Calculation method of the profit premium fine-tuned

21 Dec 2018

The Act containing Various Provisions on Employment was published today in the Belgian State Gazette. This act modifies the provisions relating to profit premiums. Profit premiums enable the employer to distribute a part of the profits of the financial year to its employees. The purpose of the new act is to fine-tune the calculation method of such profit premiums.

Calculation on the basis of actual work performance

The new wording of the Act allows one to calculate the amount of the profit premium on the basis of the employee’s actual work performance in the last completed financial year. This calculation method is an option, not an obligation. It allows the employer to adjust the amount of the premium in accordance with the working regime (full-time/part-time) and depending on the periods during which the employment contract is suspended.

Exclusion of certain categories

The act also gives the employer the possibility to exclude certain categories of employees from profit premiums. It concerns employees who left the undertaking after dismissal for serious cause or employees who have themselves resigned (unless the resignation results from a serious cause on the part of the employer). If the employer chooses to exclude, it is not obliged to exclude both categories of employees. The exclusion of one category is perfectly possible.

Periods of suspension that must be taken into account

In addition, the employer who provides for the payment of profit premium is obliged, when calculating, to take into account certain periods during which the execution of the employment contract is suspended. This in particular includes days of annual leave, statutory holidays, the first 30 days of incapacity for work, periods of maternity leave, and so on. This ensures that the amount of the profit premium would not be adjusted if, for instance, an employee takes maternity leave.

> Make use of the new calculation method

The new rules with regard to the calculation method of the amount of profit premiums enter into force on 1 January 2019. If you as an employer grant profit premiums, we advise you to check whether you can use the regime in an interesting way and whether you do take into account the listed periods of suspension.