The current situation on the labour market has forced employers to look for new methods of remunerating employees. The basic salary for a job is no longer the primary determinant of the employee’s choice of work. Currently, the growth popularity of incentive programs prepared by the employer is noticeable. Paweł Dyrduł, lawyer from KG Legal Kiełtyka Gładkowski Sp.p, based in Krakow, discusses the issue of incentive programs in the context of tax optimization.
What are incentive programs?
The incentive programs that an employer creates are usually financial instruments. Very often these are simply shares or derivatives. The employee (beneficiary) has the possibility to purchase the financial instrument on preferential terms, for a nominal fee or free of charge. The beneficiary is usually a member of the management team. The financial instrument he acquires grants him the right to receive cash in the future. Generally, the amount of benefits received depends on the economic performance of an enterprise, such as the achievement of specified value of EBIT (operating profit). At the end of the period for which the financial instrument (incentive program) was issued, it is settled. Settlement is simply the payment of cash due to the employee. So the employee receives cash, which in a very simplistic way can be called as bonus.