Welfare Premiale_On Top_Benessere Eudaimon
20 June 2024

Reward Welfare: what it is and what changes compared to the performance bonus

Reward Welfare or "On Top" represents a fundamental form of Welfare to encourage company efficiency and establish a healthy and constructive working environment.

Reward Welfare - as a broader concept - in fact represents a change in social policies, aimed at encouraging positive behavior among its beneficiaries.

Unlike traditional systems, which provide aid based on need, Reward Welfare offers rewards for achieving specific objectives .

We now better understand why this approach is designed to improve the effectiveness of assistance programs, promote self-sufficiency and increase productivity.

Examples of Reward Welfare at state level

Not only companies but also entire states can therefore benefit from Welfare Reward systems, with programs that aim to break the cycle of poverty by promoting education and health.

Italy , for example, has experimented with Welfare Rewards through programs that reward families for regularly sending their children to school and ensuring that they receive the necessary health checks.

Scandinavian welfare states , known for their comprehensive social safety nets, have instead adopted incentive-based approaches.

To cite another example, Denmark offers financial incentives for those who participate in retraining programs after losing their jobs.

In the 1990s, US welfare reform introduced work requirements and time limits on benefits, reflecting an incentive-based approach. More recent initiatives include programs that offer bonuses for completing educational and job training courses.

Reward welfare for companies

Reward Welfare for companies is a set of policies and practices adopted by companies to incentivize and reward their employees based on their performance and results.

This type of corporate welfare goes beyond traditional forms of remuneration and benefits, offering tangible and intangible incentives linked to individual or group performance.

The goal is to motivate employees, increase their productivity and improve the company climate.

Some typical features of Reward Welfare include:

corporate bonuses and rewards

Financial rewards based on achieved objectives, such as sales, production, quality of work or other pre-established metrics.

Non-monetary incentives

Benefits such as travel rewards, gym memberships, training courses, or other experiences, aimed at improving the quality of life of employees even in their free time.

Awards and certifications

Symbolic prizes, public recognition or certifications that attest to the skills and results obtained by employees.

Career and growth opportunities

Possibility of career advancement, promotions or performance-related professional development opportunities.

Flexibility and well-being

Initiatives that improve the balance between work and personal life ( work-life balance), such as flexible hours, smart working or extra vacation days.

Reward Welfare is therefore used by companies with the aim of creating a more stimulating and rewarding work environment, rewarding employees for their commitment and promoting a positive and success-oriented corporate culture.

Reward Welfare as an alternative to the Performance Bonus

The performance bonusor PdR (also called production bonus or productivity bonus ) is an additional quota, extra compared to the normal salary, which can be exceptionally awarded to deserving employees, on the occasion of specific increases in productivity, profitability, quality, efficiency or innovation.

The taxation of the performance bonus can now be reduced to 5% only if its amount does not exceed €3,000 gross per year and the income from employment does not exceed €80,000.

Therefore, although in a subsidized form, the productivity bonus is still subject to taxation.

However, the worker can choose whether to receive the bonus in the paycheck or opt for a performance bonus converted (partially or totally) into Welfare , through flexible benefits and fringe benefits.

In compliance with the limits imposed, the Welfare implemented in this way can therefore NOT be subject to taxes or contributions, both for the employee and for the company.

To be tax-free, the performance bonus converted into Welfare must also meet certain requirements:

in the case of flexible benefits, the same limits as the PdR on the pay slip apply.

For fringe benefits , however, the 2024 exemption limits are respected, which we have already talked about here.[1]

for meal vouchers , the daily value of €8 for electronic vouchers and €4 for paper vouchers must not be exceeded.

The Welfare Reward, however, can represent a further solution, even more versatile and efficient, as the Pure Welfare represents a completely tax-free bonus, which does not contribute to the formation of work income for ISEE purposes and without any limit.

The only "limit" of the pure Welfare Reward, unlike the performance bonus and the "welfarized" PdR, however, is the fact that it represents a reward system of an "inclusive" nature and therefore requires the provision of equivalent massive services : either to all employees or at least to a homogeneous category of them.

Welfare Rewards can therefore be aimed at achieving both economic and organizational objectives.

However, the choice to take advantage of the Welfare Reward for the company is not limited only to a tax advantage, but can also prove to be the winning choice also with regards to:

● increase in productivity;

● increase in quality;

● corporate attractiveness, to retain and/or attract new talent;

● increase in profitability;

● consolidation of brand identity ;

team building ;

● reduction of disaffection from work and burnout syndrome.

In conclusion, the Welfare Reward, as well as other forms of Corporate Welfare, represents a sort of double incentive, to improve working life and the corporate image.

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