The best alternatives to a salary increase are a one-off bonus, more paid time off, remote or flexible working, a personal training budget, a visible career step and tax-efficient benefits such as meal, transport or health allowances. None of them replaces a fair salary, but when the raise budget is frozen they let HR reward people, solve specific problems and buy time without adding a permanent cost to payroll.
The question is not only what to offer instead of a raise, but to whom and for how long. An employee paid 15% below market will not stay for an extra week of holiday; a well-paid employee who wants to spend less time commuting may value two remote days more than a 2% raise. This guide covers the 12 options that work, what each costs, the tax-free limits in five European countries, and TalentUp data on which benefits employers actually advertise in 2026.
Key takeaways
- Check market position first: alternatives work for people paid around the market rate, not for those clearly below it.
- A one-off bonus costs less than a raise of the same amount because it does not compound into future years.
- In TalentUp’s 2026 job ad sample, remote or hybrid work is mentioned in 15–47% of ads depending on the country, but a dedicated training budget in less than 2% of ads in most countries: an easy way to stand out.
- Tax-efficient benefits can deliver more net value per euro than salary, within strict national limits.
- Under the EU Pay Transparency Directive, benefits count as pay: offer them on objective, gender-neutral criteria.
When an alternative to a raise works (and when it does not)
Before choosing what to offer, find out why the employee wants a raise. There are three common situations, and only two of them have a non-salary answer.
| Situation |
What is really going on |
Does a non-salary alternative work? |
| Pay is clearly below market for the role, level and location |
The employee has a better offer, or will soon |
No. Close the gap, even in steps; alternatives only buy a few months |
| Pay is around market, but the employee feels undervalued |
Recognition, workload, progression or fairness problem |
Yes. Recognition, career steps, time and flexibility address the cause |
| Pay is fine, but costs or life circumstances changed |
Inflation, commute, childcare, a new home |
Often. Tax-efficient allowances, remote days or flexible hours help directly |
You cannot tell these situations apart without data. Compare each person’s salary with current market pay for the same role, seniority and location, and look at where they sit inside their band: our guide to range penetration explains how to read that position, and balancing internal equity and market pay covers what to do when the two disagree. With inflation still eroding real wages in several countries, it is also worth checking whether a “small” raise is in fact a real pay cut.
12 alternatives to a salary increase compared
The table ranks the most common options by what they cost the employer and what problem they solve. “Recurring” means the cost repeats every year, like a raise.
| Alternative |
Cost to the employer |
Best for |
Watch out for |
| One-off bonus |
One-time cash |
Rewarding a strong year without raising the base |
Does not fix below-market pay |
| Extra paid days off |
Lost working time, no cash |
Burnout risk, long-tenure staff |
Must be recorded and applied consistently |
| Remote or hybrid days |
Low; may reduce office costs |
Long commutes, caregivers |
Role must allow it |
| Flexible hours |
Near zero |
Parents, people with fixed commitments |
Needs clear core hours |
| Compressed or shorter week |
Productivity risk if badly designed |
Retention of experienced staff |
Local working-time law |
| Personal training budget |
Fixed annual amount |
Ambitious employees, skills gaps |
Unused budgets signal no time to learn |
| Promotion path or new scope |
Low now, higher later |
High performers waiting for a step |
A title without pay can backfire |
| Meal allowance or vouchers |
Recurring, often tax-favoured |
Office-based and hybrid teams |
National limits per day |
| Transport or mobility benefit |
Recurring, often tax-favoured |
Commuters |
Usually public transport or bikes only |
| Private health insurance |
Recurring |
Families, countries with long public waiting lists |
Tax limits per person |
| Equity or profit sharing |
Dilution or share of profits |
Long-term retention |
Value is uncertain for the employee |
| Recognition programme |
Low |
Feeling undervalued |
Generic praise has little effect |
The sections below explain how to use each group well.
One-off bonus instead of a permanent raise
A one-off payment is the closest substitute for a raise and the easiest to approve. The arithmetic explains why finance prefers it: a €2,000 raise is paid every year, increases the base for every future percentage raise and often raises overtime, pension contributions and severance; a €2,000 bonus is paid once. Make the criteria explicit, so it does not look like a discretionary gift to whoever asked loudest. For design options, see our guides to bonus structures, bonus frequency and profit-sharing bonuses.
Time: extra days off and shorter weeks
Time is the benefit employees understand immediately. Common forms are extra annual leave days, a day off on your birthday, a summer schedule or reduced hours on Fridays. In TalentUp’s 2026 job ad sample, ads offering extra days or a holiday allowance of 25 days or more are common in Germany (19.4%) and the UK (17.5%), but rare in Spain, Portugal or Italy, so in southern Europe extra days off still differentiate an employer.
Flexibility: remote work and flexible hours
Remote or hybrid work is the most advertised non-salary benefit in almost every market we analysed, from 14.6% of ads in Belgium to 46.6% in Poland. Flexible hours are less often stated, except in Germany (26.9% of ads), where Gleitzeit is a long-standing practice. For employees with long commutes or caring duties, two remote days or flexible start times can be worth more than a small raise. Our guide to flexible working hours policies covers the legal and practical rules.
Learning budget and career steps
A personal training budget is the clearest signal that the company invests in someone’s future, and it is still rare: fewer than 2% of ads mention one in most countries in our sample, with the Netherlands (6.1%) and Poland (7.4%) as exceptions. A few hundred euros a year, plus the time to use them, is a credible offer for ambitious employees.
Career steps matter even more for high performers who want a raise because they feel stuck. Offer a defined path to the next level: the criteria, the timeline and the salary range that applies once they get there. Be careful with a new title without new pay: if the responsibilities grow and the salary does not, you have created a pay equity problem, not solved one. Well-designed salary bands make these conversations much easier.
Tax-efficient benefits
In many European countries, part of the package can be delivered as benefits that are partly or fully exempt from income tax: meal cards, public transport tickets, health insurance, childcare or small in-kind allowances. Because the employee pays little or no tax on them, each euro of benefit can be worth more net than a euro of salary. The limits are strict and country-specific; see the next section.
Recognition and long-term incentives
When the issue is feeling undervalued rather than underpaid, specific, timely recognition from managers and peers is the cheapest lever available; the research is summarised in our article on what happens when a company actually values its employees. For key people you need to keep for several years, consider long-term incentives that vest over time instead of a raise today.
What employers offer instead of salary: TalentUp data for 2026
To see which alternatives employers actually use to attract people, TalentUp analysed the text of a random sample of about 19,000 job ads published between January and September 2026 in ten European countries.
46.6%
of job ads in Poland mention remote or hybrid work
26.9%
of ads in Germany mention flexible working hours
32.2%
of ads in Belgium mention meal vouchers
<2%
of ads in most countries mention a dedicated training budget
Source: TalentUp job postings database, January–September 2026, ~19,000 job ads with full descriptions. Minimum estimates, see methodology below.
| Country |
Remote or hybrid |
Flexible hours |
Extra days off / 25+ days |
Meal vouchers or allowance |
Training budget |
Health insurance |
| Spain |
27.8% |
14.9% |
3.8% |
6.2% |
1.9% |
16.7% |
| Germany |
19.3% |
26.9% |
19.4% |
3.2% |
1.0% |
0.7% |
| France |
17.9% |
2.6% |
8.5% |
12.6% |
0.6% |
20.1% |
| Italy |
16.5% |
6.5% |
0.5% |
10.1% |
0.3% |
4.9% |
| United Kingdom |
20.2% |
4.3% |
17.5% |
0.9% |
0.6% |
7.4% |
| Netherlands |
19.9% |
8.1% |
3.3% |
0.3% |
6.1% |
5.9% |
| Portugal |
33.8% |
6.3% |
3.8% |
9.7% |
1.5% |
19.7% |
| Poland |
46.6% |
17.2% |
2.7% |
3.0% |
7.4% |
36.3% |
| Ireland |
23.3% |
3.3% |
5.7% |
1.2% |
0.8% |
9.2% |
| Belgium |
14.6% |
5.8% |
3.1% |
32.2% |
1.1% |
19.9% |
Three patterns are useful when you decide what to offer instead of a raise:
- Remote work has not gone away. Compared with the same period of 2024, the share of ads mentioning remote or hybrid work rose in the Netherlands (13.9% to 19.9%) and Portugal (24.8% to 33.8%) and held steady in Spain (27.8% in both years), while it slipped in Germany (22.7% to 19.3%) and France (20.1% to 17.9%). Where competitors are cutting back, keeping flexibility is itself a differentiator.
- Benefits follow tax rules. Meal vouchers are standard in Belgium, France, Italy and Portugal, where they are tax-favoured, and almost absent from UK, Irish and Dutch ads. Private health insurance is advertised most in Poland, France, Belgium, Portugal and Spain; in France, complementary health cover (mutuelle) is a legal obligation for private employers, so it says less about generosity.
- Development budgets are the gap. A dedicated training budget is the least advertised benefit in every country we analysed, even though it is cheap and speaks directly to employees who want a raise because they feel they are not growing.
Tax-free benefit limits in Europe in 2026
The value of a benefit to the employee depends on how it is taxed. These are the main limits for common alternatives to a salary increase in five countries. They change often, so confirm with payroll or a tax adviser before promising a net amount.
| Country |
Benefit |
2026 limit or rule |
| Spain |
Meal card or vouchers |
Exempt from income tax (IRPF) up to €11 per working day |
| Spain |
Public transport card |
Up to €136.36 per month, maximum €1,500 per year |
| Spain |
Health insurance |
Up to €500 per year per person (employee, spouse, children); €1,500 per person with a disability |
| Spain |
Training required by the job, company childcare |
Not taxed as in-kind income |
| Germany |
In-kind benefits (Sachbezug, e.g. vouchers, cards) |
Exempt up to €50 per month in total; €51 makes all of it taxable |
| Germany |
Public transport ticket or subsidy (Jobticket) |
Tax-free, if paid on top of the salary already owed |
| Germany |
Workplace health promotion |
Tax-free up to €600 per year |
| Germany |
Company bicycle |
Tax-free if provided on top of salary |
| France |
Titres-restaurant |
Employer share exempt from social contributions up to €7.32 per voucher, and only if it covers 50–60% of the face value |
| Italy |
Fringe benefits (goods, services, utilities, rent or mortgage interest on the main home) |
Tax-free up to €1,000 a year, or €2,000 with dependent children (2025–2027) |
| UK |
Trivial benefits |
Tax-free if each costs £50 or less, is not cash or a cash voucher, and is not a reward for work or performance |
Two rules change how you can use these benefits:
- Spain allows flexible remuneration, where the employee swaps part of their gross salary for exempt benefits, but in-kind pay cannot exceed 30% of total salary (Workers’ Statute, article 26). This raises take-home pay without raising cost. Note that the exemption is from income tax; the social security treatment can differ, so check it with payroll.
- Germany’s exemptions mostly require the benefit to be paid on top of the salary already owed (zusätzlich zum ohnehin geschuldeten Arbeitslohn). Converting existing salary into a Jobticket or health budget does not qualify, so these work as a genuine addition, not as a salary swap.
How to tell employees there is no raise this year
Alternatives to a raise fail most often because of how they are presented. A PDF about free fruit sent in reply to a pay request tells employees that the company prefers not to talk about pay. A good conversation has four parts:
- Acknowledge the request and the constraint. Explain why there is no raise budget now (a hard year, a funding stage, a company-wide freeze) without blaming the employee.
- Show where their pay stands. Share how their salary compares with the market and with their band. If they are below market, say so, and say what you will do about it.
- Make a concrete offer. Choose two or three alternatives that fit their situation, with amounts and dates, in writing. Ask what matters most to them before deciding.
- Set a review date. Give a specific month to revisit pay, and keep it. Vague promises (“when things improve”) do more damage than a clear no.
Benefits count as pay under the EU Pay Transparency Directive
Alternatives to a salary increase are not outside equal-pay rules. Directive (EU) 2023/970 defines pay as the basic salary plus “any other consideration, whether in cash or in kind”, so bonuses, allowances, extra days and other benefits are part of the comparison between men and women doing the same work or work of equal value.
That matters most for individually negotiated perks. If people who push harder get an extra allowance or a one-off bonus and others do not, you can create unexplained gaps without noticing. The transposition deadline was 7 June 2026; as national laws apply, employers must base pay, including these components, on objective, gender-neutral criteria, and the burden of proof shifts to the employer in pay discrimination cases. Employers with 250 or more workers report their gender pay gap annually from 7 June 2027, those with 150–249 every three years from the same date, and those with 100–149 every three years from 7 June 2031. If a reported gap of 5% or more in a category of workers is not justified and not remedied within six months, a joint pay assessment is required.
Practical rule: write down the criteria for every alternative you offer, apply them to everyone in the same situation, and keep a record. For where each country stands, read our update on the EU pay transparency law in 2026 and our guide to salary benchmarking for pay transparency. You can also check your pay transparency readiness for free.
A 5-step plan for a frozen raise budget
- Map pay against the market for every role, level and location, and flag who is clearly below it. TalentUp’s European Salary Benchmark Report is a starting point; our methodology explains how the market data is built.
- Protect the people at risk first. Use whatever budget exists for targeted adjustments to underpaid key people, rather than a small raise for everyone.
- Ask employees what they value, with a short survey or in one-to-ones. Remote days, time off and training budgets rank very differently across teams.
- Choose three to five alternatives from the table above, set clear eligibility criteria and check the tax treatment in each country.
- Communicate once, clearly and in writing, with a date for the next pay review, and track resignations and offer rejections to see whether it worked.
When budget returns, start with the gaps you documented. If you need market data by role, level and location to make that case to finance, see our plans and pricing.
Sources
- TalentUp. Job postings database: random sample of about 19,100 job ads with full descriptions in ten European countries, published January–September 2026, and about 25,400 for the same period of 2024 (see methodology above).
- European Union. Directive (EU) 2023/970 on pay transparency, article 3 (definition of pay). https://eur-lex.europa.eu/eli/dir/2023/970/oj/eng
- Spain. Ley 35/2006 del IRPF, article 42 (in-kind income and exemptions). https://www.boe.es/buscar/act.php?id=BOE-A-2006-20764
- Spain. Real Decreto 439/2007, Reglamento del IRPF, articles 45, 46 and 46 bis (meal, health insurance and transport limits). https://www.boe.es/buscar/act.php?id=BOE-A-2007-6820
- Spain. Real Decreto Legislativo 2/2015, Estatuto de los Trabajadores, article 26 (30% limit on in-kind pay). https://www.boe.es/buscar/act.php?id=BOE-A-2015-11430
- Germany. Einkommensteuergesetz (EStG), § 8 (2) sentence 11 (€50 monthly in-kind limit). https://www.gesetze-im-internet.de/estg/__8.html
- Germany. Einkommensteuergesetz (EStG), § 3 no. 15, 34 and 37 (public transport, health promotion, bicycles). https://www.gesetze-im-internet.de/estg/__3.html
- France. Éditions Tissot, “Titre restaurant 2026: le plafond d’exonération est fixé à 7,32 euros” (citing Urssaf, update of 1 January 2026). https://www.editions-tissot.fr/actualite/droit-du-travail/titre-restaurant
- Italy. Edotto, “Per il 2026 soglia confermata per i fringe benefit” (thresholds under article 51(3) TUIR). https://www.edotto.com/articolo/per-il-2026-soglia-a-1000-o-2000-euro-per-i-fringe-benefit
- United Kingdom. GOV.UK, “Expenses and benefits: trivial benefits”. https://www.gov.uk/expenses-and-benefits-trivial-benefits