I was reading a thread on another message board where someone said in their european nations, a company had to redistribute up to 10% of their annual profits to employees in the form of bonuses.
What country is this? And is this common in europe?
If only! Never read about it for any other European country; definitely not the case for Germany.
And if the company suffers an annual loss, do they get to deduct up to 10% from employee salaries?
Only those companies that also require their executives to exercise out of the money stock options, perhaps.
I never heard of any country where companies are required to give a share of the profits to employees. It is certainly not the case in Ireland. However, you could have a situation where the employees own 10% of a company through an employee share ownership trust or similar arrangement, in which case the employees of that company will be in line to receive 10% of any dividend.
Apart from employees actually owning part of the company, profit sharing plans are not uncommon. Often, the profit sharing is in the form of stock distributions to employees, so they are becoming owners in that case. But I’ve never heard of any countries forcing companies to do it. Perhaps it’s particularly popular in some countries so that most companies do it there. Perhaps some countries heavily incentivize businesses to implement profit sharing through special tax breaks or something like this.
That goes against the definition of “profits”.
Salaries, wages, benefits, and bonuses are expenses, and are deducted from income before profits are determined.
Accounting wise, distributions of profits (Income -Expenses) are treated differently.
Not required here around (although might be written somewhere in firms statue), but many do it in form of indirect manners (improved working conditions, sponsored goodies, leisure, etc) and more directly in form of Christmas bonus (e.g. we did well, profits were great, here is another salary for you peon). Share stocks options are sometimes gifted that way too. IMHO it should not be required, but is common sense to do something about. It is straightforward way to boost company morale to do so when business is good. Same as tips. If you are loaded and service is good, then it is expected to the some point. And more you give it to workers, less you pay state taxes. And taxes, I believe, are generally harsher here in EU than in US.
Would it perhaps be more useful to ask for clarification on the other message board? :dubious:
If there was such a requirement, the businesses would simply make sure that they didn’t operate at a profit. As it is, already, a large number of businesses run on a deficit (expanding their business so that the next year’s take is large enough to pay off the previous year’s deficit), so it would not be difficult.
I’m wondering if this could be where the idea came from?
Employee share ownership schemes of various sorts and employee owned companies are not uncommon and are well regarded as employers.
This looks like an extension of the same idea by the Labour party in the UK. If there is a General Election and Labour get into power they will have a long list of radical policies like this they will want to implement…with howls of anguish from the business community. Whether it ever gets implemented is quite another matter.