CBA no. 90 bonus plans in times of COVID-19
17 Apr 2020
The COVID-19 pandemic is having a significant impact on Belgian companies and the economy as a whole. During this crisis, employers are confronted with numerous new challenges, one of which could be the impact of the pandemic on non-recurring result linked bonus plans. The current health crisis can impact such plans on different levels, however, the system of non-recurring result linked bonuses could also be utilised by employers to provide an incentive for employees that continue to work during these challenging times.
Collective Bargaining Agreement no. 90 - a short recap
The system of non-recurring result linked benefits was introduced by Collective Bargaining Agreement (CBA) no. 90 and allows employers to grant their workers tax-friendly bonuses based on the achievement of collective objectives during a certain reference period.
If a system of non-recurring result linked benefits is introduced in the company and the conditions set down in CBA no. 90 are met, the amounts paid out in this respect are not subject to regular social security contributions provided that the maximum amount of EUR 3,413/year per employee (figure for 2020) is not exceeded. If this threshold is observed, a specific employee solidarity contribution of 13.07% and an employer solidarity contribution of 33% is applicable, however. For income tax purposes, the amounts paid out are exempt up to a maximum of EUR 2,968/year per employee (figure for 2020).
A system of non-recurring result linked benefits has to be laid down in a bonus plan. This bonus plan has to be formalised by means of either a company-level CBA - in companies with a union delegation - or an act of accession (in companies without a union delegation). The CBA or act of accession has to be filed with the registry of the Collective Labour Relations Directorate General of the Belgian Federal Public Service (FPS) in charge of Employment, Labour and Social Dialogue.
Impact of COVID-19 on existing bonus plans
The current health crisis and significant decrease in economic activity can have a significant impact on existing CBA no. 90 bonus plans on different levels.
First of all, for bonus plans that contain financial targets as collective objectives (e.g. increase in EBITDA compared to previous financial year), it could prove to be difficult - or even impossible - to still achieve these objectives. If these objectives aren’t met, no payout to the employees will be possible. Some bonus plans still provide for a payment if the objectives are partly achieved (e.g. a lower bonus amount if 80% of the objective is met) and - depending on the actual impact of the crisis in the company - these thresholds might still be achieved. However, for companies that are significantly impacted, even achieving these partial objectives will be impossible, resulting in no bonus payout altogether.
On the other hand, the current situation could also have a positive impact on whether or not a given set of objectives underlying a CBA no. 90 bonus plan is met. For example, ecological objectives - such as the decrease in use of printing paper or decrease of CO2-emission of company cars - could be more easily met in companies that are now forced to employ mass teleworking.
Secondly, even if the objectives that were laid down in the bonus plan would be achieved, there could still be an impact of the current crisis on the actual bonus payment. Indeed, the bonus payment will in principle be paid out pro rate the actual days worked by the employees. Although some periods of suspension of the employment agreement will be automatically assimilated with working days for the calculation of the bonus payment (e.g. periods of maternity leave and annual holiday), periods of temporary unemployment aren’t. As such, if the bonus plan doesn’t explicitly state that periods of temporary unemployment will be assimilated for the calculation of the bonus, employees with periods of temporary unemployment will in principle not be entitled to the full bonus amount.
In order to determine the actual impact of the COVID-19 crisis on your CBA no. 90 bonus plan, the modalities of this plan will thus have to be carefully examined.
Introducing a new bonus plan
The challenging circumstances of today can not only impact existing bonus plans, but they could also prove to be an opportunity for new ones. Indeed, companies that are still operational might be looking for incentives for their employees and a CBA no. 90 bonus plan could be the solution.
Such CBA no. 90 bonus plan can be introduced for the company as a whole or for a certain (objectively and non-discriminatorily defined) category of workers. The objectives must be collective in nature and must be clearly defined. They may be financial (e.g. profit, turnover) or non-financial (reduction of complaints, optimisation of a production process, ecological objectives). Objectives for which it’s manifestly certain that they’ll be met at the time the bonus plan is introduced, are also explicitly ruled out. Objectives that are aimed at reducing the number of industrial accidents or absences in the company are only allowed if the company has a global prevention and action plan in this respect.
The bonus plan must also contain a defined reference period during which the objectives must be achieved. This reference period can e.g. coincide with a calendar year, but can also be as short as 3 months. As such, it’s feasible to introduce a short-term CBA no. 90 bonus plan with crisis-specific collective objectives, specifically as incentive for employees in these challenging times.
A CAO no. 90 bonus plan can even be introduced retroactively, as long as 1/3rd of the reference period has not yet passed.
Deadline for submitting bonus plans with 2020 as reference period
As mentioned above, a non-recurring result linked bonus plan can still be implemented after the plan’s reference period has already started, but only provided that 1/3rd of the reference period has not yet passed. As such, bonus plans with calendar year 2020 as reference period have to be implemented on 30 April 2020 at the latest. This means that the filing of the CBA or act of accession with the registry of the Collective Labour Relations Directorate General (see above) has to be done on that date at the latest. No extension of this deadline has been granted as a result of the current crisis. However, the FPS Employment, Labour and Social Dialogue communicated on its website that - taking into account that a significant part of the Belgian workforce is currently working from home - for bonus plans that are introduced by act of accession, the required registry of comments that should normally be available at the company premises for employees to mark their comments, can be replaced by communication of the bonus plan - and subsequent comments by the employees - via email.
If you require assistance in analysing the impact of the COVID-19 pandemic on your existing CBA no. 90 bonus plans or would like to introduce a new bonus plan, feel free to contact us.
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