A new result-related bonus? - Deadline approaches for bonus plan with calendar year 2023 as reference period

The system of non-recurrent result-related benefits (also, “the result-related bonus”) is well established in many companies today. The possibility of granting a tax-free bonus on condition that certain collective results are achieved by one or more companies or by a group of employees was introduced in 2007 through a collective bargaining agreement (“CBA”) adopted by the National Labour Council (NLC), specifically CBA No 90. This CBA has been amended several times since then.

If a company wishes to grant a result-related bonus as reward for collective results to be achieved in the period from 1 January 2023 to 31 December 2023, this plan must be filed by 30 April 2023 at the latest. As this day is a Sunday, the plan must be registered on the first previous working day, i.e. Friday 28 April 2023.

Result-related bonus: the concept in a nutshell

The employer may grant a result-related bonus to all employees of one or more companies or a specific group of employees, provided that certain uncertain collective objectives are achieved within a specified reference period of at least three months. CBA No 90 requires these collective objectives to be “observable, transparent, definable, measurable and verifiable”.

If the objectives that are set out are successfully achieved, the employer may pay out a result-related bonus in accordance with the other agreements of the bonus plan. To the extent that the result-related bonus does not exceed a certain maximum gross amount (for 2023, this maximum amount is EUR 3,948 gross), a special social security contribution by the employer equal to 33% and a special social security contribution by the employee equal to 13.07% will be due on this bonus. For the tax authorities, the result-related bonus will be exempt from taxes, which means that the employee will have a very favourable net amount effectively in their pocket.

Timing

If the company planned to implement a new bonus plan for 2023, it is important to keep a strict eye on the timing. A bonus plan must be deposited before one third of the reference period defined in the plan has passed, with the reference period corresponding to the period within which the collective objectives must be achieved.

Specifically, this means that a new bonus plan whose targets must be achieved in the period from 1 January 2023 to 31 December 2023 must be filed by 28 April 2023 at the latest.

Bear in mind that if there is a trade union delegation within the company for the group of beneficiary employees, the bonus plan must be introduced via a CBA. This CBA must therefore be signed by all parties involved and deposite at the clerk’s office of the General Directorate for Collective Labour Relations of the FPS Employment, Labour and Social Dialogue (“FPS ELSD”) before the deadline of 28 April 2023.

If there is no trade union delegation in the company for the group of employees concerned, a result-related bonus can also be granted via an act of accession. However, the draft act of accession must first remain on display within the company for 15 calendar days so that the employees have the opportunity to comment on the content of the act of accession. After this period, the act of accession must also be deposited at the clerk’s office of the General Directorate for Collective Labour Relations of the FPS ELSD. Taking into account the period of 15 calendar days during which the draft act of accession must be posted and the deadline of 28 April 2023, the employer must allow for the necessary margin.

In any case, the FPS ELSD encourages electronic filing in both cases.

Important to note: The 28 April 2023 deadline only applies to bonus plans whose targets must be achieved between 1 January 2023 and 31 December 2023. If a bonus plan has a different reference period, the filing deadline will also differ. For example, if a plan is concluded with the second half of 2023 as reference period, the plan will have to be deposited by 31 August 2023 at the latest. It is therefore too late to draw up a plan for the first quarter of 2023: this plan should have been filed by 31 January 2023 at the latest.

Objectives

Since the creation of the result-related bonus system, companies have worked out a variety of objectives tailored to the specific needs of the company.

Since 2019, the FPS ELSD has taken a stricter stance on the type of objectives considered appropriate under CBA No 90. Specifically, the FPS ELSD is moving away from accepting “day-to-day tasks” as objectives, such as meeting deadlines, conducting correct reporting, keeping the workplace clean, etc. The FPS ELSD believes that merely performing the work correctly and complying with the employer’s instructions is remunerated by the employee’s “regular” salary. However, according to the FPS ELSD, CBA No 90 just serves to compensate an “extra” accomplishment on top of the normal work duties. In practice, only the following objectives have been accepted in recent years: economic objectives, objectives aimed at saving costs or achieving a certain level of customer satisfaction, and finally, objectives aimed at reducing absence days, sick days or accidents at work.

In February 2022, the National Labour Council formulated an opinion on the application of CBA No 90. The NLC explained what type of objectives it considered appropriate in this context, giving several examples, arranged by theme (economic or financial performance, welfare, social responsibility, ecology, mobility, etc.). Remarkably, this opinion mentioned several objectives which the FPS ELSD no longer accepted at that time (e.g., taking training courses, introducing new working methods, organising events, taking actions with regards to digitalisation, etc.).

Specifically for well-being-related and mobility objectives, the NLC proposed a concrete amendment to CBA No 90. In particular, the NLC believed that it was insufficient for the employer to declare on honour that a prevention plan existed in the company. The NLC suggested that the global prevention plan and the current annual action plan should also be attached to the bonus plan. Furthermore, the NLC believed that mobility objectives should be part of the overall and broader vision of the company transport plans and that they should only be allowed when bicycle allowances were granted to employees who use bicycles for their work-home travel. These elements were also effectively the subject of an amending CBA No 90/4 of 22 February 2022. The model forms (act of accession/company CBA) were also adapted, taking into account these new obligations.

The question then arose whether the extensive list of objectives that the NLC had proposed in its opinion (many of which were no longer accepted by the FPS ELSD in previous years) could be applied again. However, the amending CBA No 90/4 did not specify anything regarding this list of appropriate objectives. The fact that there has been no change on this point has unfortunately been seized on by the FPS ELSD, which stated that it would not change its (strict) positions it had taken in recent years on whether or not to accept the objectives set out in business plans. Indeed, practice over the past year has shown that the FPS ELSD maintains its strict point of views.

In other words, future bonus plans will still have to work with the following objectives: economic objectives, objectives aimed at saving costs or achieving a certain level of customer satisfaction, objectives aimed at reducing days of absence/sick days or accidents at work and, finally, the newly introduced “mobility objectives” for which there is indeed a legal basis due to the amending CBA No 90/4.

Reduced administrative burden

For companies without union representation, the employer has the choice of introducing the award of a result-related bonus either through a collective bargaining agreement or through an act of accession.

If the employer opts for an act of accession, he must provide all affected employees with the draft bonus plan. He must also make a register available to these employees for a period of 15 calendar days in which they can record any comments they may have. Until recently the employer had to deliver the register of comments to the territorially competent external directorate of the Supervision of Social Laws at the end of this period, even if the register remained “blank”.

In its February 2022 opinion, the NLC already confirmed that it would be useful to remove the obligation to deliver the comments register to the FPS ELSD when there are no comments. This has since been followed up legislatively: since 6 February 2023, the employer must only deliver the register if it contains comments. For a blank remarks register, this obligation falls away.

Action point

In concrete terms, the first thing to be taken into account today is a limited number of new features when drawing up a bonus plan in accordance with CBA No 90. The new model forms will have to be used, taking into account the additional requirements for applying well-being-related objectives and mobility objectives. Furthermore, when working out the appropriate objectives, the vision of the FPS ELSD will still have to be taken into account, whereby prioritising challenging economic objectives (turnover, profit, etc.) remains the “safest” choice. Finally, timing should not be overlooked: although a bonus plan can be introduced retroactively, it is limited to one third of the reference period.