South Africa continues to face an unforgiving economic climate. Households are grappling with rising costs of food, fuel, electricity, and school fees, while salary increases remain modest or frozen altogether. As many employees search for ways to stretch their income, one practical, cost-neutral solution stands out: flexible benefits.
Tanya Tosen
Tax & Remuneration Specialist
In this environment, it’s no longer about increasing salaries-it’s about making existing packages work harder. Employers who embrace flexible benefit structures can provide meaningful financial relief to employees without increasing payroll costs, all while boosting morale and productivity.
Why Every Rand Now Counts Even More
Adding to the financial pressure is a hidden tax burden that most employees are unaware of: bracket creep.
For the second year in a row, SARS has not adjusted the individual tax tables, despite inflation and rising living costs. This means that as employees receive small increases—whether through performance-based adjustments, annual increases, or fringe benefits—their earnings may shift into higher tax brackets. The result? They pay more tax on the same real value of income.
This form of “silent taxation” eats away at employees’ disposable income, leaving them with less take-home pay—even if their gross income technically increased. And most employees don’t understand why their paychecks feel lighter than expected.
Flexibility = Financial Relief
A flexible benefit model offers employees the opportunity to adjust the split between cash and benefits within their total cost-to-company package, based on their immediate needs and life circumstances.
Here’s how flexibility can translate into real-world support:
🔹 Scenario 1: Protecting What Matters Most
An employee with a dependent facing serious health concerns may choose to retain or even upgrade to a comprehensive medical aid plan. They may sacrifice a portion of their cash salary in exchange for peace of mind, knowing their loved ones are adequately covered.
🔹 Scenario 2: Freeing Up Cash Flow in the Face of New Tax Pressures
With household budgets under strain and the impact of bracket creep taking its toll, another employee may need to reduce their retirement contributions to the minimum. This not only increases their take-home pay in the short term but also avoids locking away funds only to withdraw again under the new two-pot retirement system—often benefiting intermediaries and SARS more than the individual.
🔹 Scenario 3: Tailoring Benefits to Fit Personal Priorities
Not all employees require the default level of insured benefits. For example, someone with no debt or financial dependents may choose to reduce their standard death cover. Within a flexible CTC framework, this “freed-up” benefit value can be redirected into their monthly cash salary—providing extra liquidity when it’s needed most.
Empowerment in a Time of Uncertainty
By offering flexible benefits, employers empower their workforce in three key ways:
A Win-Win for Employers
From the employer’s perspective, flexible benefits are a cost-neutral way to enhance employee value, particularly in years where salary increases are unlikely or at a minimum. You don’t pay more—your people simply use their existing package more effectively.
It also signals empathy, responsiveness, and innovation—qualities that help retain top talent and protect your employer brand during turbulent times.
Final Word
South Africans are doing more with less, and employers can be part of the solution. Flexible benefits won’t solve every financial challenge—but they can make a meaningful difference in the lives of your employees, especially when combined with clear communication about the real impact of rising taxes and bracket creep.
In uncertain times, offering your employees more control, more clarity, and more flexibility could be the most valuable benefit of all.
