PSD forces companies to allocate part of the net profit to employees

The legislative initiative was presented by the former USR deputy Adrian Dohotaru, the leader of the PSD deputies Alfred Simonis, the president of the work commission of the Chamber of Deputies Adrian Solomon and the Social Democratic deputies Florin Manole and Roxana Mînzatu.

The initiators claim that employee profit sharing is common practice in the Member States of the European Union.

“At the EU level, profit sharing is found in 30% of units with more than 10 employees, while 13% of European employees benefit from various profit sharing schemes (European Company Survey 2013. Eurofound) “, point out the authors of the project.

They also state that: “In Romania, the inequality between capital and labor remains one of the largest in the European Union. The labor share is consistently below 40% of GDP, despite the steady increase in the employment rate, wage increases, and in contrast to most European countries where the distribution tends to be much more equitable.

According to Eurostat data, cited by the initiators, in 2018 the share of remuneration in GDP of employees at the EU-28 level was 48% and in Romania 38%. The authors of the legislative proposal also show that the possibility of employee participation in profit was regulated until 2003 by the Public Limited Companies Law, which provided that “the founders, administrators and staff of the company will participate in the benefits, if this is established in the statutes or in the absence of such provisions, it was approved by the extraordinary general assembly ”.

Thus, at present, the possibility of distributing profits to employees is provided only for state-owned companies, which can grant these rights up to 10% of net profit, but not more than the level of an average monthly basic salary. The amounts that represent employee participation are considered salary income, taxed and included in the calculation basis of mandatory social contributions.

The bill now initiated establishes the obligation of employees to share in the profit for all companies. Thus, the draft stipulates that: “From the net profit obtained for a given annual financial year, in accordance with the approved annual financial statements, the employer has the obligation to distribute to the employees, as profit sharing, in addition to salary and other monetary rights provided by law and applicable individual and collective labor contracts a part of that net profit realized ”.

By net profit obtained, the project defines the accounting profit remaining after deduction of the profit, as the case may be, of the income tax or the specific tax of some activities.

The part destined to the participation in employee benefits will be 7.5% of the net profit realized, but through the applicable collective bargaining agreements a different percentage quota may be established, but which may not be less than 7.5 % nor higher than 25%, foresees the legislative initiative.

Only employees who are at least 12 months old benefit from the expected profit sharing, although the project allows the applicable collective bargaining agreements to establish a minimum period greater or less than the aforementioned, but not greater than 24 months. months.

Of the established quota, 80% will go to eligible employees, and 20% will go to distribution only to the highest performing employees or to all, but depending on the professional performances of the employees, the initiators also provide.

For the employer, the amounts granted to employees as profit sharing may be discounted as expenses, not being taken into account in the Annual Base for the calculation of the job insurance contribution.

At the same time, for employees, the respective amounts will be exempt from income tax and will not be taken into account for the payment of social contributions.

If adopted by Parliament and promulgated by the head of state, the law will enter into force on January 1 of the year following its publication in the Official Gazette of Romania, according to the draft.