What happened to the Employment Compensation Funds?
The Employment Compensation Fund regime underwent significant changes following the entry into force of Decree-Law no. 115/2023.
As of 2024, the obligation to make new contributions to the FCT was abolished, effectively turning it into a closed fund in relation to contributions made in the past.
The balances held in employers’ accounts were consolidated into a global account, with a mechanism allowing companies to recover the amounts attributable to them, provided that the funds are used for purposes permitted by law.
Until when can the funds be redeemed?
The deadline is 31 December 2026.
The legislation establishes that the balances held in employers’ global accounts may be mobilised until this date.
This deadline deserves particular attention, as balances that are not redeemed may be transferred to the FGCT.
Companies that still have amounts in the FCT should therefore avoid leaving this assessment until the end of 2026. The balance, applicable conditions and eligible purposes should be reviewed sufficiently in advance to allow the process to be properly prepared.
What can FCT amounts be used for?
Redemption does not constitute a freely available distribution of the accumulated amounts. The use of these funds is subject to the purposes established by law.
The main permitted purposes include:
- Support for employees’ housing;
- Investments agreed between employers and employee representative structures, including investments in equipment and social facilities such as childcare facilities or canteens;
- Funding of professional training and certified employee qualifications;
- Payment of up to 50% of the compensation due upon termination of an employment contract, in relation to employees covered by the regime and subject to the legally established conditions.
The different purposes may be considered when planning the mobilisation of the funds, provided that all applicable legal requirements are met.
Are there limits on the number of redemptions?
Yes.
The legislation establishes different rules depending on the amount of the employer’s global balance.
- For balances below €400,000, the company may mobilise the amounts up to two times;
- For balances above €400,000, up to four mobilisations may be made.
These mobilisations must take place within the legally established period, and the actual use of the funds must also comply with the applicable FCT timeframe.
An opportunity companies should not overlook
For many companies, the amounts accumulated in the FCT represent financial resources that can now be directed towards specific organisational needs.
The possibility of using these funds for employee training and qualification, certain measures relating to housing, or investments that improve benefits and working conditions for employees, may represent an opportunity to strengthen human resources policies without having to finance the entire cost through additional company resources.
Furthermore, where the legal conditions for using the funds to pay compensation arising from the termination of employment contracts are met, the FCT may help reduce the financial impact associated with certain employment terminations.
What should companies do?
Companies that made contributions to the FCT should ideally carry out an assessment in four stages:
1. Confirm the available balance
The company should verify the amount effectively available in its global account and identify any outstanding amounts or adjustments that may affect the amount available for mobilisation.
2. Identify the purpose of the redemption
The company should determine how it intends to use the funds, ensuring that the intended use falls within the purposes legally permitted.
3. Plan the mobilisations
Depending on the amount available, it may be necessary to plan one or more mobilisations, taking into account the legally established limits.
4. Do not leave the process until the last minute
The 31 December 2026 deadline is critical. Companies should begin the assessment well in advance in order to avoid delays, errors or the risk of being unable to use the funds within the legal timeframe.
What happens if the company does not redeem the funds?
This is one of the most important issues to consider.
Amounts held in employers’ accounts that are not redeemed, or that cannot otherwise be transferred, may revert to the FGCT in accordance with the applicable legislation.
Consequently, a company with a balance in the FCT should not assume that it will be able to recover these amounts after 31 December 2026.
The end of 2026 should therefore be regarded as a genuine deadline for decision-making and for preparing the redemption process.
Conclusion
The redemption of Employment Compensation Fund balances represents a significant opportunity for companies that still have accumulated funds available.
The changes to the regime have made it possible to mobilise these amounts for different purposes, particularly those related to employee training and qualification, housing, investments in employee benefits and, in certain circumstances, compensation arising from the termination of employment contracts.
However, this opportunity is subject to a clear time limit:
31 DECEMBER 2026 IS THE DEADLINE COMPANIES MUST KEEP IN MIND.
Companies with FCT balances should therefore check how much is available, assess the possible uses and prepare the corresponding mobilisation process well in advance.
How can Nominaurea help?
Nominaurea can assist companies in analysing and managing the redemption of Employment Compensation Fund balances, including:
- analysing the balances available in the FCT;
- identifying the possible uses of the funds;
- providing support with the accounting treatment of the transactions;
- coordinating with payroll processing and other procedures relating to employees;
- supporting the preparation and monitoring of the necessary procedures;
- coordinating with labour and tax specialists whenever the specific circumstances require it.
Do not wait until the deadline is approaching to check whether your company has funds available in the FCT.
Contact Nominaurea and assess, in good time, the possibilities for using your Employment Compensation Fund balance.
