Suspension of the employment agreement - the unkind consequences for the benefits in kind
02 Dec 2020
For a few months, many employees have been confronted with the suspension of their employment agreement due to temporary unemployment. During the suspension of the employment agreement, the employee’s entitlement to benefits in kind (private use of the company car, laptop and smartphone, etc.) can be impacted if the employer is not paying ‘salary’ during the suspension. In this newsletter, we guide you through the main principles.
Suspension of the employment agreement - what’s in a name?
On many occasions, an employee’s employment agreement is suspended. Prime example is the suspension of the employment agreement due to temporary unemployment. Other common events of suspension of the agreement are suspension during a public holiday or during the employee’s sickness leave.
No obligation to pay salary means that the benefits in kind can be impacted
Does that mean that the benefits in kind are invariably impacted whenever the employment agreement is suspended? Absolutely not.
Only in the event that the employer is exempt from his duty to pay salary will he - in theory - be relieved of his commitment to grant the agreed benefits in kind.
Three cases of suspension highlighted
Back to our three examples - will the benefits in kind be impacted in these cases?
Where the agreement is suspended due to temporary unemployment, the employer is exempt from paying the employee’s salary, as the National Employment Office (“RVA”/“ONEM”) provides for the payment of unemployment benefits. As a result, the employer is also exempt from granting the benefits in kind. Keep in mind - as a side note - that this only applies to the regime of complete suspension of the agreement. In the case of partial unemployment, the benefits in kind may in principle be granted fully.
Where the agreement is suspended during a public holiday, the employer is by law required to pay the salary for this day off. As a result, the entitlement to the benefits in kind remains intact.
Lastly, where the agreement is suspended during an employee’s sickness leave, the employer is obliged to pay the salary during the period of guaranteed salary. During this period, the benefits in kind are also to be granted. After this period, the benefits in kind may in principle no longer be granted.
Rule of thumb: check the agreement and the policies
Even though, in principle, the employer is exempt from granting the benefits in kind in certain cases of suspension of the employment agreement, one should always check the employment agreement concerned and the policies (car policy, insurance policy etc.) in place. This is because contracts and policies may provide that the entitlement to the benefit in kind remains unaffected by any suspension of the employment agreement (be it for practical reasons - it may be difficult in practice to ask the employee to return his company car for short-term periods, or for HR reasons - the employer may consider it not appropriate to claim repayment of certain benefits in kind). If, in this respect, nothing is provided in the employment agreement or in company policies, it is strongly recommended to document practices or adopt a clear policy, in order to avoid possible issues in this regard.
If you have any questions regarding the above, don't hesitate to get in touch.
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