News Flash - Law on time savings account

06/05/19

A new law "introducing a time savings account" was adopted on April 12, 2019 (hereinafter the "Law") and entered into force on April 28, 2019.

The willingness to introduce a legal framework for the time savings account (hereafter abbreviated as "TSA") is quite old since it dates back to 1999. However, the social partners had never been able to reach agreement on a text so far.

How is the TSA set up? Which companies are eligible to the TSA?

The TSA may be set up either by a collective bargaining agreement or by a sectoral or national agreement on interprofessional social dialogue.

Agreements on interprofessional social dialogue will establish a general framework (national or sectoral) for companies not covered by a collective bargaining agreement and grant these companies the possibility of establishing a system of TSA, in accordance with its terms and by mutual agreement between the employer and the staff delegation.

Companies which are not covered by a collective bargaining agreement or an agreement on  interprofessional social dialogue will therefore not benefit from the provisions of the Law, in particular the guarantee of the State in the event of bankruptcy of the employer.

Who are the employees involved? Are they obliged to participate in the TSA?

The TSA may be put in place by the employer for the benefit of "all persons linked to the company by an employment contract" and benefiting from a two-year length of service.

Employees cannot be obliged to participate in the TSA against his/her will, even if the employer gives him/her the opportunity to do so.

How is the TSA supplied ?

The TSA is individual and imperatively held in hours. Upon written request of the employee, the following elements may be supplied :

  • the days of additional leave that may be granted when working time is calculated on the basis of a reference period;
  • balance of excess hours resulting from the reference period, or from the mobile schedule;
  • overtime hours worked;
  • compensatory rest provided in case of work on Sundays or public holidays falling on a Sunday;
  • the additional days of annual leave beyond the minimum provided by law (26 days since 1 January 2019) (assuming that these days have not yet been taken in the course of the current calendar year and are granted under the employment contract or a collective bargaining agreement); and
  • a maximum of 5 days of leave that could not be taken in the calendar year for reasons of sickness, maternity leave or parental leave, in order for the employees to be able to benefit from these days beyond March 31st of the following year.

The number of hours supplied on the TSA is limited by the Law to 1,800 hours per employee.

How is the TSA used?

The leave granted to the employee on the basis of the TSA, automatically counted in hours, may be used by the employee upon his/her written request. It is fixed according to his/her wishes, unless the needs of the service or the justified desires of other employees of the company do not allow this.

In all cases, leave resulting from the use of the TSA must be fixed at least one month in advance (unless the social partners agree differently).

In the event a period of illness documented by a medical certificate or a public holiday occur during a period during which the employee is enjoying a leave resulting from the TSA system, this leave is interrupted and the corresponding hours are re-credited, so that that the employee does not suffer from any loss.

In addition, the leave used in the framework of the TSA is considered as an effective period of work for the determination of annual leave entitlement and for the rights and obligations arising from the employee's length of service.

What are the obligations of the employer?

The employer must put in place a system ensuring the accurate and detailed holding of the TSA, and must also ensure that each employee can consult individually his hourly balance.

In addition, each employer who uses the TSA must reserve the financial contribution to the assets and liabilities of the balance sheet, increased by the employer’s part of social contributions.

And in case of termination of the employment contract, or bankruptcy of the company?

In the event of termination of the employment contract for any reason whatsoever, the liquidation of the balance of the TSA shall be made by the payment, by the employer, of a compensatory allowance corresponding to the conversion of the balance of accumulated hours multiplied by the hourly rate of the employee as applicable at the time of payment.

In the event of bankruptcy of the employer, the receivables resulting from the liquidation of the TSA will be guaranteed up to a ceiling equal to double the minimum social wage of reference.

What about existing TSAs?

Irrespective of a legal framework, a number of companies have set up TSA systems in consultation with the employees’ representatives bodies. The Law being silent on this situation, companies concerned will need to further analyse the consequences of the coming into force of the Law on these pre-existing TSAs and notably the possibility to maintain them even if they do not fall within the scope of the Law, as the case may be, with a modification of certain of its provisions.

Our team is at your complete disposal for any further information.

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