Further to the May 2014 elections, a new federal government was finally established in October 2014. The government recently presented its coalition agreement, setting out its political objectives for the coming years.

The agreement indicates that the government plans to introduce numerous changes to labour and social security law, which will have a significant impact on businesses. Below we provide a brief overview of the most important changes. Please note that the coalition agreement is a political document and has no legal value per se. Thus, the exact content of each measure must still be determined, and the government could decide not to adopt the legislation necessary to implement certain aspects of the agreement. A first set of legislative proposals is expected at the end of this month.

Measures intended to enhance competitiveness and raise the employment rate

A first set of measures is designed to enhance the competitiveness of Belgian businesses and encourage them to hire more personnel by lowering salary costs. The most important proposed measures are:

  • a reduction in employer's social security contributions to 25% (from 35%);
  • the reduction in payroll taxes and employee social security contributions to increase take-home pay;
  • maintenance of the current salary freeze; the agreement states that the government intends to enforce the salary freeze by ensuring non-compliance is effectively sanctioned;
  • enhance flexibility with regard to working time;
  • no indexation of salary in 2015.

Measures aimed at reducing the social security budget

A second set of proposed measures is intended to reduce the social security budget. The most important measures are:

  • raising the age threshold for agreed early retirement from 60 to 62, as from 1 January 2015; initially, the agreement provided that employees whose notice period started to run before 31 October 2014 would still be able to take early retirement at 60 years of age; however, the pensions minister changed the date to 31 December 2014; it should be noted that the government also plans to raise the age for agreed early retirement in the context of a reorganisation to 60;
  • abolishing allowances for certain types of crédit-temps (i.e. a system provided for by Belgian employment law which allows a salaried employee to temporarily interrupt his or her professional career, in full or in part; it can take the form of a suspension of the employment contract or a reduction in working time; the employee receives an allowance paid by the National Employment Office; the purpose of the system is to give employees more free time to meet family and societal obligations or for personal projects);
  • raising the age requirement for an end-of-career workload reduction from 55 to 60;
  • extending the period covered by guaranteed salary in the event of illness from 1 to 2 months.

Please note that only the most important aspects of the coalition agreement are mentioned above.