Insights

Practice Area Articles

Belgium

February 05, 2024

By Paul Hastings Professional

Back to International Employment Law

Belgium

KEY DEVELOPMENTS FOR 2024

Recent legislative improvements in Belgian anti-discrimination law

Anti-discrimination legislation has been amended by two pieces of legislation in 2023. New types of discrimination have been implemented alongside an updated protection and sanction mechanism. Firstly, the concept of intersectional discrimination now has legislative force, defined as the “situation that arises when a person is discriminated against as a result of a distinction based on several protected criteria which interact and become indissociable”. For example, if an employee who has painful periods that lead her to be absent every month for some days is terminated due to these absences, she would be discriminated against on both health and sex grounds. These discriminations are intertwined and can no longer be considered separately. Secondly, the notion of cumulative discrimination has been introduced and is described as a “situation that arises when a person is discriminated against as a result of a distinction based on several protected criteria that add up but can be dissociated”. In contrast with intersectional discrimination, with cumulative discrimination different grounds may not be linked. From a practical point of view, it does not seem that the difference between intersectional and cumulative discrimination will have a material impact on employers as the sanctions consequences are effectively the same.

Furthermore, following a discrimination complaint, the employer cannot take any measure deemed detrimental to the employee for grounds linked to the complaint or its content. The latter reference to content has been newly introduced. Even if an employee’s appraisal is negative and tends to show poor performance, the employer cannot rely on the appraisal to justify the dismissal or any detrimental measure for the employee who filed a complaint linked to that appraisal.

In terms of sanctions, an employee can now ask that the indemnity for a discriminatory dismissal takes into account all of the discriminatory grounds that contributed to the dismissal. In the event of intersectional or cumulative discrimination, although it is possible to accumulate multiple lump-sum indemnities on discriminatory grounds, this accumulation is not automatic as the courts will rule on whether such indemnities may be added.

Lastly, any judge presiding over legal proceedings which seek to obtain an injunction against discrimination has gained extensive powers to order side measures. The presiding judge can now impose positive actions aimed at preventing similar discrimination from occurring again in the future. Also, it has become easier for the discrimination judgment to be published in order to put pressure on eliminating the relevant discrimination.

Streamlining wage costs

Companies have been increasingly looking for ways to streamline wage costs. Various legal systems have been made available to employers to reduce their wage costs or, at least, to increase employees’ take-home pay without affecting the company’s total wage costs. Under a flexible reward plan (often called a “cafeteria plan”), employees may exchange part of their “traditional salary” (percentage of gross monthly salary, bonus, end-of-year bonus, etc.) for other benefits made available under the plan and determined by the company. By exchanging part of their salary for a flexible reward (e.g., for a bicycle, extra vacation days, a mobile phone, car, extra hospital insurance cover, etc.), the employee can make individual choices on how to spend their salary at favourable tax and social rates. For example, the company can, on the one hand, propose a salary reduction to employees and, on the other hand, provide them with a company bicycle. The employee will receive slightly less salary each month but will have a bicycle at their disposal for commuting, which is exempt from social security contributions and payroll withholding tax. The employee then has the option of purchasing the bicycle at the end of the lease contract. Although flexible reward plans are not new, they are being increasingly considered by companies to keep their wage costs under control. Such an approach can ensure that costs increase less rapidly, since the amounts in the flexible reward plan are not indexed.

Whistleblowing

In late 2022, the Act implementing the EU Whistleblowing Directive was published in the Belgian gazette. The Act came into force in February 2023 for companies with more than 250 employees and all companies active in financial services, regardless of the number of employees. Crucially, on 17 December 2023, the Act came into force for companies employing between 50 and 249 employees.

As well as establishing three channels to facilitate reporting, the Act provides for protection against retaliation and the threat of retaliation for all individuals utilising the three reporting channels. Retaliation includes, but is not limited to, suspension and dismissal, changing the terms of employment, demotion, and withholding promotion. As a guard against potentially malicious or frivolous reporting, the whistleblower should fulfil specific conditions to be eligible for the protection scheme, such as having reasonable grounds to believe that their complaint is true. The protection against retaliation is not time-limited, which may cause some legal uncertainty for companies. However, the more time that has elapsed between reporting and an alleged act of retaliation, the more difficult it will be for the employee to demonstrate a causal link. An employee who has suffered retaliation is entitled to compensation ranging from 18 to 26 weeks’ salary. If the reporting relates to legislation on financial services, products and markets or the prevention of money laundering, the compensation may amount to six months’ salary or actual monetary damages, and the employee has the right to request reinstatement.

The law also provides for a reversal of the burden of proof: the employer will have to prove that any disadvantage afforded to the whistleblower was justified and not related to the report. In addition, there are tough penalties for non-compliance, including criminal sanctions for employers who could be liable for a prison term of between six months and three years. For legal entities (that cannot go to prison), such sentence would be converted into a fine of between €24,000 and €576,000 (not paid to the employees, for the avoidance of doubt). Non-compliance can take the form of impeding (or trying to impede) a report, the initiation of vexatious proceedings against a whistleblower, retaliation or violation of confidentiality.

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

KEY DEVELOPMENTS FOR 2023

Four-day workweek

One of the various measures in the Labour Deal to improve employees’ work-life balance includes the four-day workweek. This system provides for the possibility for full-time employees of the private sector to spread their working time over four days instead of the usual five, making their working time more flexible. As such, the system is not a reduction in working hours, as the employees will have to perform longer days to carry out the weekly working hours applicable in the company on four days instead of five. This system aims to allow them to adapt their working hours to their private life.

The Labour Deal states that the work rules may allow full-time employees to spread their 38 hours of work over four days, with 9.5 hours per day. If an employer wants to introduce such regime, an amendment of the work regulations is necessary. However, if the employees perform between 38 hours and a maximum of 40 hours per week, only a company Collective Bargaining Agreement (“CBA”) may allow full-time employees to spread their hours over four days at a rate of 10 hours per day. In the end, the employer decides whether the four-day workweek system should be implemented within the company. There is no obligation to do so.

Employees interested in performing their work in such a regime can send an individual and written request to the employer. The employer can refuse this request but solely based on objective criteria. A written motivation for refusal must be provided to the employee.

If the employer agrees, an agreement must be drafted stipulating the timeframe for the regime of the four-day week, without exceeding six months. Other modalities must be stipulated as well such as the daily work schedule. A new agreement must be drafted if employer and employee want to prolong the regime of the four-day workweek.

The Labour Deal introduces some protection mechanisms as well. It is provided that employees who apply to enter the four-day workweek benefit from protection against dismissal based on their choice in favour of this system. However, such protection is not absolute. An employer still has the right to terminate the employment contract for reasons unrelated to this request. Furthermore, the employer must ensure that these employees are not treated adversely.

Reintegration and medical force majeure

The focus of this reform is the separation of the reintegration trajectory from the procedure for medical force majeure. Until now, medical force majeure was one of the possible outcomes of a reintegration trajectory within Belgian employment law. It was claimed that the reintegration procedure was profusely used to try to terminate an employment contract for medical force majeure. This results in a termination of contract without a notice period or an indemnity in lieu of a notice period for the employee. The legislator wanted to implement a more positive approach regarding reintegration and medical force majeure by creating separate procedures to ensure that the focus of a reintegration trajectory would solely be the reintegration of the employee.

The medical force majeure procedure will thus become a separate procedure, which can only be initiated after nine months of incapacity for work and insofar as no reintegration trajectory is ongoing. It is necessary to determine if the employee is still able to perform the agreed work. If this is not the case, an employee can request to ascertain if adapted work could be an option. In case the employee is not in a situation that allows for any sort of work to be done for the employer, a termination due to medical force majeure offers a solution for both parties. In short, four possible decisions can be made by the prevention advisor-occupational physician:

There is no permanent incapacity to perform the agreed work: the procedure remains without effect.
The employee is unsuitable for the agreed work and no adapted work has been requested: termination of contract
The employee is unsuitable for the agreed work and adapted work has been requested but the employer cannot offer it: termination of contract
The employee is unsuitable for the agreed work and adapted work has been requested, has been provided for by the employer but the employee refuses: termination of contract

Right of disconnection

How to maintain the balance between work life and private life is becoming an increasingly pressing issue today. The Belgian legislator also had to address this item and did so by working out a regulation within the Labour Deal of 2022. Employers with at least 20 employees are obliged to work out certain modalities on a company level to accommodate a right to disconnect. The Labour Deal provides a minimal framework that needs to be implemented by employers. Nothing prevents the employer to introduce a higher level of protection with regards to the right to disconnect.

In short, a general framework needs to be implemented providing practical modalities on how to be unavailable outside the working hours. In addition, there is also an informative pillar. The employer needs to work out guidelines for using digital tools in such a way to safeguard rest periods, holidays and to ensure no infringement in the private and family life of the employee. And even more so, education and awareness campaigns for employees on the sound use of digital tools and the risks associated with over-connection should be offered to employees to provide them with the necessary opportunities to regulate their work-life balance.

The right to disconnect policy can be implemented in a CBA on a company level, if there is no such agreement on a sectoral level, or can be stipulated in the work regulations of the company. Nonetheless, there are no real sanctions stipulated in the Labour Deal when such policy is not implemented. Yet, when the policy is part of a sectoral CBA, declared Joint Committee-wide, the employer is obliged to comply with the provisions and if not so, may face criminal sanctions based on the Social Criminal Code. If a CBA on company level is breached by the employer, it is enforceable through civil proceedings which seek for compensation of the suffered damage, initiated by the representative employee organization. Moreover, it could be argued that the rights for employees are, in principle, incorporated in the employment contract.

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

KEY DEVELOPMENTS FOR 2022

Legislative changes in light of EU Whistleblowing Directive

Whistleblowers play a key role in exposing malpractices. Nevertheless, there is no general procedure to follow nor specific protection available for individuals who want to blow the whistle in Belgium. The legislator is however currently working on transposing the EU Whistleblowing Directive. The deadline for Member States to transpose its minimum standards into national law was 17 December 2021. Belgium intended to adopt the Directive by summer 2022, however, we understand that it is yet to be adopted.

The Directive aims to provide common minimum standards of protection across the EU to whistleblowers who raise breaches of EU law with their employer. The Directive requires on the one hand, organisations with at least 50 employees and Member States to establish reporting channels that meet certain requirements to ensure confidentiality of the reporter's identity and an impartial follow-up, and on the other hand, a ban on retaliation. For example, the whistleblower may not be suspended or dismissed, receive a negative evaluation or a financial sanction.

Although the Directive still needs to be transposed into Belgian law, its compliance requirements will have a considerable impact on employers. In addition to budgetary implications, the Directive will pose challenges to organizations’ internal expertise and capacity. The setup of formal reporting mechanisms and the handling and follow-up of reports with sufficient confidentiality and impartiality, within a three-month time frame, may require significant investment from organisations.

Measures to improve high unemployment rates

A comparatively low employment rate (70% among the population aged 20-64) persists in Belgium, despite labour shortages in many sectors. The Belgian Government intends to tackle this mismatch and has set a goal of reaching an employment rate of 80% by 2030. The Government, together with the social partners, intends to examine how article 39ter of the Employment Contracts Act can be reformed and made enforceable. This article provides the possibility to allocate part of the notice period or indemnity to measures that increase employability of dismissed employees. This can be done, for example, by spending part of the notice period or indemnity on outplacement or training.

Employers should continue to monitor the law in this area as such changes in labour law would have a considerable impact on the calculation of notice periods and indemnities. Employers may be required to invest more in outplacement opportunities and training as a result of any relevant changes.

Extension of paternity leave entitlement

Inequality (particularly gender inequality) is a longstanding concern in Belgium. For example, inequalities regarding the length of birth leave (formerly known as paternity leave) have been proven to have an impact on the division of household tasks. Some private companies are already offering equal or more generous birth leave entitlements. Prompted by this demand the Belgian Government has decided to extend birth leave.

In 2021 birth leave was increased from 10 to 15 days. As of 1 January 2023, it will be increased to 20 days. The days of birth leave can be taken by the father/co-mother within four months from the day of birth. As before, the employee retains his or her salary during the first three days of absence. For any subsequent days, he or she receives an allowance under the applicable medical care and benefits insurance.

Employers should anticipate that from 2023 onwards, fathers and co-parents will be able to take up to 20 days of parental leave, which is likely to result in a significant increase in absences from the workplace.

KEY DEVELOPMENTS FOR 2021

Measures to limit the negative impact of the rules on international mobility

Companies that operate internationally and whose employees regularly work from multiple countries traditionally resort to the so-called salary split. This involves dividing the taxable salary between different countries depending on the effective physical presence in those countries, which is advantageous for both the employer's wage costs and the employee's net salary.

The global pandemic has limited travel and led to an increase in the number of workers working from home. Employees who used to carry out their activities in different countries are now only working from one country. The salary split could therefore not be applied.

Not only did the spread of COVID-19 have an impact in the tax field, it also affected the social security position of the employee. The EC Regulation 883/2004 states that an employee who lives in one country and works in another is socially insured in the country of employment. However, if the employee performs a substantial activity in the country of residence, they will be socially insured in the country of residence.

Since many workers were forced to work at home (in their country of residence) because of the measures imposed under COVID-19, their social security position would change.

For the time being, the Belgian Government has taken measures to limit the negative impact of the rules on international mobility. For example, the Government has decided that it will not take into account periods of work from home on Belgian territory when assessing the applicable social security. In addition, various agreements have also been concluded with other countries to also limit the tax impact.

Both in the area of tax and social security, however, the question arises as to the future sense and nonsense of rules geared to far-reaching international mobility. If international mobility is not restored to its original state in the future and if physical contacts are largely replaced by online meetings, then it is to be expected that the rules will also lose their usefulness and have to be adjusted. After all, there is no point in spreading the taxable salary over different countries if work is only carried out in one country, and it is also difficult to maintain that employees whose country of residence and country of employment de facto coincide because of work from home still have a de jure social security status that does not correspond to that reality.

Flexibilisation of labour

The spread of COVID-19 and the Government measures imposed in that context not only impacted international mobility, but national mobility to, from, and within workplaces was also restricted. As a result, many workers were forced to work from home. For those workers and companies for whom this was operationally impossible, the system of temporary unemployment, whereby their wages are replaced by an allowance, was introduced.

It is to be expected that the expanded opportunities to work from home will continue to be retained in many companies in the future. Employers are therefore well advised to develop well thought-out policies in which the conditions and modalities of working from home are clearly defined. Various elements must be taken into account in this regard: a balance must be sought between flexibility and security, investments must be made in digitalization, ways must be sought to preserve collegiality and involvement in the company, to control work, and to reimburse expenses in a way that is favourable from a tax and social security perspective, etc.

The legal framework for all this is, as yet, quite limited and not adapted to a situation whereby work from home is commonly applied. Thus, not only employers, but also legislators face quite a challenge.

Companies in difficulty are being forced to restructure their business

Unfortunately, the global COVID-19 pandemic is also causing some companies to run into difficulties and to be forced to restructure in order to cope with these difficulties.

Restructuring can be accompanied by savings in employment costs and can therefore lead to dismissals. Employers must always be mindful of complying with the legal rules related to collective dismissals. These rules apply as soon as a certain number of employees are dismissed during a 60-day period. This number depends on the size of the company.

If the thresholds are reached, well-defined legal procedures must be followed. An information and consultation procedure must be put in place, the sub-regional employment service must be informed and, in addition, the employer is obliged to pay special compensation to the workers. Failure to comply with these rules can have far-reaching consequences: the possible dismissals can be considered non-existent which means that the employment contracts must continue to be executed and, at least, the wages must be paid.

In the event of a collective dismissal, it should be taken into account that it is possible for older workers to receive a company bonus on top of unemployment benefits after dismissal. To qualify for this, strict age and career conditions must be met.

These conditions are set by the National Labour Council and have already undergone several changes making it increasingly difficult to be able to apply for a company bonus. A company in difficulty or undergoing restructuring can benefit from a special scheme for which the age condition was raised: currently, a minimum age of 60 years applies. This is an increase of two years compared to January 1, 2019.

In order to achieve a humane solution that strives both for the survival of businesses and the economy in general and to ensure the individual well-being of all employees, employers must strictly follow the legal procedures. In addition, the workers and their profiles should be carefully mapped so that, if possible, a company bonus can be granted.

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, Vincent Marcelle, Anke Istace, Sabrina Martin, Emila Fronczak and Raquel Gonzalez Urbano of Loyens & Loeff for their invaluable collaboration on this update.