In this blog, you will read all about the cafeteria scheme, a flexible and fiscally advantageous reward system for employees. We explain what the model entails, which benefits are included, the main pros and cons, and how the modern cafeteria model distinguishes itself.

What is the cafeteria scheme?

The cafeteria model is a scheme whereby employees can exchange (part of) their gross salary for another 'reward'. Because no tax is paid on the exchanged part of the gross salary, it can provide significant tax benefits to employees. This way, costs become lower than if purchased with net salary.

The attractive aspect of the cafeteria scheme is that different components of the gross salary can be used, such as holiday pay or the 13th month. This way, the employee can decide with which salary component they want to make the exchange.

Why offer the cafeteria scheme?

Because employees can determine for themselves what they exchange the gross amount for, they essentially give themselves a discount on certain (work-related) costs. Some options include a lease bike, extra vacation days, or an additional pension plan. Additionally, the cafeteria model is also interesting for employers: the gross amount that you as an employer pay premiums on becomes lower, allowing you to save on your expenses.

Which benefits fall under the cafeteria scheme?

• Company-related training, courses, and workshops;

• Gym memberships and fitness programs;

• Savings for now or later, from a sabbatical to a personal pension plan;

• Company bike or lease car for commuting;

• Net travel expense reimbursements;

• A contribution for childcare;

• A contribution for health insurance;

• Extra vacation days that can be purchased in addition to the statutory number of vacation days;

• Costs for working from home, such as a workspace or a cost for an internet subscription.

Cafeteria scheme travel costs

When a travel expense reimbursement is not possible, or is not high enough to cover the commuting costs of an employee, the cafeteria scheme can also be used for a tax-free travel expense reimbursement. This way, the employee can allocate part of their gross salary and exchange it for extra travel expense reimbursement—regardless of the mode of transport. This maximizes the use of travel expense reimbursement.

Cafeteria scheme bike

Another example of the cafeteria scheme is the lease bike. The government introduced the new bike plan in January 2020, which ensures that the costs for a lease bike fall outside the work costs scheme. Instead, you can lease a bike with a gross-net discount.

Thanks to the new bike plan, you finance a lease bike with the gross salary of the employee. The costs for the lease bike are deducted from the gross salary, thus lowering the gross salary. As a result, the tax paid on the gross salary also decreases, providing net benefits. The employer does not have to contribute additionally, but can do so at no extra cost. The gross tax advantage can be reinvested in the lease bike. Here you can read more about the bike scheme.

Cafeteria scheme and WKR

Some employers think it’s no longer possible to utilize the work costs scheme with the cafeteria model. But it certainly is. Even if you use the cafeteria model, you can still use the work costs scheme for certain reimbursements or allowances (additional gifts on top of salary) for employees. Thanks to the free space of the WKR, you can provide those reimbursements tax-free. A difference is that the cafeteria scheme is withheld from the employee's salary, while the work costs scheme provides an extra tax-free space that employers can use to offer benefits tax-free. Here you can read more about the WKR.

Some employers use the work costs scheme for lunches, outings, or a Christmas package—others for benefits, travel costs, or reimbursement of home working costs. Often these are expenses where employees do not contribute themselves, but it is a way for employers to offer something extra. The interesting thing about benefits through Alleo is that employees can choose for themselves.

What are the benefits of the cafeteria scheme?

• Tax advantage: employees can choose different rewards with a gross-net benefit. At the same time, you as an employer see social charges decrease due to lower wage costs.

• Attractive employment: the extensive range of employment conditions makes you attractive to employees. This results in unique and distinctive employment.

• Personalized employment conditions: the strength of the cafeteria model lies in flexibility. Each employee has the opportunity to mix and match their secondary employment conditions. This way, you meet the unique wishes of each team member.

• Higher employee satisfaction: when employees can assemble their employment conditions themselves, the package fits perfectly with their life stage and interests. The result? A happier and more engaged team.

Challenges of the cafeteria scheme

Yes, the cafeteria model also has its complexities.

• Administration: each employee chooses from a range of benefits, and each choice brings its own administration. This can lead to extra time and costs due to the complexity of the administration. The more freedom of choice, the more receipts, the more difficult the processing of current WKR expenses. How do you ensure that the free space is optimized but not exceeded?

• Balance in the WKR space: with the freedom of choice in the cafeteria model comes the challenge of a fair distribution of the WKR space, which depends on the total wage sum. A 'first come, first served' approach may lead to unequal utilization of the WKR space, causing some employees not to fully benefit from the scheme.

The modern cafeteria model: the largest benefits offering, fiscally advantageous

At Alleo, we have revamped the traditional cafeteria model with a wide assortment of benefits. The result? The Modern Cafeteria Model. What are the benefits of the modern model?

• Largest range of employment conditions: thanks to our platform, employees have access to the most comprehensive employment conditions package in the Netherlands in one place. Our offerings include mobility, training & education, finance, charities, and vitality. Including access to over 10,000 sports locations and more than 100,000 courses and trainings.

• Easy and intuitive to use: the entire range of secondary employment conditions can be found in our app. We integrate seamlessly with systems like NMBRS, Afas, Loket, and Personio. Existing secondary employment conditions can also be added.

• Aligning individual needs: no package that treats employees the same. The offers on Alleo take into account the personal interests and situations of each employee.

• Financing options (with tax benefits): from the WKR, with employer contribution; from the WKR, without employer contribution; outside the WKR, without employer contribution; outside the WKR, with employer contribution.

• Tax benefits for both employer and employee: regardless of the method of financing you choose, you will benefit from a tax advantage. With the Modern Cafeteria Model, employees enjoy an average saving of 40%, while you as an employer save 18% on employer costs. Through Alleo's partner network, we also offer up to 20% collective benefits to employees. All this is possible both within and outside the WKR.