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Business Accounting in Belgium: All About the Penalty Clause

A mission letter indicates a file that concretely links the company or the individual with his professional figure. Like any kind of contract, it sets out all the rights and obligations governing each party. Also, a letter of engagement can contain innumerable components, one of which focuses on the severance pay in favor of the accounting specialist. This is in case of termination of the task. This article analyzes here this kind of penal clause which can be integrated in the letter of mission of a professional accountant in Belgium.

Statutory Auditor Compensation Allowance: Definition

By definition, the termination indemnity, which is also considered as a penalty clause, indicates the amount that the company must pay to its auditor in Ixelles, Brussels and Saint-Gilles. This occurs when the digit professional’s job has been completed in the event of a number of conditions not being met.

The amount of severance pay differs according to each expert in the figure. However, it is generally high because it is intended to encourage the structure to ensure compliance with its commitments. Also, it allows the company not to change the accounting provider at any time during the accounting year. In practice, severance pay is currently 25% of all fees due for an accounting assignment.

Of course, an accountant has the full right to insert a penalty clause at the time of the establishment of his engagement letter. These severance payments have a significant impact on the non-fulfillment of the additional obligations to the agreement, which characterizes non-compliance with a number of provisions already considered in the engagement letter.

In addition, there are some institutions that have recognized the non-abusive and lawful aspect of a break-up of 25% of the salaries of a chartered accountant. However, when the professional does not collaborate with a client company but rather with an individual, the penalty clause must be a lower sum. By default, the accounting specialist must justify it. In the opposite case, the penalty clause will be found to be an abusive statement.

Payment of severance payments

The payment of the severance payment occurs only when the company has not fulfilled its commitments provided for in the letter of mission especially in matters of termination. As such, we sometimes speak of breakage notice which is systematically mentioned in renewable tasks by tacit renewal. Also, the notice of termination establishes a period beyond which the task is renewed automatically for a complementary year.

For example, a company may send a letter with acknowledgment of receipt to its auditor in Ixelles on 30 June. It informs him of his desire to terminate the mission in the immediate future without waiting for the time of preparation of the balance sheet of the current year. It normally ends its financial year on December 31st. The notice of termination is three before the end of the year. The accounting specialist has already made 1000 euros of mission and his salaries are 2000euros throughout the year. In the event that the company has not complied with its notice, it will have to pay to its accountant the 25% of its fees, ie the amount relating to the termination indemnity which is equal to 1500 euros.

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