Hot topics in international employment law - Belgium

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1 Hot topics in international employment law - Belgium Wage moderation - Indexation Marie-Hélène Jacquemin 01 October 2015

2 Background Wage moderation Maximum margin for Obligations Sanctions Future developments Case studies Indexation freeze 1 / L_LIVE_EMEA1: v1

3 1. Background Current wage moderation legislation Law of 26 July 1996 Maximum margin for the increase of salary costs for Law of 28 April / L_LIVE_EMEA1: v1

4 2. Wage moderation Scope Employment agreements concluded at the cross-sector, sector, company and individual level cannot exceed the maximum margin Exceeding the maximum margin as a result of indexation and salary scale increases will not be in breach: - indexation: increases resulting from indexation mechanisms to reflect inflation as described in existing collective labour agreements - wage scale increases: existing salary increases that depend on seniority, age, normal promotions or change of individual categories provided by collective labour agreements 3 / L_LIVE_EMEA1: v1

5 3. Maximum margin for The maximum margin for the increase of salary cost: : 0% When? : 0.5% of the employer s wage cost + 0.3% net wage cost without additional costs for the employer - 30 April 2015 v. 01 January / L_LIVE_EMEA1: v1

6 4. Obligations Increase of salary cost : the increase of average salary cost per FTE salary cost / FTE s Correction in case of change of working time (eg reduction of working time without reduction of salaries = increase of salary costs) Average salary cost of 2015 and of 2016 must be compared to the average salary cost of 2013 and / L_LIVE_EMEA1: v1

7 4. Obligations If the average salary cost of = : indexation - + wage scale increases 2016: indexation - + wage scale increases % % net 6 / L_LIVE_EMEA1: v1

8 4. Obligations Salary cost: - salary - end of year premium - public holiday pay - holiday allowances - commissions / bonus - stock options / warrants - benefits in kind (eg company car) - costs unrelated to the production process - contributions to insurance plan - meal vouchers - social security contributions - 7 / L_LIVE_EMEA1: v1

9 4. Obligation The following will not be taken into account when calculating the increase of the average salary cost: - Profit sharing as provided by law (Law of 10 July 1998) - Increase resulting from an increase of FTE - Participation of employees (Law of 22 May 2001) - Social complementary pension regime - Premium for innovation 8 / L_LIVE_EMEA1: v1

10 4. Obligations The following should not be taken into account: - CLA n 90 (non-recurring bonus) - Increases resulting from legal constraints - Increases to achieve equal pay 9 / L_LIVE_EMEA1: v1

11 5. Sanctions Administrative fine: 250 EUR EUR Per agreement that causes the maximum margin to be exceeded - per year? - a sanction cannot be applied twice for the same breach Agreements which result in an increase of salary costs beyond the maximum margin are null and void 10 / L_LIVE_EMEA1: v1

12 6. Future developments Increase of enforceability Sanctions Inspections Tax shift 11 / L_LIVE_EMEA1: v1

13 7. Case studies Promotion Merit increases Variable pay 12 / L_LIVE_EMEA1: v1

14 8. Indexation freeze Indexation is suspended As long as inflation is below 2% Inflation rate of March 2015 Application will depend on the indexation rules of the governing joint labour committee 13 / L_LIVE_EMEA1: v1

15 Questions This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name Simmons & Simmons or one or more of those practices as the context requires. The word partner refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP s affiliated practices. For further information on the international entities and practices, refer to simmons-simmons.com/legalresp. Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address. 14 / L_LIVE_EMEA1: v1

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