We had the honor to be guest lecturers within the AHK HR working group, where HR professionals from all industries gathered. The lecture was held on June 4, 2019. in the premises of the host Mokoro Gora School of Management.
The workshops and lecturers from the Mokoro Gora Management School were very interesting, and our colleagues Dušica Spasojević and Katarina Aćimović talked about the impact of employee benefits on work motivation (with a special focus on private health insurance).
Read more about the benefits for employees, as well as how to calculate those benefits.
Of course, we all agree that wage is the main motivator for employees, but it is compensation that came from their work in the company. While benefits make up the extra part where employees feel that they are valued by the company.
Some of the most common benefits that employers offer are:
- Flexible working hours
- Additional days of vacation
- Work from home
- Private health insurance
- Using an official car for private purposes
- Recreation of employees (gym, wellness program, yoga)
- Pension funds
- Joint employee activities (team building, family day, lunches, etc.)
- Granting loans to employees (housing, borrowing)
- Scholarships for education
And before introducing the benefits, you should answer the following questions that are shown in the picture below.
Even when benefits that are implemented and adjusted to employee’s needs, we need to properly communicate it, in order that these benefits are understood, because in the opposite employee it will not be worthwhile to appreciate the opportunities that have been assigned to them. This can be done through various websites, user benefit manuals, individual interviews, group interviews so that the employer is sure that employees understand what is being offered to them. When employees understand the impact of benefits on their lives, employees will be more loyal and productive.
Benefits that have proved to be good in our company are joint activities of employees (teambuilding, monthly lunches, sports activities), flexible working hours, work from home, additional free days for passing exams, education and private health insurance.
Influence of private health insurance on absenteeism and fluctuation of employees
Regular systematic control conducted in order to prevent disease are contributing to decreasing of employee`s absence based on long sick leaves.
Work organization in private health institutions enable employees to finish their medical controls and do necessary analysis in a short period of time, which is different from public health institutions which due to bad organization and systematization requires longer stay which implies longer absence from work.
In the analysis which has been shown, we saw that private health insurance is on the second place among all age categories of employees – a benefit which influences their satisfaction and motivation contributing in such a way contributing in higher loyalty to present employer.
Tax treatment of private health insurance
According to article 13, paragraph 1 of the Personal income tax law, under salary in sense of this law, is considered the salary which is achieved on the base of the employment relationship, defined according to the law which arranges employment relationship and other recipience of employee.
Under salary, in sense of articles 13. and 14. of the Law, are considered premiums of all kinds of voluntary insurance which employer pays for employees – insurants included in voluntary insurance, according to the law which arranges voluntary insurance (Article 14b, paragraph 1).
Extraordinary from paragraph 1 of that article of Law, by salary in sense of articles 13 and 14 of Law is not the considered premium of voluntary health insurance, which employer pays for employees – insurants, in accordance with special regulations arranging mentioned areas, by the amount which is released from paying contributions in pursuance of law which arranges contributions for mandatory social insurance (article 14b paragraph 2, point 2) of Law).
The employer pays that pays to all employees (Collective private health insurance)
Personal income tax law implies, in article 14b, that premium of voluntary health insurance which employer pays for employees – insurants, to the amount which is released from contributions doesn’t have salary treatment. Practically, according to this article, the employer doesn`t pay tax and social contributions to the premium of private health insurance for employees, to a certain amount (5872 RSD).
When the total amount of premium – contributions cross over non-taxable amount – the part which is higher than the non-taxable amount is considered as a salary and employer is obliged to calculate and pay, for the same amount, tax on salary as well as contributions for mandatory social insurance. In this case, the amount of premium and non-taxable the amount is shown separately on the payment sheet of each employee.
The employer pays for individual employee
Collective insurance premium from consequences of an accident, including insurance from work injuries and professional disease, as well as collective insurance from the case of serious disease and surgeries, which employers pay only in case of certain employee categories (not all employees) has a tax treatment according to article 13. and 14 regulations of Personal income tax law.
This is part of our lecture if you have questions about the tax treatment of benefits and the calculation of private health insurance you can send mail to our colleague Katarina Aćimović at email@example.com.