Three months after the entry into force of the National Budget for 2023, which provides for an IRC-based tax break for companies that increase salaries by more than 5.1%, the stimulus has not yet come out of the drawer. The deadlock between employers and unions over what can be considered dynamic collective bargaining, one of the criteria for granting aid, has successively postponed the measure.
If the stimulus was already in place, employers could increase deductions, in IRC, from costs with wage increases above 5.1% by 50%, as stipulated in the last signed Medium-Term Agreement to improve income, salaries and competitiveness October between the executive and the social partners.
The issue came back this Tuesday in the negotiation round in the Social Dialogue, but a solution is still not in sight. The point of contention mainly concerns whether or not to include the regulations extending collective bargaining agreements in the definition of dynamic collective contracts, a condition for companies to access such a tax incentive. These instruments make it possible to automatically extend the rules of a given collective bargaining agreement to employers and employees who have not signed the agreement. It should be noted that collective agreements generally give employees greater benefits for the purposes of the Labor Code, such as more vacation days (for example 25 instead of 22), a starting salary higher than the minimum wage (760 euros) or a weekly working day lower than that stipulated for the private sector, from 40 hours.
Employers’ federations argue that extension regulations should count towards the criterion of dynamic collective bargaining, the opposite of that of trade union structures. And the government is moving the file to the next meeting on May 10.
“There is no consensus on the application of the tax advantage in IRC,” revealed the president of the Confederation of Tourism of Portugal, Francisco Calheiros, at the end of the plenary session of the Permanent Commission for Social Dialogue on Tuesday. For the leader of the tourism bosses, “the understanding of the companies is different from that of the unions”, in that “companies defend the inclusion of extension regulations” in the eligibility criteria “and the unions do not”.
The Confederation of Trade and Services of Portugal (CCP) also considers it a “restriction” to prevent extension regulations from being counted as dynamic collective bargaining. The president of this employers’ federation, João Vieira Lopes, states that “tax breaks for companies that increase wages by more than 5.1% should be generalized”. The CCP leader also criticized the position of the executive: “The government has not set a position. The position of the government was to postpone”.
On the side of the Confederação Empresarial de Portugal (CIP), the recently sworn-in president Armindo Monteiro stressed that the granting of the tax advantage as it stands now depends on “many criteria which, in the combination of the different results, can become a void that is, it can have “no practical application”. Therefore, “CIP asked the government to clarify and simplify the criteria”. Armindo Monteiro, who made his debut as boss of bosses at the table of the Social Concert, also noted that “wages rose by 8.2% in the first months of the year”, in homologous terms, so that “companies are doing their bit contributions, taking into account that the salary increase for this year is set at a minimum of 5.1% in the income agreement.
Asked about the demands of the employers, the Minister of Labor Ana Mendes Godinho said only that “the government has presented the social partners with a proposal for application and interpretation of the tax authorities” on the tax benefit, without giving details. “There have been several meetings with the social partners who have expressed doubts about the application of the incentive and its operation and there is no result yet. There will be another meeting on May 10,” concludes Ana Mendes Godinho.
In the multi-year wage increase agreement, two criteria are laid down for the granting of the tax benefit on top of the wage increase of at least 5.1%: companies must have dynamic collective labor agreements for less than three years; and they need to narrow the pay gap between the top 10% of workers and the bottom 10% of earners.
In May, companies will stop withholding 0.925% of employees’ basic salaries for the Work Compensation Fund, which has 642 million euros.
There are also no developments regarding the way in which companies can use the money they have discounted to the Work Compensation Fund (FCT), which currently amounts to 642 million euros. The labor minister said that, with the entry into force of the Labor Act on May 1, “companies will no longer have to pay” the 0.925% of employees’ basic salary “to the Fund” in May. As Dinheiro Vivo has already reported, the amounts from the FCT will be able to be mobilized to support the costs of housing and training of employees and also to help pay compensation for layoffs, the purpose for which the fund was created.
Source: DN
