How to Reward Your Employees More Without Significantly Increasing Labor Costs
September 2026 - Want to reward an employee for good performance or taking on extra responsibility? Your first thought is likely a higher gross salary. However, the net amount your employee actually takes home from such a raise is often much less than the amount you, as the employer, pay. It may therefore be worth considering other forms of compensation.
Meal vouchers are one of the best-known alternative compensation benefits. If all conditions are met, they are exempt from taxes and regular social security contributions. As of January 1, 2026, a meal voucher can be worth up to 10 euros. The employer may pay up to 8.91 euros of that amount; the employee contributes at least 1.09 euros.
For employers who do not yet provide the maximum amount, an increase could therefore be an attractive way to boost employees’ purchasing power. Keep in mind, however, that sector-specific agreements may also play a role.
Eco-vouchers can also be a good option
Eco-vouchers also offer tax and social security benefits as long as you comply with the legal requirements. An employee can receive up to 250 euros per year in eco-vouchers. They can be used for energy-efficient products, secondhand purchases, sustainable mobility, and other eco-friendly products and services, among other things. Be sure to check what has been agreed upon in your sector. In various joint committees, eco-vouchers are already regulated through a sectoral collective bargaining agreement.
Reward collective results with a pay bonus
Do you want to reward employees when your company or a team achieves certain goals? In that case, a non-recurring performance-based benefit—better known as the “CBA 90 bonus”—may be worth considering.
You link the bonus to predefined, objectively measurable, and uncertain collective goals. Examples include a specific increase in revenue, fewer workplace accidents, or higher customer satisfaction.
Within legal limits, such a bonus receives favorable social security and tax treatment. Another advantage is that you reward employees for results without structurally increasing their fixed gross salary.
Reimbursement of Professional Expenses
Does your employee regularly work from home or use their own equipment for work? If so, under certain conditions, you can reimburse expenses that are actually the employer’s responsibility. Examples include a work-from-home allowance or reimbursement for the professional use of the employee’s own internet connection or computer. Such expense reimbursements are not considered additional wages, but rather a reimbursement of costs the employee incurs for work. Specific conditions and amounts therefore apply.
A bicycle allowance can also be attractive for employees who regularly bike to work.
Think Beyond Money
An attractive compensation package doesn’t have to consist solely of money. A supplemental pension, hospitalization insurance, company bicycle, smartphone, or laptop can also be appealing. In addition, you can consider benefits that primarily improve work-life balance. Extra vacation days or greater flexibility can be just as valuable to some employees as a modest pay raise.
Not every benefit is equally tax-efficient. For example, some benefits are subject to a “benefit in kind” tax. Therefore, always review the tax and social security implications before introducing a benefit.
Ask your employee what matters to them
The best solution isn’t the same for everyone. A young employee may place a high value on mobility or extra time off, while another employee might prefer pension contributions or higher net purchasing power. That’s why you should start by having a conversation. What benefits does your company already offer, and which ones are truly valuable to the employee? This way, you can put together a compensation package that’s not only tax-efficient but is also perceived as a real bonus.
Optimization Doesn’t Mean Simply Replacing Gross Salary
One final point to consider: you generally cannot simply replace existing gross salary with meal vouchers, eco-vouchers, or other tax-advantaged benefits. Sector-specific collective bargaining agreements, the applicable wage standard, and the specific terms of each benefit may also impose restrictions. Therefore, anyone wishing to give an employee a raise should look beyond gross salary alone. By cleverly combining various benefits, you can make the total compensation package more attractive without increasing labor costs to the same extent.
