December payroll: points for attention

December is traditionally a busy month for HR professionals, payroll agencies and others that are involved with payroll.  After all, December is the last month of the income year and the payment and settlement of salaries must be correct.  

What follows is an overview of some items that deserve special attention.

13th month

In view of the Year End festivities, some extra pocket money is always welcome. Many employees receive their thirteenth month in December. But is everyone entitled to this?

A 13th month is not legally required. Whether an employer has to pay a thirteenth month depends on the regulations in force in the joint committee and therefore depends on the sector. 

In most sectors there is a collective labour agreement (CAO) that determines the right to a 13th month.  All employees from these sectors will therefore be entitled to a 13th month, insofar they meet the conditions (for example, a certain seniority in the company) that are stipulated by the CAO.

If nothing is regulated in the sector, it may still be that the employee is entitled to a 13th month because this right is arranged at company level:

• by a company collective agreement;
• by the work regulations;
• by the individual employment contract;
• by an existing use in the company. A use exists when the 13th month has a permanent (granted for a sufficiently long period), general (to all employees of the same category) and fixed (according to a constant calculation basis) character.

Please note that it is possible that the 13th month must be prorated in function of the starting date of the employment or the work arrangement. 

Vacation days and compensation days

Legal vacation days must be taken before the end of the year and can therefore in principle not be carried over to the next calendar year. Unused vacation days are also not paid.

The same applies to compensation days as they are meant to respect the average weekly working time.  

On the other hand extra-legal holidays granted by the company can be carried over to the next year.  

An exception on the non-payment of unused vacation is, when the employee was not able to take all his vacation days for instance in case of illness during the month December or in case of  maternity leave. In those cases the unused vacation must be paid.  

The same applies when the working schedule of the employee has been changed in comparison with the year before (for instance from 38 hours to 20 hours) and the employee cannot take the number of vacation days built up the previous year.

Benefits in kind

The month December is also a good moment to verify whether all benefits in kind that needed to be taken into account, were calculated correctly and/or that no benefits were taken into account where this was not or no longer necessary.  The most common benefits are for the private use of a company car, mobile phone, data, internet, computer, Ipad, ….. that where put at the disposal of an employee by the employer.

More in general it a good time to verify whether the payroll for the whole year is correct or needs adjustments.