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Belgium

January 25, 2021

By Kris De Schutter and Vincent Marcelle 

Back to International Employment Law

Belgium

KEY DEVELOPMENTS FOR 2020


 

Changes to flexible benefits

The Belgian authorities have taken steps to curtail an employer's ability to offer employees certain flexible benefits. One example of this is the annulment of the 'cash4car' system by the Belgian Constitutional Court, which enabled employees to exchange their company car for a global mobility budget. This system will no longer be available from the end of 2020.

The Belgian tax and social security authorities have also limited the creativity of employers who may have implemented flexible-reward plans, by making changes to the tax treatment of certain employment benefits (e.g., mandatory payment of social security contributions on enhanced child allowances).


 

Concept of remuneration

The decision by the Belgian Supreme Court in the Sisley case has clarified the treatment of variable pay granted to employees by third parties. This decision confirms that if variable pay and benefits are granted to employees by a third party for services provided within the framework of the performance of their employment contracts, the third company is liable to pay social security contributions in respect of such remuneration, even in the absence of an employment contract between the employees and the third company.


 

Limits on the right to strike

The Belgian Supreme Court has ruled on a clear limitation of the right to strike. The Supreme Court confirmed that although the right to strike is fundamental, it must be restricted if it is prejudicial to public safety. In the event collective action creates a dangerous environment or could result in significant accidents (such as blocking road access), individuals are liable to be punished by the Belgian criminal code.

 

KEY DEVELOPMENTS FOR 2019


 

Increased flexibility in the labour market

The Belgian labour market is becoming more flexible. Working time, remuneration and organisational structure are evolving to improve the work-life balance of employees.

The following trends are expected for 2019:

  • more flexible-reward plans: many employers have already successfully implemented flexible-reward plans in which the employees can tailor their salary and benefits to suit their own needs. It is expected that more employers will begin to do the same; and
  • mobility: a law was passed introducing the “Cash for Car” mobility allowance and the Belgian Government proposed a mobility budget to enable employees who benefit from the use of a company car to exchange their cars for a cash mobility budget which can be used on other modes of transport at no extra cost to the employer. This proposal is awaiting approval from Parliament.

 

Voluntary occupational pension will be available for employees

From the first quarter of 2019, the Voluntary Occupational Pension for Employees (“VOPE”) has been available to employees who do not have an occupational pension scheme at industry or company level, or who contribute to an occupational pension that is lower than 3% of the pensionable salary (i.e. gross salary, subject to social security).

From a practical point of view:

  • employees falling under the scope of the VOPE will be able to conclude a VOPE agreement with a pension provider (i.e. an insurance company or a pension fund).
  • the employees can determine the amount of their VOPE contributions, with a maximum of 3% of the pensionable salary, earned in the second year (n 2) before the year of accrual (n). The maximum VOPE contribution is capped at EUR 1,600; and
  • the employers will deduct the VOPE contributions from the employees’ net salaries before to transfer the contributions to the pension providers.

 

Validity of notice period agreements

Since the introduction of the unified employment status between blue and white-collar employees, there is indistinctness about the applicability of the notice period agreements of "higher" and "highest" white-collar employees that were concluded before 1 January 2014.

In an important judgment of 18 October 2018, the Constitutional Court has now set a clear direction that the notice period agreements are valid and should be applied to determine the notice period. This means that if a valid notice provision was agreed, the statutory rule of one month per started year of seniority (with a minimum of three months) is not applicable if a notice period agreement is more favourable to employees.

This decision should be affirmed in 2019 by other court decisions.

 

KEY DEVELOPMENTS FOR 2018


 

Mobility Budget instead of Company Car Schemes

From 2018, employees who benefit from the use of a company car will be able to exchange their cars for a cash mobility budget which can be used on other modes of transport. The government has agreed draft legislation to implement the policy, which contains three requirements in order for the scheme to qualify:

  • both employer and employee should be able to opt freely in and out of the mobility budget scheme;
  • the scheme should be treated competitively with the existing schemes for company cars from a tax and social security perspective; and
  • the scheme should be cost neutral for the employer, the employee and the Belgian state.

The success of the scheme will depend upon the practicality of meeting the above conditions and the actual amount of the cash mobility budget available being sufficient for employees.


 

Posting of Employees – Liaison Person and ‘Limosa’ Posting Declaration

Foreign employers sending employees to work on a temporary basis in Belgium must submit a ‘Limosa’ declaration form to the Belgian National Social Security Office (NSSO) and appoint a liaison in Belgium.

The liaison must be a natural person authorised by the foreign employer to provide the NSSO and their inspectors with the required information about the activities and employment conditions of the posted employees in Belgium.


 

Profit Participation

On 26 July 2017, the Belgian government announced reforms which included changes to employee profit participation schemes. From 2018 onwards, employers will have the opportunity to share a portion of the company’s profits from the previous financial year with their employees, with potential advantages from a tax and social security perspective.

The distributions do not have to be the same for all the employees. The distribution procedure will vary as follows:

  • If the employees receive the same amount, a general meeting and a communication of the information to the employees will be sufficient.
  • If a distinction is made between the employees (e.g. the method of calculating the distributions is different), the implementation of the distributions will require a collective bargaining agreement or an ‘adhesion act’ (in the absence of union delegation within the company).

 

Trial Period

The Belgian government is considering reintroducing probationary periods under Belgian law by way of a reduction in the minimum legal notice periods during the first 5 months of employment.

The table below details the proposed periods:

Length of employment <1 month  <2 months   <3 months <4 months  <5 months   <6 months
Current notice period  2 weeks  2 weeks  2 weeks  4 weeks  4 weeks  4 weeks
Proposed notice period  1 week  1 week  1 week  3 weeks  4 weeks  5 weeks

 

KEY DEVELOPMENTS FOR 2017


 

A proposal to promote more flexibility at work

The government intends to allow employers and employees to organise their relationships with more flexibility. The legislation is still in draft form but the most significant proposals relate to:

  • The calculation of the average working time (38 hours/week) on an annual basis for all sectors;
  • The opportunity for employees to choose to perform overtime;
  • Incentives for offering training to employees;
  • Occasional telework and the opportunity for employees to work from home.

In addition to these measures, other sector-specific reforms are anticipated, such as a global reform of working time, the possibility to introduce flexible work arrangements, and the creation of career-investment accounts in order to finance future career breaks or to help employees with personal issues.


 

Students at work

The applicable rate of social security contributions to be paid for the employment of students is lower than the standard rate if the students are employed for a limited period of time.

The maximum annual limit (as of 1 January 2017) will be 475 hours per year per student (instead of 50 days per year as previously applicable). This will allow more flexibility to students and their employers.


 

Evolution of salaries

At the time of writing, no decisions have been made regarding a possible (limited) salary freeze for the period 2017-2018. Following the latest communications from the government, the sanctions in cases of infringement of the salary freeze should be strengthened and the decision-making process leading to establishment of a salary freeze modified in the future.


 

A proposal to amend the current legislation regarding collective dismissals

The government is considering amendments to the existing legislation regarding collective dismissals. The reform will focus on mediation and modify the current process.

 

KEY DEVELOPMENTS FOR 2016


 

Tax shift: reduction of the social contributions to a basic rate of 25% and preferential treatment for the first six employees

The government intends to reduce employers’ social contributions from a 32.4% basic rate to a rate of 30% by 2016 and of 25% by 2018. In addition, it aims offer lower rate of social contributions for the first six employees of a company. This measure takes place in the framework of a global tax shift in order to improve the competitiveness of the Belgian employment market.


 

Important modifications concerning supplementary pensions

There have been three important changes:

  • The rate of the guaranteed return of employers will be lowered to 1.75% for 2016 and 2017 and adjusted in the future by reference to the economic index;
  • Where an employee exits a supplementary pension scheme, the employee will keep the right to choose life assurance ; and
  • As a general rule, supplementary pensions will only be paid on the statutory retirement age.

 

Systematic withholding of four weeks’ pay in lieu of notice by the employer to finance outplacement

As of 1 January 2016, employers are entitled to withhold four weeks’ payment in lieu of notice in order to finance outplacement for those employees dismissed with immediate effect if the employees are entitled to an indemnity of at least 30 weeks of remuneration. Since 2016, an employee has been able to refuse the offer of outplacement but the employer will not have to pay the complete indemnity in lieu.


 

The payment of salary cash in hand is forbidden

The payment of salaries by bank transfer was made mandatory on 1 October 2016.


 

Increase of the employer’s social contributions for unemployment benefit

In order to discourage early retirement, the employer social contributions has increased by 2.25% for the market-sector and by 1.25% for the non-market sector. This system allows dismissed senior employees to retire from the employment market with the benefit of an unemployment allowance together with an additional contribution from their former employer.

With thanks to Kris De Schutter and Vincent Marcelle of Loyens & Loeff for their invaluable collaboration on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department
Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department
Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department