The modernisation act (1) extends the possibility to grant an innovation premium until 1 January 2015.
As mentioned in Laga’s 9 September 2013 Newsflash, the innovation premium is a “bonus” paid to an employee in case he/she develops an innovative product to the benefit of his/her employer.
Given the fact that this bonus is free of social security contributions as well as income taxes and does not fall under the limitations of the salary moderation rules, it can be a very attractive tool for granting employees an additional bonus on top of their normal salary.
It is important to know that:
• The premium can be granted for a wide range of innovative ideas. The added value can relate to productivity, technique, economy, organisation, wellbeing in the workplace, etc. The innovation can thus apply to products, services, (fabrication) processes or the work environment (e.g. improvement of the invoicing process, shortening of the assembly line);
• Some formal conditions must be met in order for the premium to be exempt from social security contributions and income taxes:
1. the innovation must have a clear and proven added value for the employer;
2. the project should be developed internally (may not be outsourced);
3. the innovation should be implemented by the employer or should, at least, lead to a “prototype” request;
4. the premium should not replace any other salary component or benefits in kind to which the employee is entitled;
5. the premium can only be granted to employees;
6. only a limited number of employees can be awarded a premium according to the following limitations:
• no more than 10 employees per innovation project;
• no more than 10 % of the total number of employees; in companies with less than 30 employees, a maximum of 3 employees can receive an innovation premium.
7. The total amount paid to each employee during the same calendar year cannot exceed the equivalent of the employee’s monthly (gross) remuneration;
8. The total amount of innovation premiums per employer should not exceed 1% of the total amount of salaries declared by the employer during the same calendar year.
An employer introducing an innovation premium must respect the following procedure:
1. Inform the employees that one or more innovation premiums will be granted and explain the selection criteria and project scope;
2. Inform the Federal Public Service for Economy (FOD Economie /SPF Economie) about the innovation, its added value and how it will be introduced within the company (specials applications forms are available);
3. Once the project is approved by the FPS Economy, inform the National Social Security Office (NSSO) about the employees involved and the amounts of premiums granted.
The innovation premium can be a very attractive tool for stimulating innovation within companies and motivating employees to be innovative. The procedure is straightforward, easy to implement and highly beneficial for the employer and his employees.
It is worth taking the time to verify within the company whether certain projects would fall within the scope of the innovation premium regulation while motivating employees to engage in such projects.
If this review generates a new idea, it will result in a well-deserved bonus for the employee(s) involved (with limited cost to the employer) and in a benefit for the company, improving its effectiveness.