Every two years, the social partners (known as the "Group of 10") negotiate an interprofessional agreement (IPA). The IPA contains new binding terms of employment that apply across all sectors.
Today, the concluded agreement is merely a draft that the social partners have yet to approve. The agreement will then have to be converted into legislation. No further substantive changes are expected and the IPA should enter into force shortly.
In the area of the wage standard, which is normally part of the IPA, the government has intervened for the period 2023-2024. It has thus created the "purchasing power premium," the outlines of which have already been enacted. It is now up to the social partners to flesh out the final details.
In this article, we provide a preliminary overview of the most important measures that may be relevant to you as an employer.
Extension of voluntary and tax-advantaged overtime
The system of the 120 voluntary "relance overtime" on an annual basis, which normally expired on Dec. 31, 2022, will be extended through June 30, 2025.
"Relance overtime" is overtime that is completely exempt from social security contributions and withholding taxes. These are therefore "net" overtime: for each gross overtime, the employee sees the full amount appear in his account. Furthermore, no catch-up rest or overtime pay is due for this type of overtime.
Prior to working this overtime, you must sign a written agreement with your co-worker regarding the performance of this overtime. This agreement is valid for a maximum period of 6 months and can be renewed each time thereafter.
Furthermore, the increase in the number of tax-favored overtime from 130 to 180 overtime hours per year across all sectors extended through June 30, 2025.
With the exception of the above relance overtime, overtime is normally considered simply as pay: it is therefore subject to the usual NSSO contributions and withholding taxes. However, on a select number of overtime hours, some 180 per year until 2025, there is a particularly nice tax discount: the employee enjoys a reduction in the withholding tax owed by him. Moreover, the employer does not have to pass on part of the remaining withholding tax to the tax authorities. This makes granting these overtime hours particularly attractive.
Other measures
- Extension of the innovation premium system;
- Retention of fine for failure to offer outplacement (EUR 1,800.00);
- Extension of flexible temporary unemployment scheme for white-collar workers (CLA No. 159);
- Increase in guaranteed minimum average monthly income (GMMMI);
- Standstill on tax and parafiscal rules for supplementary pensions until Jan. 1, 2028;
- Extension of existing age requirements for some specific systems of SWT (System Unemployment with Company Supplement);
- Extension of runway arrangement with benefits from age 55.
Purchasing Power Premium
Through the Royal Decree of April 23, 2023, the purchasing power premiumon which the government reached an agreement in November 2022, finally became law. Since the social partners failed to reach an agreement on the wage standard for the years 2023-2024, something that is normally part of the IPA, the government intervened on this issue.
With this one-time bonus, the government wants to allow companies that have performed well over the past year in this exceptional economic context to additionally reward their employees for their efforts.
Specifically, the premium will maximum EUR 500 may amount in companies that in 2022 have a "high profit" achieved, and maximum EUR 750 in companies that by 2022 will have a "exceptionally high profit" achieved.
However, a further definition of the terms "high profit" and "exceptionally high profit" is lacking in the legal text itself. The hot potato is passed on to the sectors: each sector (joint committee) will thus be able to give its own interpretation to the above concepts and consequently impose stricter conditions.
For example, it is possible that certain sectors will require employers who fall under the sectoral definitions of "high and exceptionally high earnings" to grant a purchasing power premium. It therefore seems appropriate to us not to grant a purchasing power premium yet until you know the outcome of the sectoral negotiations.
Otherwise, the purchasing power premium may be granted under the following terms, which are quite similar to those of the "consumption vouchers" during the corona crisis:
- The award must be contained in a collective bargaining agreement at the sector or enterprise level or in a individual agreement.
- The award may from June 1, 2023 to December 31, 2023.
- The premium may be awarded in the form of a check (paper or electronic) and spent up to and including December 31, 2024 in the same way as meal vouchers or ecocheques.
- At the (para)fiscal level, the purchasing power premium for the employee will be exempt are from social contributions and withholding taxes. As an employer, you are only a special employer contribution of 16.5% due and will pay the premium fully tax deductible
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