Belgian Tax and Social reform: Employment-related measures to reduce cost, increase workforce flexibility and enhance competitiveness
03 Feb 2025
On Friday 31 January 2025, after seven months of negotiations, a new Belgian government agreement was concluded by the political parties that now form the ‘Arizona’-coalition. This agreement reflects the coalition’s ambition to implement broad reforms, including measures that aim to significantly reshape the Belgian labour market in the years to come. In this newsletter, we’ll discuss the general principles of this labour market reform, with a specific focus on those measures that will have the greatest impact on employers and active employees.
Note that, with a lot of the proposed measures, the devil will be in the details and their actual real-life impact will only become fully apparent once the legislative texts are adopted. We will of course keep you posted on these developments.
Modernisation of Belgian labour law
The new government agreement contains several measures aimed at modernising Belgian labour law and adapt it to the changing needs of employers and employees alike.
These include reintroducing a six-month probationary period at the start of a new employment, during which both employers and employees can terminate the employment agreement with a one-week notice period. This measure provides flexibility and security for both parties. Another notable measure is the fact that, for new hires, the maximum notice period will become limited to 52 weeks.
The student work contingent will be structurally increased to 650 hours per year, and the minimum age for student work will be lowered to 15, offering young individuals more opportunities to gain work experience.
The system of flexi-jobs will be expanded, increasing the maximum yearly income and hourly wage for flex workers and making these jobs available across all sectors. Additionally, the existing various types of leave for childcare will be integrated into a single 'family credit’, and parental leave will be opened up to foster parents, providing more comprehensive support for families and facilitating employees to work longer in a sustainable manner. Other measures will also support this goal, including the fact that no new entries will be allowed into the system of unemployment benefits with company surcharges (‘SWT’/’RCC’).
Working time flexibility
There’s also a clear focus on increasing flexibility in terms of working time. On this topic, the new measures include abolishing the prohibition of working at night, as well as removing the requirement that an individual’s minimum weekly working hours must be at least one-third of a full-time schedule. To regain competitiveness compared to neighbouring countries, night work in the distribution sector and related sectors (including the e-commerce sector) will start from midnight instead of from 20h.
Additionally, the government plans to eliminate the currently legally required closing day and to ease regulations on opening hours. A legal framework for the annualisation of working time will be set up, and a system of 360 hours of voluntary overtime will be introduced across all sectors.
Wage (cost) and remuneration elements
There are a great deal of incoming changes regarding wage cost, salary, and remuneration elements as well.
One of the the changes in this field is the aim to lower the employer's social security contributions for low and mid-level salaries as one of the measures to decrease companies’ wage costs and increase their competitiveness. A legal framework on flexible remuneration will be established, including limitations on the portion of the gross salary that can be converted into other remuneration elements.
Furthermore, the maximum employer contribution to a meal voucher will be increased, and the deductibility for the employer will follow suit. Conversely, eco vouchers, along with sports- and culture vouchers, will be phased out. Collective bonus schemes, such as the non-recurring, result-linked bonuses (under collective bargaining agreement no. 90) and profit premiums, will be simplified and their scope harmonised to provide clarity and consistency across the board.
The road to achieving an 80% employment rate
One of the main goals of the new government agreement is reaching a general employment rate of 80%. This not only requires people to work longer in a sustainable manner (see the measures above) but also a focus on reintroducing inactive employees into the labour market as soon as possible.
As such, the agreement not only limits unemployment benefits in time, but also contains a comprehensive plan for the reintegration of (long-term) ill employees that focuses on stronger accountability for all actors involved. This will include the fact that, during an employee’s first two months of incapacity for work that follow the period of guaranteed salary, the employer will be required to pay a contribution equal to 30% of the allowance the employee receives from their health insurance fund. The waiting period to be able to terminate an employment agreement for medical force majeure will also be adjusted to six months of uninterrupted incapacity for work instead of the currently applicable nine months.
Key takeaways
Companies should keep close tabs on the implementation of the new government’s labour market reforms, not only to comply with new obligations but also because these reforms present significant opportunities, including in terms of increased operational flexibility, improved workforce management and enhanced competitiveness. If you’re looking for more information on these measures or would like to leverage them to implement changes in your company as well, don’t hesitate to reach out; we’d love to hear from you.
