No national legislation
The right to a year-end bonus is not governed by any law or collective labour agreement from the National Labour Council, meaning it does not apply to everyone. To find out if an employee is entitled to a year-end bonus, you need to refer to other legal sources.
Collective labour agreement at sectoral level
In most sectors, there is a collective labour agreement (CLA) that specifies the right to a year-end bonus. All employees in these sectors are entitled to a year-end bonus, as long as they meet the conditions (for example, a certain seniority in the company) outlined in the CLA.
These conditions, as well as the amount or calculation method of the bonus, are not the same for all sectors: it is possible for an employee in sector X to receive no or a lower year-end bonus than an employee in sector Y, even though both sectors have a right to a year-end bonus.
Do you want to find out if there is a right to a year-end bonus in your sector and what the conditions are? Visit Lex4You > Joint Committees. Then select your joint committee and look under the keyword Bonuses > Bonus(es) at the end of the year.
Other possibilities at company level
If there is no regulation in the sector, it may still be the case that the employee is entitled to a year-end bonus because this right is regulated at the company level by:
- A company CLA
- The labour regulations
- The individual labour contract
- A practice within the company. A practice exists when the year-end bonus is awarded consistently (over a sufficiently long period), generally (to all employees of the same category), and based on a fixed calculation method.
Calculation of the year-end bonus
Since there is no national legislation on the year-end bonus, the amount or its calculation must be found in the legal source that grants the right to a year-end bonus (CLA, labour regulations, etc.).
What remains net?
Once the year-end bonus is calculated, the legal deductions are applied. There are three deductions.
Ordinary social security contributions
As the year-end bonus is considered salary, social security contributions must be deducted. The employee pays contributions amounting to 13.07% of the year-end bonus.
Withholding tax
The year-end bonus is treated as an exceptional payment for withholding tax purposes. This means that the year-end bonus will be taxed differently from regular salary. The percentage of the withholding is determined based on the annual amount of normal taxable remuneration and can be as high as 53.50%.
Special contribution to social security
In the month when the year-end bonus is paid, the special contribution for social security (or solidarity contribution) is calculated on the monthly basic salary plus this bonus. If this payment occurs in the last month of the quarter, the special contribution will be calculated based on the wage components of the quarter and according to the quarterly scale.
What does Securex do for you?
Our social secretariat handles the calculation of year-end bonuses for your staff. For more information on common legal questions about the year-end bonus, check our theme "Year-end Bonus" on Lex4You.
Additionally, you can always visit our online portal MySecurex. In the search function ‘MySupport’, we have compiled the most frequently asked questions and answers. This way, you can get help quickly, even outside office hours.
Sources
- Administrative Instructions of the NSSO
- Point 59-63 of Annex III to the Royal Decree / Income Tax Act 92
