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Financial Participation

In Belgium, different forms of employee financial participation are possible: profit-sharing and employee share ownership, share option plans, free shares (to a certain extent), stock appreciation rights and share purchase plans.

 

All pre-2002 regulations on employee financial participation were directed at enabling various forms of participation by individual employees, such as employee shares, share option plans or the possibility of gain-sharing.

 

It was not until 2002 that the direction was changed. The Law on Profit-Sharing and Employee Share Ownership provided support for collective schemes for all employees in a company. It was explicitly not conceived as a motivation for individual employees.

 

The Belgian Law on Profit-Sharing and Employee Share Ownership is based on the following principles:

  • Participation is determined on a company basis. There are no sectoral participation schemes.
  • Each company is free to decide whether it wants employee financial participation.
  • Employers and employees negotiate the form of participation.
  • If a company introduces employee participation, the scheme must be open to all employees
  • The objective of participation is collective motivation. Other regulations promote individual motivation, such as share options.
  • Financial participation is not a substitute for wages but a supplement.

The Law basically governs three forms of participation: profit-sharing, employee share ownership and employee participation in small and medium-sized enterprises (SME) in the form of company loans. All three forms receive state support.

 

Employee shares are exempted from social security contributions for both employer and employee. Profit-sharing is subject to a flat-rate social security contribution. There are tax incentives for all schemes, but to different degrees. The higher tax incentives are for share ownership, rewarding employees’ willingness to participate in the entrepreneurial risk.

Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.