Author: ibizz

The school year is in full swing, so about time to list all the regional principles regarding educational leave.

What is the scope?

Paid educational leave gives the employee the right to follow an approved training course and to be absent from work while keeping his/her entitlement to salary. Not each and every training course opens the right to educational leave. However, the training does not necessarily need to be linked to the employment activities exercised by the employee for the employer.

In Flanders, ‘Flemish training leave’ has replaced paid educational leave. In order to determine the competent region for this type of leave, you need to check where the seat of business is located where the employee is employed. This is the address/location as mentioned on the DmfA declaration for the National Social Security Office. The employee’s place of residence or the place where the training is followed are therefore not decisive for entitlement to educational leave..

With this newsletter we wish to explain the general system and the regional differences of training leave and we discuss the novelties of this school year. We limit ourselves in the present overview to the rules and regulations of the three biggest regions in Belgium.

Which employees are involved?

All employees from the private sector working on a full-time basis. Certain part-time working employees are also entitled to this type of leave.

Does this apply to all courses?

No. Only training courses approved by the authorities are eligible, but there are regional differences when it comes to these approvals.

Through the links below you can verify if a training is approved in the region where your employee is employed. Unfortunately enough, these databases are not available in English.

Flemish region
Brussels
Walloon region
German region

The training should normally last at least 32 hours.

In Flanders the employee is allowed, for the school year 2022-2023, to combine several courses or modules at different training providers – which by themselves do not amount to 32 hours – in order to meet this minimum requirement.

Can the employer refuse the request for leave?

No, the employee has the right to take training leave and the employer cannot refuse. The days of absence however need to be planned in mutual consent between the employer and the employee.

How many hours of leave can the employee apply for?

This depends on the specific training course the employee follows.

Maximums have been set which depend on the training followed and which differ per region.

In the Flemish region the maximum number of hours of training leave is set at 125 hours per school year.

For the school year 2021-2022, the common initiative right was introduced. This measure will be extended for the school year 2022-2023. If the employee follows a training course at the employer’s proposal and if the employee also follows a training course on his or her own initiative, the training leave is increased to 250 hours in Flanders. A maximum of 125 hours will be granted for training undertaken by the employee on his/her own initiative and a maximum of 125 hours will be granted for training proposed by the employer.

How does the employee apply?

The employee must submit a proof of enrollment to the employer by October 31. In the event of a change of employer or in case of a registration for a training course during the year, this certificate or proof must be delivered within 15 days after the change of employer or registration.

When the employee follows a training course in the Brussels or Walloon region, (s)he needs to hand over a ‘certificate of accuracy’ to the employer on a quarterly basis. In the Flemish region, the employee is no longer required to hand over this certificate of accurate presence to the employer. The institution where the employee follows the training has to register the presence of the employee online. If the employee does not follow the lessons punctually and therefore has taken more leave than (s)he is entitled to, (s)he will receive less training leave the next time (s)he wishes to register for a training course.

When does the leave need to be taken?

In the Walloon and Brussels region, the days of absence need to be taken between the start and the end date of the course. In the Flemish region, the employee has a little more time: the days of absence need to be taken between the day before the start date of the course and two days after the end date, or after the final exam.

Who’s paying?

The employee who is absent in the framework of educational leave receives his/her normal wage from the employer, but the latter can limit this to € 3,170 gross per month for full-time employees. This is the threshold for school year 2022-2023.

The employer can reclaim part of the salary paid during training leave from the Walloon, Brussels or Flemish government, depending on the region where the employee is employed. The employer can claim € 21.30 per hour of absence from the concerning regional government. This amount has remained unchanged for several years and we do not expect this to change for 2022-2023.

The deadlines for submitting the file to claim a reimbursement are very strict and vary by region:

• The Brussels region: The files must be submitted between September 1 and December 31 of the school year following the school year for which reimbursement is requested. So in order to obtain a reimbursement for the hours of absence of the employees for school year 2022-2023, the file must be submitted no later than December 31, 2023.
• The Walloon region: The request can be submitted until March 31 of the school year following the school year for which reimbursement is requested. This means that reimbursement requests for school year 2022-2023 can be submitted until March 31, 2024.
• The Flemish region: you only have 3 months after the start of the course to claim compensation. If your employee has started a training in September 2022 in the framework of Flemish training leave, the file must be submitted before December 31, 2022.

What can Pro-Pay do for you?

Pro-Pay can file the applications for (partial) reimbursement of the salary with the competent authorities on your behalf.

Please contact your Payroll Business Partner for more detailed information.

Each year in January, salaries are adjusted to the cost of living for employees of companies subject to Joint Industrial Committee 200 (JIC 200). In Belgium, this is referred to as the indexation of salaries.

This indexation is a mechanism whereby salaries are linked to the evolution of the flattened health index. The monthly salary is more specifically increased by a percentage equal to the inflation rate of the previous calendar year. The indexation system as foreseen by JIC 200 is applicable to all employees falling under the scope of this Joint Industrial Committee.

With this newsletter, we would like to inform you that the high inflation of the past few months will lead to a historically high indexation in January 2023. Due to the automatic salary indexation, the salary cost for the employer will significantly increase.

Based on current forecasts, we expect that the indexation percentage for January 2023 will be approximately 10,47%.

In October and November, we will provide you with another indexation forecast. We will inform you of the final indexation percentage at the latest early January 2023.

Employees who work from home on a structural and regular basis can receive a lump-sum reimbursement from their employer. The maximum amount of this allowance has been increased on 01.09.2022 from 140,15 EUR per month to 142,95 EUR per month.

Office indemnity increase

As costs related to homework are relatively small and difficult to prove, the social security authorities (RSZ/ONSS) and the tax authorities accept to estimate these costs on a lump sum basis. The office allowance is intended to cover, among other things, costs for heating, electricity, water, insurances, office supplies and refreshments.

The social security authorities have indicated in their intermediary administrative guidelines that the office allowance is indexed again. The maximum amount of 140,15 EUR, which applied from 01.06.2022 until 31.08.2022, has been increased to 142,95 EUR per month as of 01.09.2022.

The tax authorities had already indicated in their circular letter of 26.02.2021 that they would follow the amount of the office indemnity as determined by the social security authorities, as well as the evolution of this amount. The amount of 142,95 EUR is therefore exempt from social security contributions and taxes.

The amount of 142,95 EUR is a maximum amount. It is therefore not mandatory to grant this maximum amount, but you are free to increase the amount to 142,95 EUR per month as of 01.09.2022.

We would also like to remind you that a written agreement must be drawn up for teleworkers, in principle at the latest when the employee starts teleworking. In this agreement, specific mandatory provisions must be included, such as the place where the telework will be performed, how the costs will be reimbursed, etc.

Other indemnities for homework

In addition to the office allowance, the employer can also reimburse the following costs on a lump sum basis:

• 20 EUR per month if the employee uses his/her own internet connection for professional purposes.
• 20 EUR per month if the employee uses his/her own computer for professional purposes.
  OR 10 EUR per month (5 EUR per item) for the professional use of a personal second computer screen and printer/scanner (and this for a maximum of 3 years). Attention, this allowance cannot be combined with the lump sum of 20 EUR per month for the use of the own PC.

These indemnities have not been increased: the maximum amounts remain the same.

The lump sum amounts can of course only be granted if the office and internet costs are not yet reimbursed to the employee in another way.

Action point

Contact your Payroll Business Partner if you wish to increase the current lump-sum office allowance.

When an employee uses his own car to travel for professional purposes, the employer can reimburse him for the costs incurred.

It is not necessary to be able to prove the exact amount of these costs as the authorities have fixed a maximum lump sum per kilometre that is accepted as a cost proper to the employer. It follows that no taxes and social security contributions are payable for the mileage allowance if the maximum is not exceeded.

This amount is adjusted every year.

The new amount applicable from July 1, 2022 until June 30, 2023 equals € 0.4170 per kilometre.

As a reminder: the amount that was applicable from July 1, 2021 until June 30, 2022 was € 0.3707 per kilometre. Note that there is an increase compared to the previous amount.

An additional condition is that the number of kilometres per year should not be abnormally high (max. 24,000 kilometres per year). If the number of kilometres is higher, proof must be furnished.

This amount is a maximum amount. Employers can reimburse the driven kilometres at a lower rate without any discussion. A higher reimbursement is also possible, but in that case, the burden of proof lies with the employer and the employee. They should be able to prove that the allowance granted is in line with the actual cost.

Employers may grant a lump sum allowance to employees working from home on a structural and regular basis. The maximum amount of this allowance increased from € 137.40 to € 140.15 per month on June 1, 2022.

Until now, the National Social Security Office (NSSO) allowed homeworkers to receive an amount equal to 10% of the gross salary as an expense allowance for homeworking, under certain conditions. As of June 1, 2022, this rule will be phased out.

Office indemnity increase

As costs related to homework are relatively small and difficult to prove, the social security authorities (RSZ/ONSS) and the tax authorities accept to estimate these costs on a lump sum basis. The office allowance is intended to cover, among other things, costs for heating, electricity, water, insurances, office supplies and refreshments.

The social security authorities have indicated in their intermediary administrative guidelines that the office allowance is indexed again. The maximum amount of € 137.40, which applied from April 1, 2022 until May 30, 2022, has been increased to € 140.15 per month as of June 1, 2022.

The tax authorities had already indicated in their circular letter of February, 26 2021 that they would follow the amount of the office indemnity as determined by the social security authorities, as well as the evolution of this amount. The amount of € 140.15 is therefore exempt from social security contributions and taxes.

The amount of € 140.15 is a maximum amount. It is therefore not mandatory to grant this maximum amount, but you are free to increase the amount to € 140.15 per month as of June 1, 2022.

We would also like to remind you that a written agreement must be drawn up for teleworkers, in principle at the latest when the employee starts teleworking. In this agreement, specific mandatory provisions must be included such as the place where the telework will be performed, how the costs will be reimbursed, etc.

Other indemnities for homework

In addition to the office allowance, the employer can also reimburse the following costs on a lump sum basis:

• € 20 per month if the employee uses his/her own internet connection for professional purposes.
• € 20 per month if the employee uses his/her own computer for professional purposes. OR € 10 per month (€ 5 per item) for the professional use of a personal second computer screen and printer/scanner (and this for a maximum of 3 years). Attention, this allowance cannot be combined with the lump sum of € 20 per month for the use of the own PC.

These indemnities have not been increased: the maximum amounts remain the same.

The lump sum amounts can of course only be granted if the office and internet costs are not yet reimbursed to the employee in another way.

Change of position of NSSO 10% rule for homeworkers

As an alternative to the lump-sum office allowance, it was possible for employers to make use of the so-called “10% rule” under certain conditions. Under the “10% rule”, the NSSO accepted that homeworkers received a lump-sum office allowance equal to 10% of the gross salary, albeit limited to the part related to homework.

In its latest administrative instructions, the NSSO has changed its position: from June 1, 2022 onwards, this 10% rule can only continue to be granted to homeworkers who already benefited from this 10% rule before this date, and to the extent that the part of homework does not change (“phase-out”). For the situations, which do not meet these conditions, the 10% rule cannot be applied as of June 1, 2022.

Action point

Inform your Payroll Business Partner if you wish to increase the current lump-sum office allowance.

In the context of the corona crisis, the government has announced that certain hours performed by students will not be counted towards the annual quota of 475 hours. Which hours are impacted and what does this mean in practice? What exactly are the conditions for student work?

A perfect time to outline the basic principles of student work before the start of the summer.

Who is eligible for student work?

A student has to be at least 16 years old (15 years if he completed the first two years of secondary school) and has to follow a full-time training curriculum. Someone following an evening class is not considered eligible for student work.

A student finishing school in June and graduating, can work with a student contract until September 30 of the same year.

The student can work a maximum of 12 subsequent months.

Lower solidarity contribution for student work and quota of 475 hours

Under certain conditions, student work is exempt from normal social security contributions (ca. 28% for the employer and 13,07% for the student). Student work is subject to a much lower solidarity contribution (5,42% for the employer and 2,71% for the student), provided that the following conditions are met:

• The student is employed in the framework of a written student agreement that contains certain legally mandatory provisions and is concluded prior to the start of the activities. The student contract is always a fixed-term contract (max. 12 months).
• The student works a maximum of 475 hours during the calendar year (the quota of 475 hours). If the student works more than 475 hours, the solidarity contribution is no longer applicable and regular social security contributions (as for a normal employee) will be due as from the 476th hour onwards.

The student can consult the number of worked hours at Student@work. He or she can also download a certificate confirming the number of available hours of the quota. We highly recommend requesting this certificate in advance in order to be sure of the number of quota hours the student has left to work with the advantageous solidarity contribution.

• The student is only allowed to work during periods he/she does not have to be present at school.
• The employer has performed a specific Dimona declaration for students prior to the start of the employment. If you prefer your Payroll Business Partner to make this declaration, please inform him/her at least two working days before the start of the employment.

Salary and working conditions

You have to pay at least the minimum salary in the sector, as applicable to your other employees (or the minimum salaries on company level if more advantageous rules were agreed upon) to the student, unless the sector itself provides an exception for student work. For example, in JIC 200 (joint industrial committee for white-collar employees), specific minimum salaries are provided for students.

As a general rule, the same labour law rules are applicable to students as to a normal employee. For example, students also have to receive a copy of the working regulations when they start their employment. However, there are some exceptions to this general principle. A student contract contains a trial period of 3 days, students may work less than 1/3 of the weekly working time (in a 38 hour week, this implies that students may work less than 13 hours per week) and night work is prohibited in most cases for minors.

Enrolment certificate

As an employer, you must be able to demonstrate that the person employed is actually a student. The NSSO therefore requires that you present the student’s enrolment certificate for the ongoing academic year upon their request.

Keeping that in mind, we highly recommend you to request the student to provide you with a copy of that enrolment certificate prior to the start of the employment and to keep this copy available at the company’s premises.

Extension quota 475 hours in Q1 and Q2 2022 in response to the corona crisis

As indicated above, a student can work a maximum of 475 hours per calendar year with a lower solidarity contribution. In order to make it possible to use students to alleviate the increased work pressure due to the corona crisis caused by the shortage of personnel as a result of corona contaminations, the government has decided that the hours a student works during Q1 and/or Q2 of 2022 (January 1, 2022 to June 30, 2022) will not (fully) count towards the annual quota of 475 hours. The rules differ depending on whether the student work is performed in the health care and education sector, or in other sectors.

In calendar year 2022, there will be a complete neutralisation of the hours a student works in Q1 and Q2 in the health care and/or education sector. This rule is also applicable for students who are employed in the health care or education sector through a temporary employment agency. Attention: the measure of complete neutralisation in Q2 has not officially been published yet!

In all other sectors, the first 45 hours a student works during Q1 of calendar year 2022 will not be counted towards the quota of 475 hours.

On an annual basis, some students will therefore be able to work more than 475 hours with the lower solidarity contribution. The other principles mentioned above remain valid (Dimona, a written student contract, etc).

What should you do as an employer?

Before the start of the student’s employment:

• Request enrolment certificate and certificate Student@work
• Sign student contract
• Perform Dimona declaration à inform Pro-Pay!

Upon start of employment: give the student a copy of the working regulations and ask him or her to sign an acknowledgement of receipt.

Costs proper to the employer are reimbursed either based on actual costs (through supporting documents) or on the basis of a (monthly) lump sum. Until the income year 2021, these costs had to be mentioned on the tax form, but in most cases without a mention of the corresponding amounts.

From the income year 2022 onwards, the amounts of all costs must be indicated on tax form 281.10. This is therefore a good time to scrutinise your company’s reimbursements of costs.

In this newsletter, we discuss the most important aspects of this extended obligation of the tax form.

Extended obligation as from income year 2022

There are two types of reimbursement of a cost proper to the employer :

1. Reimbursement based on a lump sum expense allowance, i.e. a fixed amount per month. The lump sum expense allowance is classified depending on whether it is based on:

“serious criteria”, i.e. lump sums which :

• the government itself grants to its civil servants and are therefore accepted by the tax authorities if certain conditions are met (for example: the lump sum mileage allowance for professional travel, daily allowances for domestic and international business trips, the home working allowance equal to € 134.71 per month in case of structural teleworking); or
• are determined by the employer on the basis of a sufficiently substantiated file. The employer has kept a record of expenses for a sufficient period of time in order to determine a monthly lump sum based on the average costs.
  Ideally, the employer repeats this step regularly so that the lump sum remains justified. However, it is recommended to present the amount of this type of expenses to the tax authorities in advance so that the employer can obtain a ruling. This way, the employer has certainty about the amount of the lump sum expense allowance.
  

“non-serious criteria”: these include the reimbursement of expenses that have not been determined according to serious criteria. For example, a representation allowance without an underlying file supporting the amounts.

! The tax authorities and the social security authorities are not always on the same page, so it must also be verified whether the social security authorities agree with the amounts. For example, the tax authorities may accept a representation allowance based on a supporting file, but the social security authorities recently changed their point of view and no longer accept a representation allowance without a ruling.

2. Reimbursement of actual expenses based on supporting documents (“expense notes”), for example: reimbursement by the employer to the employee of the cost of a business lunch or a hotel for a business trip.

Until the income year 2021, only amounts for lump sum expense allowances that were not based on serious criteria had to be indicated on tax form 281.10. For all types of expenses, the obligations were as follows :

From the income year 2022, the amount of actual costs and all lump sum expense allowances must be declared via tax form 281.10.

The above table changes as follows from the income year 2022 :

What are the expense allowances concerned?

From the income year 2022 onwards, the amounts of all expenses proper to the employer must be included in tax form 281.10 (business lunch expenses, business travel expenses, home working allowance, etc.), regardless of whether they are lump sum expenses or actual expenses.

Consequences

The costs proper to the employer of which we are aware, still have to be qualified under one of the above categories. Your payroll business partner will contact you soon and provide you with an overview of the costs proper to the employer of which we are aware, so that you can inform us whether the costs are considered as actual costs or are based on on (non-)serious criteria.

Concerning the preparation of the tax forms for 2022 :

• If all expenses are included in the payroll, we are aware of these amounts and we can automatically include them in the tax form next year. You do not have to do anything except inform us in advance under which category these expenses fall (see above).
• If you do not have any expenses or only submit lump sum expenses via the payroll, you must separately report to Pro-Pay the amounts of the (actual) expenses and the qualification of these expenses as actual costs or as lump sum costs according to serious or non-serious criteria. It is sufficient that you provide this information to your Payroll Business Partner when we request the necessary information for the preparation of the tax forms of 2022.
  As the above obligation starts from the income year 2022, we will have to receive the data on the expenses that are unknown to us for the first time at the beginning of 2023. We will contact you in due time about this.
  

! This new information will allow the tax authorities to have a view idea of what expenses you are reimbursing within the company. This can lead to more targeted controls by the tax authorities, so use this opportunity to verify whether you can justify the reimbursement of all expenses (lump sum and actual) that you grant.

Sanctions in case of non-compliance

If the amounts are not mentioned on the tax form 281.10, the penalties depend on the type of costs :

• “Fixed” lump sum expense allowance: tax authorities may refuse the deduction of the costs as professional expenses and/or apply the secret commission tax of 309 %.
• “Variable” actual costs: the tax authorities can impose an administrative fine. However, the deductibility will not be refused, nor can the secret commission tax be applied.

! Action points

• In response to the overview you will receive, provide your Payroll Business Partner with the correct qualification of the costs proper to the employer we process for you via payroll.
• If you are reimbursing certain expenses outside the payroll, you must keep good records of these amounts so that you can provide us with the necessary data at the beginning of 2023.
• Carry out an analysis within your company to determine whether the (lump sum) reimbursement of expenses is justified.

In our newsletter of 10 April 2019 , we informed you about the possibility to introduce a mobility budget for your employees. The mobility budget is the possibility offered by an employer to its employees to exchange the company car or the entitlement to a company car for a budget. The employee can spend the budget as he wishes in 3 pillars, taking into account the offer made by the employer in those pillars.

A Law published in the Belgian State Gazette of 3 December 2021 has modified this mobility budget. Additionally, the tax authorities have published some circular letters, which discuss these changes. We summarise these changes for you in the present newsletter.

Scope

The principles stay the same: the employer chooses whether or not to introduce the mobility budget in the company and the employee is free to accept the offer of the employer.

New: From 1 January 2022 the employee no longer has to go through a waiting period. Before this date, the employee must have had a company car at his disposal or must have been entitled to one during minimum 3 months immediately preceding the application and during minimum 12 months during the 36 months preceding the application. Whether an employee is entitled to a company car or not needs to be derived from the employer’s company car policy (e.g. a written car agreement).

However, the employer who wants to provide the budget must still have offered company cars without interruption for at least 36 months preceding the budget. This condition does not apply to new employers. They have to have offered at least one company car to at least one employee when the mobility budget is introduced.

How is the budget determined?

Introducing the mobility budget should not result in additional costs for the employer.

The available budget for the employee corresponds to the actual yearly employer cost of the company car that is being exchanged. This is not only the gross yearly cost of the exchanged company car or the company car to which the employee is entitled but also contains the tax and the social security charges, the fuel cost, the solidarity contribution for the social security, insurances, …, in other words: the “Total Cost of Ownership (TCO)”. This budget will consequently be different for each employee, depending on the car that is exchanged and the employee’s fuel consumption.

New: From 1 January 2022, the mobility budget must be a minimum of € 3,000 and a maximum of € 16,000 per year. Maximum 1/5 of the employee’s total gross salary may be budgeted as a mobility budget.

What can the employee do with the budget?

The employee may exchange his company car for the following :

• Pillar 1 : a more eco-friendly car.

New: From 1 January 2026, this may only be a company car without CO2- emission. This eco-friendly car is subject to the same social security and tax withholdings as a classic company car.

• Pillar 2 : sustainable means and services of transport such as (electric) bikes, steps, subscriptions and tickets for public transport, collective transport or sharing solutions, etc.

New: Since 1 January 2022, the employer is obliged to make at least one offer in this pillar!

New: The possibilities in this pillar have been expanded since 1 January 2022 and now also include the possibility to spend this budget on:

• financing costs for: bicycle loans, storage costs for bicycles, electric motorcycles and equipment to increase visibility, etc;
• season tickets and tickets for all journeys by public transport for both the employee and his family members living at home;
• parking costs incurred by the employee to use public transport;
• a pedestrian allowance for the employee who comes to work on foot or with a scooter, skateboard, etc. The maximum amount to be awarded is equal to the maximum bicycle allowance (currently 0.25 €/km). This pedestrian premium can only be granted within the framework of the mobility budget.

The possibility to pay rent and interest on mortgage loans with this budget already existed for employees whose residence is located at a maximum of 5 km from the normal place of employment. This is now being expanded to 10 kilometres and capital repayments of mortgage loans are now also eligible.

This pillar is exempt from social security contributions and taxes. It is up to the employer to decide the services and means of transport he wishes to offer in this pillar.

• Pillar 3 : balance in cash. If at the end of the year, there is still part of the budget left, this will be paid in a one-time cash payment, at the latest together with the salary of the month of January of the following year. It is therefore not possible to make an advance payment during the year. This cash amount is subject to a special employee contribution of 38,07%. The employer does not pay any social security contributions on this balance.

Action point: in the context of the employees’ desire for flexibility as well as a more eco-friendly mobility policy, the extensive mobility budget can be an interesting solution for you. Do not hesitate to contact us for more information.

Teleworking no longer mandatory, nor recommended

In our newsletter of February 17, 2022 we informed you that teleworking was no longer mandatory in Belgium as from February 18, 2022, but was still recommended. In the meantime, it was published in the Belgian Official Gazette that teleworking is no longer recommended since March 17, 2022.

Temporary unemployment due to force majeure: extension until June 30, 2022 and new type of temporaryunemployment in the context of the war in Ukraine

The government has decided to extend the simplified procedure for temporary unemployment “Corona” (“corona unemployment”) to June 30, 2022. This has been confirmed by the Unemployment Office (RVA/ONEM) in the meantime.

You can find more information regarding the conditions for employers who wish use corona unemployment in our newsletter of November 09, 2020.

In addition, the government has decided that companies affected by the economic sanctions in the context of the war in Ukraine can use the same simplified procedure as for corona unemployment from April 1, 2022 until June 30, 2022. Reasons to use this type of temporary unemployment due to force majeure include among others: the lack of raw material, the loss of a part of the sales market, the need to limit the production due to expensive energy prices, etc. As is the case for corona unemployment, the execution of the employment contract can be fully or partially suspended.

For the scheme of temporary unemployment due to force majeure caused by the war in Ukraine, the same modalities apply as for corona unemployment. We would like to remind you that you need to take the following steps as an employer if you use one of these types of temporary unemployment:

Inform your employees in writing prior to the start of temporary unemployment about:

• the period of corona unemployment;
• the number of days during which the employee will be temporarily unemployed and, in the event of partial unemployment, the number of days the employee is expected to work.

​​Let your Payroll Business Partner know which type of temporary unemployment (“Corona” or “Ukraine”) you are using as well as the days your employees will work and which days they are unemployed.

Pro-Pay takes care of the required electronic registration of these unemployment days, which allows the Unemployment Office (RVA/ONEM) to determine the unemployment allowance for the employee.

Until now, new employers in Belgium who hired a first employee could benefit from an almost full exemption from social security contributions for this employee during the entire period of employment of this first employee. This is called the ‘target group reduction first hiring’.

The purpose of the target group reduction for the first hiring was to support starting businesses and to create more jobs. Studies show that this support measure had a limited effect. Therefore, a new law was published that made fundamental changes to the target group reduction for the first hiring.

Changes

Capped exemption

The employer’s contribution for social security amounts to approximately 25% of the gross salary for a white-collar worker in Belgium. Until now, employers did not have to pay this contribution for a first hired employee. However, as from January 1, 2022 the amount of the reduction for the first hiring will be capped at € 4,000 per quarter. This target group reduction may still be applied unlimited in time.

No transition period is foreseen in the new regulations. Current reductions for first hirings, which until now have benefited a near-full exemption, will switch to the lump sum from January 1, 2022 onwards.

In practice, the new scheme only affects gross monthly wages of at least € 5,333 a month. For a white-collar worker who earns a maximum of € 5,333 gross per month, the employer will not have to pay social security contributions. For white-collar workers with a higher gross monthly salary, the employer will have to pay social security contributions on the part exceeding the exemption of € 4,000. The following example will make this clear.

Example: A white-collar worker earns € 5,333 gross per month. This is € 16,000 per quarter. We subsequently take 25% of € 16,000. This is 4,000. The first € 4,000 is exempt from social security contributions.

If you have an employee with a target group reduction first hiring, you do not have to take any action yourself. We will automatically calculate the capped exemption for you. If the salary of the employee, for whom you currently benefit the target group reduction, exceeds the salary cap of € 5,333, take into account that your salary costs will increase.

Concepts

The new law also defines the term ‘new employer’. A new employer is an employer who has never been subject to Belgian social security, or who has not been subject to it for at least 12 consecutive months preceding the starting date of the first employee. Moreover, the company may not belong to the same so-called ‘technical business unit’ with another company.

The term ‘technical business unit’ is also explicitly defined from now on. Two or more companies form a technical business unit together if there is a social link (at least one common person in the companies) and if there is a socio-economic interdependence (this is assessed on the basis of activities, location, clientele, material, personnel management, etc.).

Second to sixth hiring

Employers are entitled to a target group reduction for the first 6 hired employees. The target group reductions for the second to the sixth hirings remain unchanged. For these employees, the employers benefit from a lump-sum reduction that is valid for a fixed period.

Overview

Finally, we give a brief overview of the target group reductions from January 1, 2022 onwards. The following amounts are exempt from social security contributions on the employers’ side.