Forthcoming changes to the legislation on profit premium (“winstpremie / prime bénéficiaire”)

On 1 January 2018, the profit premium, a simplified and attractive bonus scheme, entered into force (see our newsletter of 9 February 2018). The profit premium has rapidly become a popular bonus due to the straightforward implementation procedure and the favourable tax and social security treatment.

The current legislation, however, contains certain ambiguities which are not always clear and create practical issues and uncertainties. As a consequence, a draft bill has been submitted to parliament on 5 November 2018 in order to mitigate these issues.

The draft bill includes the following key changes to the legislation on the profit premium:

  • The prorated calculation of the amount of the profit premium will be explicitly included in the text of the law. Consequently, it will become possible to prorate the amount of the profit premium in function of (i) the work regime of employees and/or (ii) certain periods of suspension of the employment contract (however, see second bullet point).
  • Certain periods of suspension of the employment contract will have to be taken into account to calculate the amount of the profit premium, i.e. annual vacation, public holidays and replacement days thereof, the first 30 days of work incapacity, maternity leave and paternity leave.

It is expected that these changes will enter into force in December 2018 or January 2019, without retroactive effect.

Companies which are considering to introduce a profit premium can take these forthcoming changes already into account and could contemplate including a prorated calculation in the profit premium scheme.