When is the best time in the year to implement a cafeteria plan?

Cafeteria plans are becoming more and more popular - some things just happen. Hence, SMEs are massively searching for answers to very practical questions such as "when is the ideal time to introduce a cafeteria plan". Since the link between a cafeteria plan and an end-of-year bonus is quickly made, many think that the introduction of such a plan should take place in December. Nothing could be further from the truth! Read below the true facts surrounding proper cafeteria plan timing in 2023 and get started!

Maura Nachtergaele

Co-Founder, CEO

December 23, 2022

Cafeteria plan budgets play an important role

As explained in detail in our cafeteria plan e-book, a cafeteria plan consists of a "budget side" on the one hand and a "benefit side" on the other. One obviously serves to fund the other 😉. The most popular budgets anno 2022 are year-end bonuses and bonuses. And because these budgets are mostly linked to year-end, many SMEs think that cafeteria plans should therefore be launched in December.

Let us nuance this!

End-of-year bonus as budget

Cafeteria plans with year-end bonus budgets are usually launched in the first quarter of the calendar year. Why is this? Because the budget in the cafeteria plan is a "pre-funding" of the end-of-year premium for that same calendar year. So instead of the cash payment of the year-end bonus in December, the year-end bonus is already made available in the month of January, for example. In this way, employees have an early say on this amount and can spend the budget throughout the year on benefits they can immediately enjoy (think of vacations or a bicycle). The value of the benefits chosen is then simply deducted from the end-of-year cash bonus that will be paid in December.

Therefore, in order to launch in January of the year, it is advisable to start preparing the cafeteria plan in the last quarter of the previous year. However, this is not an obligation! A cafeteria plan preparation can start perfectly in February, to go live in March or April. Cafeteria plan launches later than June of a calendar year are not common.

🗓️ The cafeteria plan high season for preparation and launch here is September to June.

Bonus(s) as a budget

Cafeteria plans with bonuses are prepared and launched throughout the year with no restrictions. Why is this? Because the budget in the cafeteria plan is the alternative of paying out the bonus in cash. Indeed, through the cafeteria plan, employees are given the opportunity to opt (possibly in addition to cash) for other benefits with the bonus already acquired at that time. This is in contrast to the year-end bonus that is pre-funded. So instead of the cash payment of the bonus at the moment the bonus is acquired (after measuring performance, for example), the bonus is simply made available in the cafeteria plan to be spent there freely on all kinds of benefits (in addition to cash - cash always remains an option). Thus, employees have a say on the amount at the same time as in the situation without cafeteria plan, only they have more opportunities to transform the bonus into benefits that they can enjoy more (fiscally). 

🗓️ The cafeteria plan high season for preparation and launch is here all year round.

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