Myths vs. Reality: 6 Employee Benefits Misconceptions Debunked

We are well-set with benefits and don’t need anything more

It’s not uncommon for companies to believe they are already doing well in the area of employee benefits. They emphasize offering company pension schemes (bAV), company bike leasing, and corporate benefits. However, upon closer inspection, it often becomes clear that the company pension scheme (which is legally required by every company) is mainly used by older employees, while younger ones show little interest. When it comes to bike leasing, only 10% of the workforce is actually taking advantage of it — not least because of the long-term commitment of 2-3 years. And with corporate benefits, it is quickly agreed that these are more of a pseudo-benefit or marketing gimmick that doesn’t truly differentiate the company from others — after all, corporate benefits are available for free to all companies in Germany.

In the first 3 minutes of such discussions, it becomes apparent that the company’s perception and the reality are often far apart. Of course, there are also companies that offer an outstanding benefits package, including non-cash benefits, Germany Tickets, meal subsidies, child care subsidies, and more. Unfortunately, these are still mostly large corporations. Our takeaway for small and medium-sized businesses: Look closely and seek solutions to create real benefits that excite employees while keeping administrative efforts low. Benefits should create real value, not just empty buzzwords in job ads.

A fuel card makes everyone happy.

This bold claim was literally presented to me by an HR department employee at a trade fair this year. My immediate thought was how outdated and irrelevant this statement is. The colleague’s argument that the balance on the fuel card would be spent each month, making employees happy, seemed to me a big misconception. It’s not true that any additional benefits beyond salary automatically lead to more satisfaction.

In particular, the “scattergun” approach rarely proves to be a success, as each employee has individual needs that may change over time. Therefore, a cafeteria model is generally the better choice, as it allows employees to decide which benefits meet their personal needs. I would even go a step further and claim that benefits create the most satisfaction when they allow employees to treat themselves to something they wouldn’t normally be able to afford — such as a concert ticket, a cooking course, or a premium gym membership. Fortunately, more and more modern companies are realizing this. Variety and the emotional component play a crucial role in the psychological evaluation and recognition of benefits by employees. Simply offering any benefits is not enough; it’s about recognizing individual needs and giving employees the freedom to fulfill their own wishes.

We already use non-cash benefits through fruit baskets, Germany Tickets, and company events.

Such or similar statements regularly come up in our client discussions, and it’s actually sad to hear such claims. They suggest that particularly small and medium-sized companies are not receiving adequate advice from their tax consultants regarding the optimization of labor costs. Many companies are still unaware that there is a wide range of options to utilize tax-advantaged benefits. And these can be used in parallel.

The idea that the classic non-cash benefit of €50 should only be used for company events, and the confusion that the Germany Ticket supposedly overlaps with subsidies for other mobility options (like sharing services), are just some examples of widespread misconceptions that persist. Moreover, companies often hesitate to do something wrong because they fear the complexity of German income tax law and feel unprepared to navigate this maze. Therefore, dear companies, I recommend that you ask your tax consultants clearly and be proactive: Optimizing personnel costs through benefits is a worthwhile endeavor, as there is often untapped potential that can benefit both companies and employees.

An employee doesn’t join us because of the benefits.

Of course, no one chooses a company solely because of an outstanding benefits package. The decision is always made based on the overall package, including salary, benefits, tasks, opportunities for development, flexibility, team culture, and much more. However, when changing jobs, it’s rare that there is only one offer — job seekers can choose the position they find most appealing. Thanks to platforms like Kununu and Glassdoor, we know that for similar positions, companies often pay identical or similar salaries. Therefore, industry-standard salaries are increasingly becoming a “hygiene factor,” and other aspects become the deciding criteria. We’re seeing that benefits are becoming more relevant for talent — especially among younger generations.

Now, some might argue that younger generations are less “loyal” to their employers and switch jobs more quickly to take advantage of career opportunities. However, wouldn’t you rather have an employee for 18 months who is motivated and then shares their great experience with their friends, rather than an unhappy employee who doesn’t switch because of a lack of alternatives? Therefore, a good benefits package can make a significant difference in both current and future talent acquisition.

We are an international company and want to offer the same benefits to all employees.

We regularly have customers approach us who are not only active in Germany but also in other parts of Europe or even outside Europe. These companies often have the vision of offering the same benefits to all their employees and are looking for a single global solution for benefits. However, we regularly ask our customers three important questions: Do employees in different countries receive the same salaries? No. Are the cost of living and social security contributions the same in each country? No. Is there the same tax treatment of benefits in all countries? Again, no.

The realization always follows: It makes sense to have an overarching global approach to the compensation and benefits strategy. However, trying to make everything identical for all employees will inevitably fail. It’s much more important to optimize the setup for each location, as salaries, living costs, and tax aspects differ from country to country. In the field of benefits, this is best achieved with providers who specialize in the respective market structures. Locally adapted solutions are key. Therefore, caution is advised when international benefit platforms claim to be perfectly equipped to offer benefits in Germany.

Due to the current economic situation, we unfortunately don’t have money for benefits.

This statement is highly problematic, as it only reflects half of the truth and could be damaging to the business in the long term. The economic recession, combined with the still-high inflation, is affecting everyone. Both companies and employees are struggling with rising costs. Precisely for this reason, companies should find efficient ways to reduce costs while also supporting employees to compensate for the real loss of purchasing power caused by inflation. This way, employees are protected from financial worries and their satisfaction is increased.

Tax- and social security-free benefits, in comparison to salary increases, represent an efficient way for companies to support employees during the current inflation while also reducing costs on the company side. It becomes dangerous when existing benefits are cut just to maintain shareholder profits. In such a scenario, employees will be looking for a new employer in the short to medium term, and this could mark the beginning of a mass exodus of team members. Therefore, as much as possible, companies should enable employees to have more net income from gross, with minimal overall costs for the company.