The FedEE reports on 'Europe: recession, what recession', 'Belgian tax-free bonus launched' and 'Vacation entitlement during sickness absence'.

EUROPE: RECESSION, WHAT RECESSION?

Whilst newspaper journalists have been warning about an imminent recession, current evidence indicates only a temporary slowdown in the rate of economic growth.

The conventional definition of a recession is two successive quarters without economic growth. During the last two available quarters, GDP at constant prices for the EU27 countries has risen by 0.5% (Q2 2007) and 0.8% (Q3 2007). Over 2007 as a whole, the EU economy grew by 2.9% and during 2008 the rate of growth is predicted by the European Commission to fall slightly to 2.4%. In fact, across the EU, real unit labour costs have fallen through each of the last five years for which statistics are available (2002-6) and the latest unemployment figures show that the proportion of people out of work fell from 7.7% to 6.9% over the year to November 2007.

Even the OECD's monthly longer leading indicator points to no more than 'a moderate slowdown in economic activity' over the next six months, with Germany and the UK faring better than the other leading EU economies. Company stocks may continue to decline in value for some time, but changes in secondary stock trading prices will take many months to filter through into sales figures or restrictions on company borrowing. There is a strong prospect that companies will be able to ride out the first half of 2008 and that downsizing will be largely confined to smaller firms and businesses in the service sector that cannot sustain growth by tapping into global markets.

BELGIUM: TAX-FREE BONUS LAUNCHED

A national collective agreement on the payment of bonuses to employees that was concluded at the end of 2007 has now been incorporated into Belgian law.

A new payment for 'non-recurrent advantages linked to results' may be introduced by a company, provided that it does not replace or substitute any other element of a remuneration package. The bonus may not exceed 2,200 euros per year and will
not be subject to any tax or social security deductions before being paid to an employee. Their employer will be subject to a special social security levy of 33% of the bonus value, although the levy will count as an employment cost and may be
offset against corporation tax.

ECJ: VACATION ENTITLEMENT DURING SICKNESS ABSENCE

An adviser to The European Court of Justice (ECJ), Advocate General Verica Trstenjak, has issued her opinion in a case concerning the effects of employee absence upon vacation entitlement.

The Landesarbeitsgericht Düsseldorf (Germany) lodged a reference for a preliminary ruling from the ECJ for an interpretation of Article 7(1) of the Working Time Directive (2003/88/EC). The main question at issue was whether workers must receive minimum annual paid leave of four weeks if their absence makes it impossible to grant the leave within the year in question - or during any carryover period laid down in national law.

In the Advocate General's view, Directive 2003/88/EC must be understood to mean that employees have a right to receive a minimum of 4 weeks' paid annual vacation. If the employee has been unable to take their full vacation because of illness in the vacation year, it should be granted at a later time.

According to this opinion, upon completion of the employer- employee relationship, an employee is entitled to financial remuneration for vacation not taken because of prior sickness absence. Moreover, a worker who is absent for the entire year does not lose their entitlement to annual vacation or payment
in lieu of vacation that has not been taken (C-350/06).

In the further case of C. Stringer et al v Her Majesty's Revenue and Customs submitted to the ECJ, Advocate General Trstenjak has also taken the view that a worker on indefinite sick leave is entitled to designate a future period as paid annual leave. However, they may not take this leave during a period in which
they would otherwise be on sick leave (C-520/06).

Copyright: FedEE Services Ltd 2008

The Federation of European Employers (FedEE) is the organisation for international employers operating across Europe. 

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