One-off purchasing power premium voted into law
24 May 2023
During last week’s plenary session, the Chamber of Representatives voted the draft act containing measures regarding the wage negotiations for the period 2023-2024 into law. Together with the Royal Decree of 23 April 2023, this act lays down the regulatory framework for the introduction of a one-off purchasing power premium of maximum EUR 500 or EUR 750 (depending on the circumstances) in companies that achieved good results in 2022.
The purchasing power premium will take the form of consumption vouchers, exempt from income taxes and regular social security contributions (an employer contribution of 16,5% will, however, be applicable). Whether or not a company can – or is required to – award the premium to its employees will firstly depend on negotiations at the industrial level. Only if no collective bargaining agreement (CBA) is concluded within the competent joint committee, the ball will be in the employer’s court.
Wage negotiations for the period 2023-2024
Every two years, the social partners negotiate an inter-professional agreement that, among other things, includes the maximum margin of wage increase for the coming period. These wage negotiations are based on a report published by the Central Economic Council, which sets out the maximum increase in wages (the so-called wage norm), taking into account wage developments in neighbouring countries. The report for the period 2023-2024 showed that, owing to the system of mandatory indexation of salaries – which surpassed 10% in 2022 due to soaring inflation – there was no margin for additional wage increases during the 2023-2024 period.
This resulted in difficult negotiations between social partners, necessitating governmental intervention to address this aspect of the inter-professional agreement. To reach a compromise, the government maintained the wage norm at 0%, but introduced the possibility of awarding a one-off net purchasing power premium – in the form of consumption vouchers – by companies that achieved good results in 2022. When awarded, this purchasing power premium will thus not be factored into the calculation of the company’s wage cost evolution.
A new type of consumption vouchers: the purchasing power premium
The purchasing power premium’s regulatory framework provides for a cascading system to determine whether or not a company can – or is required to – award consumption vouchers to its employees. The initiative firstly lies with the different joint committees. If no industry-level CBA is concluded, the premium can be awarded by company-level CBA or – in case there’s no union delegation in the company or if it concerns a category of employees for which no CBAs are concluded – via individual written agreement.
As mentioned above, the determining factor for both the possibility to award the purchasing power premium and its maximum amount is the fact that the company achieved good results in 2022. This notion is, however, not defined by law but rather has the be specified in the instrument that introduces the premium:
In the case of an industry-level CBA, two definitions must be included. The first definition pertains to ‘high profits in 2022’, allowing for a maximum premium of EUR 500. The second definition pertains to ‘exceptionally high profits in 2022’ allowing for a maximum premium of EUR 750;
In contrast, a company-level CBA only needs to provide a justification demonstrating that the company achieved good results during the crisis. In such cases, the maximum premium that can be awarded is EUR 750.
The purchasing power premium will be granted in the form of consumption vouchers and can be issued between 1 June 2023 and 31 December 2023. The vouchers will remain valid until 31 December 2024. Employees will be able to use the vouchers to buy food, as well as products and services with an ecological nature (in essence, it’s a combination of a meal voucher and eco voucher).
If the purchasing power premium-consumption voucher meets all of the necessary conditions, the amount will be exempt from income taxes and regular social security contributions. However, a specific employer contribution of 16.5% will nonetheless be applicable.
Conclusion
Following the act containing measures regarding the wage negotiations for the period 2023-2024 being voted into law, the legislative framework for the one-off purchasing power premium is complete. This framework entered into force retroactively as from 1 May 2023 and companies can already start negotiations on the attribution of the premium, however, it’s recommended to await the industry-level negotiations on this topic.
If you have any questions regarding the granting of the purchasing power premium, do not hesitate to reach out; we’d love to hear from you!
