Cafeteria plans, a difficult balance

“By negotiating these plans, we now have a say”

Cafeteria plans are widespread in our business community. Ever more companies and organisations are including ever more benefits in flexible packages available to ever more staff members. It’s a tax-efficient way to give employees a little something extra. But this tax benefit also has a questionable side.

Cafeteria plans contribute little to the treasury. And they contribute even less to social security, which ensures our income when we’re ill, lose our jobs or retire. And that social security is already lacking funds. It really doesn’t need to be stretched even more.

This duality creates a difficult stance for employee representatives, who are asked by employers (and colleagues) to reach agreements about these plans. Below you can read our interview with employee representatives Marten Van Hoorn from Beobank and Patrick New from Siemens.

Van Hoorn: “In 2019, our employer first raised the idea of a CLA on a cafeteria plan. We initially rejected the idea at the time. The reasons were obvious. The system undermines social security, we didn’t want to encourage car traffic – agreements on lease cars were also included in the package – and there were some long-term uncertainties. What if the next government suddenly wants to change directions with the cafeteria plans? And what if you lose your job or become seriously ill?”

Yet you changed your mind later on…

Van Hoorn: “We had many discussions about it. But in 2020, we agreed to implement a cafeteria plan. The most important argument that convinced us is that the lack of a cafeteria plan meant that our employer had a significant competitive disadvantage to attract employees. Other banks did have cafeteria plans. It became increasingly difficult to recruit new employees. Job applicants really asked about the plans. By signing an agreement, we have been able to decide what you can include in the plan in exchange for your end-of-year bonus. In terms of mobility, lease cars and bikes, as well as first-class train travel and parking tickets have been included. In addition, you can opt for the leasing of a PC or tablet or for the funding of your individual pension pillar. You can even donate to charity.”

At Siemens, you didn’t buy into the cafeteria plan. Why is that?

New: “At Siemens, the cafeteria plan was introduced via a unilateral policy by the employer. So, there was no social dialogue involved. Well, the trade union wouldn’t have signed either way. In the metal industry, of which Siemens is part, ACV has decided not to approve any cafeteria plans because they undermine social security too much. Our employer also insisted on the introduction of a cafeteria plan. For the same reasons as Beobank: it was attractive to job applicants. But very few employees were interested in the cafeteria plan. Which also shows in the numbers. Siemens has about 800 staff members, and only 50 of them have joined the cafeteria plan so far. The car and the tablets were the most popular options. Many colleagues opted for the alternative financing of the amount they were previously obliged to contribute for their leased car. A few other colleagues opted for payment of the third pension pillar or additional days of leave. Bike leasing isn’t very popular in our company.”

Can everyone join the cafeteria plan?

New: “Almost everyone. Some groups are excluded, such as interns and expats. But other than that, anyone can join.”

Van Hoorn: “At Beobank, the plan is open to all staff members. You can take benefits to the extent of your thirteenth month, including the employer’s contribution. It was also considered to include bonuses in the plan. But we held off on that. Because if your bonus was lower or if no bonus was paid, you would have to pay extra yourself or sacrifice part of your wage. That was no option for us. Another point of discussion is that the employer wants to remove things from the plan that aren’t very popular. But that would be inconvenient for the employees who did choose those options. As we co-negotiated the plan, we now have a say on these aspects.”

What is included in Siemens’ plan?

New: “At Siemens, the plan includes many more benefits. Employees can exchange up to 10% of their monthly wage. That is a lot more than in other companies. The plan therefore has a significant impact on, for example, your end-of-year bonus and your holiday allowance. And the cafeteria plan also has long-term consequences. Your ‘new’ wage, i.e. after the deduction of what you have exchanged, counts as the basis for your pension, unemployment with company allowance, sickness benefit, etc. And the part that you exchange won’t be indexed. I think many colleagues were deterred by those disadvantages. For employees with variable wages, the calculation is more complex. Not least because the outstanding amount you exchange at the end of the year will be taxed differently.”

How did the ‘workplace’ view your decision?

Van Hoorn: “It was important to us to properly inform the staff group about our decisions. We openly explained all sides of the discussion and then allowed everyone to make the decision of whether they wanted to join or not. Employees appreciated this approach. About half of our colleagues decided to join the plan. But that doesn’t mean they actually use it. I have joined too, but I haven’t used the possibilities yet. I don’t think they’re interesting enough for me personally. I live in the Netherlands. I privately leased a car, which was the more interesting option. There are other colleagues who joined out of principle, but are still on the fence or decided not to take any benefits after they made their calculations. No, a cafeteria plan is not the most interesting option for everyone.”

New: “We have also communicated openly about the plan. We provided information about what the plan entailed, but also pointed out the negative aspects. And apparently, many colleagues have followed our advice.”

Never Work Alone 2024 | Author: Jan Deceunynck | Photo: Shutterstock