Employers Cost – Belgium

Belgian Social Security

Social security payments are provided either to those who have or had a professional activity
(pensions, unemployment benefit, sickness and disability benefits, industrial accident,
occupational diseases) or are extended to all the members of the family (family allowance,
sickness insurance). The system also regulates holiday entitlement. Eligibility for unemployment
benefits and sickness and disability benefits require contributions to be paid by both the employer
and employee. Payment of social security contributions is compulsory. Blue and white collar
workers pay 13.07% of their salary, while employers pay in general 38.44% for their blue-collar
and 32.44% for their white-collar employees.

The overall social security fund is then divided up and managed by offices
responsible for different types of benefit that fall into seven categories each dealt
with below:

• Family benefits
• Unemployment benefits
• Incapacity benefits
• Accidents in the workplace
• Occupational illnesses
• Pensions
• Annual paid holidays

Redundancy Cost

Redundancy pay for white-collar employees in Belgium is based on payment in lieu of their notice
period which, as a minimum, is three months' pay per five years of service. A number of formulae
have been devised to guide parties on out-of-court settlements for white-collar employees. The
most widely-used is the Claeys formula which, based on a statistical analysis of case law, is used
to estimate how many months' notice an employer should give. For white-collar employees
earning less than EUR 28,580 per annum, the statutory minimum period of notice applies (of
three months per period of five years' seniority). For employees earning more than EUR 28,580
per annum, a "reasonable" notice period (or payment in lieu) must be given. This is often
calculated based on the Claeys formula. The Claeys formula is not compulsory and a white-collar
employee could still contest the length of the notice period before the court. Most courts follow the
formula, but some don't and none go beyond its result. The application of the formula has
generally reduced redundancy pay levels for white-collar employees (i.e. because courts are
awarding shorter notice periods).

Blue-collar workers have statutory minimum notice rights which may be enhanced by collective
agreements. As is the case for white-collar workers, redundancy pay is based on payment in lieu
of their notice period (unless the employer chooses to give notice). Also, for blue-collar workers
the dismissal requires a legitimate reason, otherwise there is the risk of a successful unfair
dismissal claim (for which the maximum award would be 6 months’ salary).
 The Claeys Formula is used in Belgium by the practitioners of social law to evaluate the notice
period that has to be respected when an employee is dismissed. This formula derives from a
statistical analysis of the case law and takes into account three variables: length of service, age
and remuneration.

The Claeys Formula was revised and updated based on 2,591 relevant judgments pronounced
between mid 2003 and mid 2007. The formula now reads as follows:

(0.87 x Length of service) + (0.06 x Age) + (0.037 x Remuneration x index 2007/index month
of dismissal) - 1.45

The analysis of the case law also revealed that where the annual remuneration equals or
exceeds 120,000.00 €, the coefficient for the remuneration has to be modified, thus:

(0.87 x Length of service) + (0.06 x Age) + (0.029 x Remuneration x index 2007/index month
of dismissal) – 1.45

Minimum wage rate: 1,387.49 euros

Holidays

Generally, employees are entitled to at least 24 days’ annual leave and 10 days’ paid public
holiday, after an initial work period of 12 months. In principle, working on these days is not
allowed.
• Holiday entitlement depends on your length of service. Usually you get: 24 days’ leave if you
have 12 months to your credit; 22 days’ leave if you have 11 months to your credit; 20 days’
leave if you have 10 months to your credit, and so on.
• Holiday payment is paid directly by your employer. Employees have the right to at least two
consecutive weeks’ leave (three if below 18 years of age) between 1 May and 31 October.
• Employees with children of school-age get preferential treatment, so they can take their leave
during school holidays.

Sick Leave

Employees on permanent contracts and those on fixed-term contracts of more than 3 months’
duration are entitled to 30 days’ employer-paid sick pay. For manual workers and temporary
employees, the salary is paid by the employer for 14 days, if they have been in its employ for
more than 1 month. The unemployed are not entitled to employer-paid sick pay.

Maternity leave

Mothers are entitled to 15 weeks' maternity leave (or 17 weeks if they are expecting more than
one child). The mother is entitled to take six weeks (or eight weeks if expecting more than one
child) before the due date of the child. She must, however, stop working seven days before the
due date and must take at least nine weeks off after the birth.
Going forward, provided that a mother has taken her compulsory post natal leave, she will be
able to convert the last two weeks of her maternity leave into days which can be taken off within
the eight weeks after she returns to work.

Employers will not be able to refuse an employee's request to postpone her maternity leave in
this way, but the number of days that she is entitled to take will depend upon her working week.
An employee working full time will be entitled to 10 days off, while an employee working over
three days a week will be entitled to six days off.

Paternity leave

A male worker is entitled to stay away from work on the occasion of the birth of his child (where
he is lawfully declared to be its father) for 10 days of his choosing from among the 30 days
running from the date of delivery:

3 days’ leave are paid-for by the employer and the remaining,

7 are paid-for by the sickness-invalidity insurance scheme.

The employee will receive 82% of his gross pay. The benefit is paid only for the days of leave that
coincide with days of work.

Payroll Costs – Belgium (Factors to be considered)

1. Social security contributions

Social security benefits are financed by contributions paid to the National Social Security Office by both employers
and employees. Contributions are due on all pay without any ceiling. → See : Social security : Contributions.

2. Reductions

There are various measures to promote employment that limit social security contributions or exempt employers
from having to pay them. One general measure reduces the social security contributions for all employees subject
to the Belgian social security scheme. This is called a “structural reduction”.

Another type of measure, referred to as “target group reductions”, concerns particular categories of employees: the
first three employees to be hired by an employer, elderly and young employees, employees who were previously
laid off, and the long-term unemployed.
A target group reduction can be combined with a structural reduction. However, it is not possible to combine two or
more target group reductions. An employer can only apply for one target group reduction per employee.

The National Social Security Office (ONSS/RSZ) calculates the reductions in the social security contributions
based on a three-monthly, multifunctional declaration submitted by the employer.

Other measures to reduce social security charges are linked to reductions in working time.

2.1. Structural reduction

All employers are eligible for structural reduction of their social security contributions provided their employees are
subject to the Belgian social security scheme.

The structural reduction is a quarterly flat sum that varies from EUR 400 to EUR 471 according to the reference
salary of the employees concerned, the category to which the job belongs and the duration of the employees’ work
activities.

The reduction is calculated separately for each employee based on:

• his/her three-monthly salary;

• the category he/she belongs to;
• his/her three-monthly activities (full-time or part-time).

2.2. First three employees

All employers are eligible for a target group reduction for their first three hirees, on condition that they qualify as
“new” employers. A “new” employer is someone who has never, or has not for at least the last four successive
quarters, been subject to the social security scheme for employees.

In order to be eligible for a reduction in social security charges for hiring a second employee, the employer must
not have had more than one employee in his employ at the same time during the four quarters before hiring him;
for a third hiree, he must not have had more than two employees in his employ.

When each of the first, second and third employees is hired, a period of 20 quarters commences during which the
employer can apply for a reduction as he wishes.

• For the first employee, the employer is entitled to a reduction in social security charges of EUR 1,000 per
quarter for five quarters, and a reduction of EUR 400 for the next eight quarters.
• For the second employee, he is entitled to a reduction of EUR 400 for 13 quarters.
• For the third employee, he is entitled to a reduction of EUR 400 for nine quarters.

2.3. Young employees

Regardless of how many employees they employ, all employers are eligible for a target group reduction for “young
employees” (< 26 years).

For young employees, an employer can be entitled to a reduction in social security charges of EUR 400 to EUR
1,000 per quarter.

2.4. Elderly employees

The employer is entitled to a reduction in social security charges of EUR 400 per quarter if the elderly employee
reaches at least age 57 by the last day of that quarter