As you know, since 1 January 2008, it has been possible for Belgian employers to introduce a collective bonus plan which qualifies for favourable tax and social security treatment, provided the plan meets the applicable criteria provided for in CBA No. 90 and the Act of 21 December 2007.
In December 2010, the collective bonus system was re-evaluated and a new collective bargaining agreement was concluded, CBA No. 90bis.
The most important changes to the collective bonus system introduced by CBA No. 90bis are summarised below.
- With respect to the introduction of a collective bonus plan
An employer that wishes to introduce a collective bonus plan is now obliged to do so using either the model CBA or the model act of accession, both of which are appended to CBA No.90bis.These models can be found at www.werk.belgie.be ("Procedures and forms").
- With respect to the procedure if the bonus plan is introduced by means of an act of accession
a) When submitting the proposed plan to the competent authority, the employer must also submit a sworn statement (affidavit) attesting to whether the employees have (or have not) commented on the plan in the register placed at their disposal for this purpose and that this register has been sent to the Labour Law Inspectorate. If any comments have been made, the employer should submit another sworn statement attesting to whether diverging opinions have been reconciled.
The register placed at the employees' disposal for comments must still be submitted to the Labour Law Inspectorate, but the latter need no longer provide an acknowledgement of receipt, which must thus no longer be included in the file submitted to the competent authority (i.e., the Federal Public Service for Employment, Labour and Social Dialogue). The employer's affidavit indeed replaces the acknowledgement of receipt.
b) As you will recall, the competent joint committee is entrusted with reviewing the form and substance of the bonus plan. If the competent joint committee fails to conduct such a review or fails to issue a decision within two months from receipt of the act of accession, the plan will be referred to the competent official of the FPS for Employment, Labour and Social Dialogue for review.
If the competent official rejects the bonus plan, the employer now has the possibility to remedy, during the course of the procedure, any possible irregularities in the plan. In this way, if the plan is initially rejected, the need to restart the procedure by submitting a new plan for a new reference period can be avoided.
Finally, if the competent public official does not take a decision within one month from receipt of the amended bonus plan, the plan will be deemed approved.
- With respect to the content of the bonus plan
a) Employers were already entitled to prorate the bonus, based on the time actually worked by the employee in question over the reference period, with maternity leave treated as days effectively worked. Henceforth, annual holidays (both those voluntarily taken by the employee and due to the annual closure of the business) and public holidays (as well as public holiday make-up days) must also be treated as days effectively worked for the purpose of calculating the employee's bonus.
b) The CBA or the act of accession, as the case may be, must mention the precise number of employees in the company who are affected by the plan at the time of drafting the CBA or the act of accession and whether the company has a prevention plan (in particular if the company has linked the collective bonus objectives to a reduction in the number of occupational accidents or the number of absences).
Please note that these changes will apply as from 1 April 2011. Thus, any bonus plan filed on or after 1 April 2011 with the Directorate General for Collective Labour Relations should reflect these changes.
The National Labour Council (Nationale Arbeidsraad/Conseil National du Travail) has requested the various inspectorates to proceed with audits in order to verify strict compliance with the statutory provisions on bonus plans.
Finally and in general, please note that for 2011, the maximum bonus per employee has been set at EUR 2,358. This means that if a collective bonus is paid in 2011, an amount of EUR 2,358 per employee will be exempt from taxes and social security contributions in the hands of the employee, regardless of the time at which the collective bonus is paid (although the determination of whether the plan's targets are met should be based on performance in 2011). This amount thus represents a net gain to the beneficiary.
The employer must still pay annual social security contributions at a rate of 33% on all bonuses paid. However, the total cost (bonuses + social security contributions) is deductible for corporate tax purposes.
For 2012, the maximum bonus per employee will obviously differ, and it is therefore advisable to mention in the plan that the bonus is subject to indexation.