The company car: new calculation method for benefit in kind
As of January 1, 2012 a new calculation method for the benefit in kind for the private use of a company car entered into force. The new formula no longer takes into account the annual number of private kilometres but focuses on the so-called catalogue value of the car. Under the new rules the benefit in kind is calculated as follows: (catalogue value * 6/7 * CO2 coefficient).
The catalogue value consists of three elements: first of all the value of the car, as indicated in the catalogue, secondly the value in the catalogue of all options on the car paid for by the employer, (not taken into account any received discounts and reductions) and thirdly the actual VAT paid (i.e. 21 percent of the actual amount paid for the car, including all discounts and reductions).
Furthermore, as of May 1, 2012, the calculation basis for the benefit in kind may be reduced with 6 percent per initiated year as of the second year that the car is registered, in Belgium or abroad, with a minimum cap of 70 percent.
Since under the new rules, the monthly benefit in kind is calculated on the basis of the number of calendar days in the relevant month, the monthly benefit in kind will be different each month.
It is advisable for employers to modify their car policies in light of these new rules, in order to avoid a significant increase of the benefit in kind for the employee.
Changes in Belgium's Vacation Act
Rules in Belgium's Vacation Act have recently changed as a result of a threatening condemnation by the European Commission. Belgium's Vacation Act violated one of the fundamental principles of the Working Time Directive n° 2003/88/EC providing that Member states take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks.
As of April 2012 a new rule entered into force in order to ensure that every employee is entitled to four weeks additional vacation in the calendar year during which the employee (re-)enters the Belgian labour market, also called Additional Vacation. As an employee vacation entitlements are accrued on a pro rated basis on the basis of the work performed during the vacation service year, i.e. the calendar year prior to the year during which the vacation is taken, i.e. the vacation year, not all employees are automatically entitled to four weeks vacation as required according to the Working Time Directive. This is particularly the case for employees who did not perform a full vacation service year, e.g. young employees during their first year of employment after they have completed their studies, employees who are employed after a period of unemployment, employees who before worked on a self-employed basis, employees who were employed abroad and who did not fall in the scope of application of the Belgian social security regime.
In order to rectify this situation, the Belgian legislator inserted a new article in the Belgian Vacation Act by Act of March 29, 2012. According to this new article, employees are entitled to one week additional vacation as of the last week per period of three months service during the calendar year when (re-)entering the labour market. During this additional vacation, the employee remains entitled to his normal salary. This amount is then deducted from the double holiday pay, to which the employee will be entitled in a later stage. Further modalities are still to be determined by Royal Decree.
Belgium's Federal Council of Ministers decided to extend the duration of parental leave up to four months in accordance with the Parental Leave Directive 2010/18/EU providing that such leave shall be granted for at least a period of four months. Until recently, the duration of parental leave was limited to three months in cases of 100 percent career interruption. According to the decision of the Federal Council of Ministers all employees will be entitled to such extended parental leave. However, only parents of children born after March 8, 2012 will be entitled to allowances paid by the Belgian Unemployment Office (RVA/ Onem) during the fourth month.
On June 1, 2012 the new rules regarding parental leave became applicable in accordance with the Royal Decree of May 31, 2012.
Fundamental changes in an employee's entitlement to allowances during a period of time credit leave
As of January 1, 2012 an employee's entitlement to allowances during time credit leave as paid by the Belgian Unemployment Office (RVA/ Onem) will depend whether or not the employee is on a motivated or not motivated time credit leave. In case of motivated time credit leave, an employee will be entitled to allowances during a period of 36 or 48 months while in case of a not motivated time credit, an employee will only be entitled to allowances for a limited period of 12 months.
Furthermore, existing eligibility conditions became more severe (e.g. age increase from 50 under the old rules to 55 under the new rules for more senior employees on time credit leave) or new eligibility conditions have been introduced (e.g. professional career requirements of five years will be required in case of a not motivated time credit).
The eligibility conditions to benefit from a time credit leave as such remain for the moment unchanged. However, it is very likely that the latter will be amended in the near future.
Early retirement / Canada Dry regimes
The Generation Pact Act December 23, 2005 introduced higher age and career requirements for early retirement as well as higher employer's social charges on early retirement allowances and so-called Canada Dry allowances (i.e. extra-legal allowances paid on top of state unemployment allowances outside the scope of an early retirement regime), in an effort to increase overall Belgian employment rate. As it turned out that these measures had no significant impact, the new so-called Di Rupo legislation envisages, for both social and financial reasons, to further limit access to the early retirement regime and make early retirement / Canada Dry regimes financially less attractive by further (and steeply) increasing the employer's social charges on allowances.
In terms of increased age requirement, the main change will be for sector-level regimes to have an increase from age 58 to age 60 as minimum age. The increase of the career requirement towards 40 years applies to both the sector-level and the national regimes for early retirement (the latter as of age 60). Most of these changes will in principle enter into effect as of 2015, be it with some noteworthy exceptions. The reduced early retirement age in case of companies in difficulties or in restructuring will, as of 2013, gradually increase to 55 years by 2018.
The increased employer's social charges on early retirement and Canada Dry allowances has as main result that these regimes will, generally speaking, only be financially attractive for employees of 60 years and older. The social partners have however requested the federal government to re-consider the steep increase in social charges.
Early retirement will, as of now, legally be referred to as Unemployment with Company Allowance (UCA).
Unless the social partners (National Labor Council) will by June 30, 2012 have come up with an alternative, and subject to the issuance of a Royal Decree with further details, in case of collective lay-off, the employer will no longer be free to select the employees that would be terminated. Indeed, and as is the case in the Netherlands, the selection will have to reflect the age structure in the company. More in particular, the overall number / percentage of dismissals will have to be proportionally spread over three age groups, i.e. up to age 30, from age 30 up to and including age 49, and as of age 50.
The law provides that said reflection principle will be mitigated by (i) limiting the scope of application to the division(s) or specific activity/ies which are impacted, (ii) excluding fixed-term contracts (unless terminated in the framework of the collective lay-off before the end of the originally agreed term), (iii) allowing a 10 percent derogation per age group and (iv) excluding key functions.
Non-compliance would be sanctioned by a loss of social security contribution reductions for all employees of age 50 and older who would be terminated in the context of the collective dismissal, and this for the quarter during which the intention to proceed to the collective lay-off is announced and the preceding seven quarters.
Unless the social partners (National Labour Council) will by June 30, 2012 have come up with an alternative, companies employing on average 20 employees or more will become obliged to issue on an annual basis, a plan providing with measures aimed at improving / maintaining the level of employment of age 45+ employees. The relevant legal provisions do provide with a non-exhaustive list of examples. The federal ministry of work will provide with a template.
Each year, by March 31 (and for 2012 exceptionally by July 1, 2012) such plan will have to be submitted to as applicable - the works council, or in absence thereof to the safety committee, or in absence thereof to the trade union delegation or in absence thereof to the personnel.
No sanction is foreseen in case of non-compliance but the preparatory parliamentary documents indicate that compliance will be an element that will be taken into consideration by the federal ministry in case of request for early retirement at reduced age (e.g. in the framework of a collective lay-off or closure).
At this moment, a draft act regarding the implementation of the Interim Directive n° 2008/14/EC is subject to discussion by the Federal Parliament. With this draft act, the legislators want to complete the Belgian rules on interim work in order to be fully compliant with the above mentioned directive.
According to the draft act, interim works will be entitled to the same company infrastructure (e.g. refectory, nursery, transportation facilities) as the employees are, unless the difference in treatment is reasonably justified. Furthermore, the draft act provides that a set of protective measures will also be applicable to interim workers (e.g. equal treatment between male and female employees, Sunday rest, night work, maternity protection,...). Finally, employers will have the obligation to inform the interim workers of all vacant positions within the company.
In the pipeline: New legal rules in the fight against sham employment
The Belgian government is planning to introduce a refutable legal presumption of the existence of an employment relationship in certain specific business sectors (like the building sector, the cleaning sector, the private security sector and the transportation sector, and possibly also in other sectors). This legal presumption will be based on a formal (check)list of 9 criteria which are considered to point to economic dependency.
Once this new legislation is in place, it can be expected that there will be an increased risk of re-characterization of a self-employed (contractor) relationship into an employment relationship in the relevant business sectors.