Social benefits: What are they and what are their objectives?

29 de August, 2023

Social benefits, or social vouchers, emerged after World War II, in the 1950s, in the United Kingdom. Instead of setting up canteens, some employers began distributing meal vouchers to their workers, so that they could have lunch in local restaurants and have access to a decent meal during their working day.

This model was quickly adopted in France and Belgium and was later gradually introduced in dozens of other countries.

In Portugal, meal vouchers were included in the legislation in 1979, child support vouchers in 1999 and other social benefits to support education, health and social support in 2009.

But what are social benefits in practice? What types are there? What are their characteristics and objectives? Come and find out.

What are social benefits?

Social benefits, or social vouchers, are “granted collectively to workers by public or private employers to enable them to access specific products and services that improve their working conditions and facilitate their work-life balance”(Social Vouchers International Association).

In order to ensure this access, social benefits can be used in a network of member establishments that have a contractual relationship with the entity issuing these benefits (as is the case with Edenred).

Objectives of social benefits

The purpose of social vouchers is to contribute to a higher disposable income for their beneficiaries, who thus have more purchasing power to support expenses in fundamental areas such as food, education or health, for example. In this way, these benefits promote people’s well-being and a better quality of life.

Various national and international studies, such as the OECD study “Social Vouchers: Innovative Tools for Social Inclusion and Local Development” (2021), have reinforced the positive economic impact of social benefits, as well as their role in inclusion and local development.

This is particularly evident in the context of inflation that we have been experiencing in recent months, as social vouchers maximize liquidity in expenses that represent a large slice of family budgets (such as food, for example).

At the same time, social benefits can also be used as a tool to combat inequalities by public entities – such as governments, municipalities or IPSS – which can thus guarantee access to certain goods and services for the most disadvantaged communities.

Types of social benefits

Social vouchers aim to facilitate access to goods and services in various areas, such as:

• Food: the aim is to promote the health and well-being of workers by ensuring that they have access to a nutritious meal during their working day. To this end, they can be used to purchase meals or food for their preparation.
• Childcare: can be awarded to help employees cover the costs of nurseries, crèches, kindergartens and the like. In Portugal, employees with children or dependents up to and including the age of 6 are eligible to receive this social benefit.
• Education and training: there are social benefits whose purpose is to guarantee access to education and training for employees themselves or their children/dependents (they can be used for expenses with schools, universities, school materials, books and manuals, etc).
• Health: companies can also grant social benefits in order to make it easier for employees and their families to access health care (by using them in hospitals, clinics, pharmacies, among others).
• Depending on the country, there are other types of social vouchers, in areas such as transport and mobility, sport, culture, tourism, among others.

Characteristics of social benefits

Social benefits have their own legal framework, which regulates their use and ensures that they are used for their specific purpose.

The companies that award them, as well as their recipients, have certain tax benefits associated with them, which vary according to the type of benefit. These tax advantages represent a tax saving for the company and greater liquidity for employees compared to giving the same amount in cash.

Other characteristics of social vouchers are:

• Companies are not obliged to give them, not even meal allowances (unless this is provided for in the individual or collective employment contract);
• They can be awarded in different formats (e.g. paper, electronic card or 100% digital format);
• They are not money and cannot be exchanged for money (as they are not intended to be used for other purposes);
• In the case of cards – such as meal cards, for example – they should not be confused with other means of payment or bank cards (you can’t withdraw money or make transfers);
• They can only be used in the country in which they are issued, since one of their objectives is also to promote consumption on national territory and boost the local economy;
• They can only be used in a network of establishments that have a commercial agreement with the entity issuing the vouchers (as only an accredited network guarantees the proper use of the benefit).