The Act of 26 July 1996 aiming to improve employment and preserve competitive power (hereinafter: the Salary Restraint Act) seeks to limit the growth of labour costs in Belgium.

Within the framework of this Act, the maximum margin for the growth of labour costs in 2015 and 2016 has been determined by the Act of 28 April 2015.

As one might expect, the maximum margin for 2015 is fixed at 0%, as in 2013 and 2014.

For 2016 the margin is determined as follows:

  • 0.5% of the gross mass salary, i.e. the total cost for the employer, all charges included; 
  • increased by 0.3% of the net mass salary, without additional costs or charges for the employer.

Outside these margins, the labour cost in principle may not be increased. However, exceptions are provided for in the Salary Restraint Act.

Indexations and the application of existing remuneration scales fall outside the scope of the salary restraint. Hence, an increase in labour costs due to the application of the automatic indexation or the existing remuneration scales is therefore allowed.

An increase resulting from the application of a profit sharing plan, as defined by the Act of 22 May 2002 concerning employee participation in the capital and the profits of companies, resulting from employer contributions in social pension schemes or resulting from one-off innovation premiums, also falls outside the scope of the legislation on salary restraint.

Moreover, an increase in the labour costs due to an increase in the number of staff members will not be taken into consideration.

It has been asserted that the Salary Restraint Act applies only to salary increases provided for under collective or individual agreements, based on Article 9 of the Salary Restraint Act that provides that “the margin referred to in articles and 7 applicable to the growth of labour costs may not be exceeded by agreements at the intersectoral, sectoral, company or individual level”. On the basis of a literal interpretation, it could be held that unilaterally granted salary increases fall outside the scope of the Salary Restraint Act.

However, such an interpretation may be contested:

  • the interpretation that unilateral salary increases fall outside the scope of the legislation is not explicitly confirmed by the Salary Restraint Act;
  • the preparatory works of the aforementioned Act provide that the reference to intersectoral, sectoral, company or individual levels aims to include all levels of labour costs. The legislator wanted to prevent the Salary Restraint Act from containing disincentives to concluding collective bargaining agreements. The interpretation that unilateral salary increases fall outside the scope of the Act is contradictory to this aim of the legislator;
  • in practice, it is difficult to distinguish a unilateral grant and an oral agreement. It could be argued that as soon as an employee accepts a unilateral increase of the remuneration by the employer, an agreement is concluded.

As a consequence, a strict salary restraint has to be taken in account in 2015 and 2016.