Stock options and severance indemnities

January 10, 2011

On 31 May 2011, the Labour Court of Brussels has reconfirmed that stock options must be included in the calculation basis of the severance indemnity payment.

Nature of the stock options

The case concerned the character of stock options and whether or not they fell under the notion of an advantage acquired in the framework of ‘an employment agreement’ in the sense of article 39 of the Act of 3 July 1978 regarding employment agreements (“Act”).

The decision is the result of an appeal against a judgement of the labour tribunal of Brussels on 29 June 2009.  The Court applied the reasoning of the Supreme Court in its decision of 4 February 2002 but in addition considered how the benefit should be calculated.

On that basis, the Court of Appeal reconfirmed the character of the nature of the stock options, i.e. the stock options are advantages falling under the Act and therefore to be included in the calculation basis of the severance indemnity payment.  It also ruled that the advantage is deemed acquired at grant and not upon vesting or exercise.

The “added value” of the Court’s decision

Another discussion was the determination of the value of such advantage falling under the scope of article 39 of the Act of 3 July 1978.

In Belgium, in most cases, stock options are taxed at grant on the basis of a lump sum valuation.  The applicable tax rate is the marginal tax rate, increased by communal taxes and, in certain cases, the application of the Belgian social security contributions (employees and employers).

For labour law purposes, the Court rules that the value of the stock options to be included in the calculation basis of the severance indemnity payment is the fiscal lump sum valuation at grant.


This decision is a significant step towards clarification in this matter and is relatively favourable to employers by taking the fiscal value at grant into account and not a later value at vesting or exercise.

It is an important decision considering that Brussels is the jurisdiction handling most of the prominent cases.


Labour Court of Appeal of Brussels, 31 May 2011, RG n°2009/AB/52708 (judgment not yet available).

For further information or to discuss any of the issues raised, please contact Jean-Louis Davain or Soubiha Ouamari on +32 2 743 43 45.


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