Profit incentives: Five years of sharing company profits with employees

Profit incentives: Five years of sharing company profits with employees
Companies in sectors where hiring new staff is challenging often us the bonus. Credit: Belga/ Dirk Waem

Since 2018, employees in Belgium have been able to share in the profits of the previous financial year via a profit bonus. Now in its fifth year, the scheme remains popular, with a higher number of recipients than last year.

The profit bonus, which sees employees share in profits made by their employer in the previous financial year, was given to more employees in the first seven months of 2022 than last year. This is logical, as last year's bonus was based on profits made during the pandemic-driven year, while the 2022 bonus is based on 2021: the year of economic recovery.

"This year, profit incentives are almost back to what they were before the pandemic: 1.62% of all employees were given one, which is higher than last year (1.57%)," Isabelle Cornelis, Consultant at SD Worx, said.

Currently, the median gross amount is €900, up from €700 last year. 2020 was the most successful year so far, as 1.79% of employees received the bonus as part of the 2019 profits.

Winning war for talent

The extra-legal benefit of a favourable taxing rate comes on top of people's salaries and can be vital for sectors in which staff retention is crucial, certainly if it is very difficult to attract new talent.

"Employers are keen to retain staff and also give them a financial edge by sharing in the profits. Healthcare, construction, food production, ICT, transport, but also social services, for example, use the profit bonus to reward their people extra," SD Worx stated.

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In relative terms, the profit bonus is most popular among SMEs with 100-250 employees and larger companies with 500 employees or more. However, even within these companies, the instrument is limited to less than 4% (3.55% among large organisations with 500-999 employees and 2.91% among SMEs with 100-250 employees).

While Cornelis celebrates that many companies are handing out these bonuses, she stressed that "we are not there yet," as the number of employers that are giving the bonus decreased to 1.45% this year. "It is still an innovative motivational tool. Not all employers are doing it yet," she concluded.

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