When the payslip is prepared, account 421 « Employees – Salaries payable » is credited with the gross salaries to be paid to employees by debiting the relevant expense accounts.
It is debited with :
-
the amount of advance payments on account to employees by crediting account 425 « Employees – Advance payments on account and other accounts receivable » ;
-
the amount of salary deductions notified to the entity regarding its employees, by crediting account 427 « Employees – Allowable salary deductions » ;
-
the portion of social security charges payable by employees, credited to account 43 « Social security and other social agencies » ;
-
the amount of withholding tax credited to account 442 « Contributions, taxes and duties collected on behalf of the State » ;
-
the amount of payments made to employees by crediting a cash account.
Account 422 « Social and Economic Committee » is credited with the amount available to the social and economic or other committees, by debiting a subdivision of account 647 entitled « Contributions to employee social and economic committee ». It is debited with the amount of payments made to this committee by crediting a cash account.
Account 424 « Employee profit-sharing » records the amount of profit-sharing given to employees after the date of the annual general meeting approving the financial statements in the year following the year for which the profit-sharing is given, or on the date of validity of the profit-sharing agreement if this is later than the date of the annual general meeting.
Depending on the type of profit-sharing plan, a subdivision of account 424 is debited by crediting the following accounts :
-
in the case of the allocation of company shares or fractional company shares by capitalization of reserves : 101 « Capital », and 104 « Premiums related to share capital » ;
-
in the case of the allocation of shares bought back by the company : 502 « Own shares », the account to which the shares were recorded at the time of the buy-back ;
-
in the case of the creation of a fund within the entity : subdivision of account 166 entitled « Profit-sharing funds » ;
-
in the case of payments to external investment funds and purchases of shares in open-ended investment companies (SICAV) or payments to the custodian of the mutual fund, in accordance with the company savings plan : relevant cash account.
Remaining unallocated funds, resulting from the per beneficiary cap, are maintained in the appropriate subdivision of account 424.
Management fees paid by the employer to the investment company managing the funds deposited in the context of the employee profit-sharing or company savings plans are recorded in the external expense account 628 « Sundry ».
The employer’s contribution to the company savings plan in the form of an additional payment (employee payment topped up by the company) is recorded as personnel costs in account 647 « Other social contributions ».
If the funds are not used, due to the non-agreement between employers and employees, they are transferred from account 424 to the subdivision of account 166 « Blocked accounts ».
When funds become available, the debt recorded in account 166 for blocked accounts or profit-sharing funds is transferred to a subdivision of account 424 entitled « Current accounts ».
Account 425 « Employees – Advance payments on account and other accounts receivable » is debited with the amount of advance payments on account paid to employees and other debit transactions related to personnel expenses, by crediting a cash account. It is credited, for the balance, by debiting account 421.
Account 426 « Employees – Deposits » is credited with the amounts entrusted to the entity by its employees as deposits, by debiting a cash account. It is debited, when the amounts thus deposited are refunded to the employees, by crediting a cash account.
Account 427 « Employees – Allowable salary deductions » is credited with the amount of salary deductions opposed by third parties to the entity’s employees, by debiting account 421 « Employees – Salaries payable ». It is debited with the amount of such deductions, when paid to the opposite party, by crediting a cash account.
When making accounting entries at the end of the financial year, the entity credits the subdivisions of account 428 « Employees – Accrued expenses » corresponding in particular to the amount of potential debts relating to vacation pay and employee profit-sharing by debiting the subdivision of account 641 entitled « Vacation pay » and account 691 « Employee profit-sharing ».
