Hot topics in international employment law - Belgium Wage moderation - Indexation Marie-Hélène Jacquemin 01 October 2015
Background Wage moderation Maximum margin for 2015-2016 Obligations Sanctions Future developments Case studies Indexation freeze 1 / L_LIVE_EMEA1:28581828v1
1. Background Current wage moderation legislation Law of 26 July 1996 Maximum margin for the increase of salary costs for 2015-2016 Law of 28 April 2015 2 / L_LIVE_EMEA1:28581828v1
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_EMEA1:28581828v1
3. Maximum margin for 2015-2016 The maximum margin for the increase of salary cost: - 2015: 0% When? - 2016: 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 2015 4 / L_LIVE_EMEA1:28581828v1
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 2014 5 / L_LIVE_EMEA1:28581828v1
4. Obligations If the average salary cost of 2013-2014 = 100 2015: - 100 - + indexation - + wage scale increases 2016: - 100 - + indexation - + wage scale increases - + 0.5% - + 0.3% net 6 / L_LIVE_EMEA1:28581828v1
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_EMEA1:28581828v1
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_EMEA1:28581828v1
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_EMEA1:28581828v1
5. Sanctions Administrative fine: 250 EUR 5.000 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_EMEA1:28581828v1
6. Future developments Increase of enforceability Sanctions Inspections Tax shift 11 / L_LIVE_EMEA1:28581828v1
7. Case studies Promotion Merit increases Variable pay 12 / L_LIVE_EMEA1:28581828v1
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_EMEA1:28581828v1
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