Czech Republic: Results of annual survey on employee benefits

ING Life Insurance, in conjunction with the Confederation of Industry of the Czech Republic, have carried out an annual survey of employee benefits since 2010. Employee benefits are provided by virtually all companies which, on average, offer 10 different benefits. Mobile phones and company-produced training were the most frequently offered benefits in 2014.

Scope of survey

An annual survey of employee benefits provided by Czech companies has been carried out by ING Life Insurance, in conjunction with the Confederation of Industry of the Czech Republic (SP ČR), since 2010, with the number of participating companies ranging from 112 in 2011 to 173 in 2010. The purpose of the survey is to find out how common individual benefits are and how they differ in the companies concerned.

The 2014 survey was conducted in June and July 2014 in the form of an online questionnaire which was filled in by 171 companies from all over the Czech Republic. Surveyed companies were not selected based on pre-defined instructions to ensure a representative sample, but were only invited to fill in the questionnaire with reference to collaboration with SP ​ČR.

Benefits are not considered as wages as they are not mandatory and are granted according to a decision by the employer or by collective agreement. Some employee benefits are not subject to legal restrictions as in the case of income tax and the costs associated with them can be deducted from the tax paid by the employer.

The table below shows the percentage of companies offering employee benefits over the past five years listed according to their popularity in 2014. 

Percentage of companies providing employee benefits, 2010–2014

Source: ING and SP ​ČR

Key findings

Employee benefits were provided by a majority (99%) of the companies which took part in the survey in 2014. On average, 10 benefits were offered. Companies with fewer than 50 employees offered on average only seven benefits, whereas companies with 250 and more employees offered 11 benefits on average.

The number of benefits offered differs according to the financial situation of the company. Companies with improving economic status offered on average over 10 benefits, while companies reporting a deteriorating economic situation offered on average only eight.

Most popular benefits: mobile phones and training 

Mobile phones and company training were the most frequently offered benefits in the 2014 survey. Company training as a benefit has been increasing in the long term. Financial contributions aimed at health improvement (for the purchase of vitamins, rehabilitation, massage and so on) registered the highest increase.

Training courses as benefits were reported in eight out of 10 companies, where they are aimed at approximately one-third of employees. The most common are:

• language and computer courses (offered by 76% of companies in both cases);
• courses on the use of new technologies and materials (offered by 67% of companies;
• management and personal development courses (offered by 66% of companies).

Language courses were organised, on average, for 42% and IT courses for 32% of employees. Training in the field of management and leadership was available for 30% of employees. More specialised courses, such as courses on the use of new technologies and materials, were provided to 23% and courses aimed at personal development to only 13% of company employees.

On average, companies spent CZK 3,500 (about €130) on education and training for a lower-skilled employee, CZK 5,900 (about €215) on a junior manager, CZK 10,000 (about €320) on a senior manager and CZK 16,000 (about €580) on a top manager. This means that about 2% of company turnover was spent on training.

Insurance benefits and meal vouchers

Financial contributions to supplementary pension insurance and life insurance are traditional forms of benefits that have been provided on a long-term basis. These benefits are the eighth and ninth most frequent, and have been increasing in importance.

In 2014, pension savings were supported by 68% of companies addressed in the survey, with the frequency increasing with company size (provided by 87% of companies of over 250 employees). Compared with previous years, a higher number of companies planned to increase the amount contributed in the following year (5%). Another 1% reported that they had increased the amount in the year of the survey (2014).

Financial contribution to life insurance was offered by 49% of the companies surveyed in 2014. This was slightly less than the percentage offering life insurance in 2013 (53%). However, in the long term this kind of offer has been growing though this growth may be linked to the misuse of this product. By mutual agreement, a company can give a life insurance contribution to its employees instead of an increase in pay. As a result, the company and the employee do not have to pay tax and social and health insurance on this amount. An employee might have received up to CZK 30,000 (about €1,090) in one year and the employer might have saved about CZK 10,200 (about €370) per employee. Misuse of the life insurance contribution has been prevented since January 2015 by the amended Income Tax Act.

In contrast, traditional forms of benefits such as meal vouchers have become less popular. For many years these were the most frequently offered benefits. But in 2014 and 2011, companies' interest decreased. Radek Špicar, the then Vice-President of SP ČR, linked the drop in 2011 to the tax reform that was then under preparation and was expected to limit or eliminate tax concessions related to some benefits.

Commentary

Employee benefits represent a solid element of corporate social policies. In the long term, benefits with tax concessions such as training and education, meal vouchers, life and supplementary pension insurances, culture and sport contributions have been very popular among employers. However, companies also favour benefits with no tax concessions, in particular the provision of mobile phones. Companies have also gradually been introducing fewer traditional benefits, such as extra sick days or healthcare, and this can be seen in the growing interest in the area of health-related benefits.