantages organized into goods and services. They are a possible benefit element provided within company welfare programs.
Corporate welfare, on the other hand, is a broader program that aims to promote the general well-being of employees and create a healthy, sustainable and rewarding working environment, through a series of services, programs and initiatives, which may include fringe benefits. , include them only partially or not include them at all.

Why workers like Fringe Benefits so much

It's easy to see why people are looking for these benefits. Fringe benefits are very popular with workers (and especially with families thanks to recent decrees), because they have in all respects a monetary value that can be spent immediately and which does not contribute to the formation of employee income, within the limits seen above.

These benefits then extend to various sectors and types: improving one's position with training courses paid for by the company or having discounts for periodic daily expenses.

There are certainly fringe benefits that nowadays we take for granted such as meal vouchers, while other benefits are less common, not necessarily provided for by law and can give a turning point to the well-being of employees and their organisation.

If you are a company interested in welfare solutions and want to know more, contact us!

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