Compensation & Benefits
A “purchasing power premium” of up to EUR 750 can be paid if the profit was high in 2022.

On 26 May this year, the Royal Decree of 13 May 2023 was published, setting (unsurprisingly) the maximum margin for changes in salary costs for the period 2023-2024 at 0%. The publication of this Royal Decree now makes the salary margin legally binding.

The law of 26 July 1996 (which aims to preserve the competitiveness of Belgian companies) stipulates that, at least every two years, the maximum margin for the evolution of salary costs for the next two years must be set in the interprofessional agreement. The margin is set on the basis of a report by the Central Council for Business (CCB) on Belgium’s salary disadvantage vis-à-vis its neighbouring countries.

In principle, the margin is then set by a collective bargaining agreement concluded at the National Labour Council, which is then made generally applicable by the King (the Government). If the social partners fail to reach a consensus, the Government provides for mediation. If no agreement can be reached on this basis, the King (the Government) may set the maximum margin by Royal Decree.

In this case, due to the failure to reach an inter-professional agreement and successful mediation, the Government has set the margin by Royal Decree of 13 May 2023. This was already the case for the previous margin, which was set at 0.4% for the period 2021-2022.

The 0% margin comes as no surprise. It is the maximum margin that the CCB considered available to preserve the competitiveness of Belgian companies, and the Government had indicated from the outset that there would be no margin available, particularly in view of the significant indexation that has recently affected salaries.

The 0% margin does not imply that salaries are completely frozen. In fact, indexation and pay scale increases (increases linked to seniority set by collective bargaining agreements) are still guaranteed. The “purchasing power premium” is not affected by the margin.

The evolution in salary costs (which must remain within the available margin) refers to the increase in nominal terms in the average employment cost per worker in the company, expressed in full-time equivalents. Labour costs are defined very broadly: they include the base salary and benefits in cash and in kind, as well as employers’ social security contributions. Whether or not the available salary margin has been exceeded is determined on the basis of the average wage cost per employee over the period 2023-2024, compared with the same cost for the previous period (2021-2022).

There are penalties for exceeding the available margin.

Only salary cost increases resulting from agreements are subject to the ban on exceeding the maximum margin available. It is therefore not permitted to conclude collective (or individual) agreements that increase workers’ wages by more than the existing indexation and pay scale increases. Or to be more precise: if this is the case, be careful that these increases do not result in the margin available being exceeded over the period in question.

By way of compensation, it should be noted that the Government has nonetheless provided the possibility for companies that achieved good results in 2022 to grant a “purchasing power premium” of up to EUR 750 to its employees in 2023. This premium (granted in the form of consumption vouchers) can be issued until 31 December 2023.

The purchasing power premium is exempt from the regular social security contributions and income tax, subject to certain conditions. Only a special employer’s contribution of 16.5% is payable.

The granting of the purchasing power premium in companies that have achieved good results in 2022 must be the subject of a collective bargaining agreement at sectoral or company level. If such an agreement cannot be concluded due to the absence of a trade union delegation, or if it concerns a category of personnel for which it is not customary to provide for such a collective bargaining agreement, the granting of the premium may be governed by an individual agreement.

If a collective agreement is concluded at the level of a joint (sub-)committee, it must, in order to be legally valid, contain two definitions based respectively on high profits in 2022 (allowing a premium of up to a maximum of EUR 500) and “exceptionally” high profits in 2022 (allowing a premium of up to EUR 750).

Point of attention

Make sure that the average salary cost in your company for the reference period 2023-2024 does not increase compared to the previous reference period (2021-2022). One or more employees may benefit from salary increases, provided that they do not increase the average salary cost within the company compared to the previous reference year. Increases resulting from compulsory indexation and existing pay scale increases are still possible and guaranteed.

If your company has achieved good results in 2022, you may consider paying a “purchasing power premium”, under certain conditions, which benefits from advantageous (para)tax treatment.