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Article | Global News Briefs

Belgium: New Inter-Professional Agreement for 2021 – 2022

By Antoine Michel | June 30, 2021

Key points in a new IPA may affect salary budgets, pension plan harmonization, pre-retirement pensions, the national minimum wage and overtime.
Retirement|Health and Benefits|Ukupne nagrade
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Employer Action Code: Monitor

The social partners have reached an accord on the key points for a new Inter-Professional Agreement (IPA) affecting salary budget planning, harmonization of salaried and hourly pension plans, pre-retirement pensions, the national minimum wage and overtime. IPAs are collectively negotiated, cross-sector agreements that — in principle — are reviewed every two years. While they are not legally binding, they are considered to be highly influential at the national level.

Key details

The agreement, reached on June 8, 2021, includes the following:

  • Increases in employers’ overall wage costs are capped at 0.4% between 2021 and 2022 (referred to as the salary norm). Certain forms of compensation and increases are excluded from the norm, including mandatory wage indexation, certain types of profit sharing, nonrecurring bonuses and awards for innovation, certain costs related to contributions to supplemental pensions and cost increases related to the increase of full-time staff employed by companies.
  • Between August 1 and December 31, 2021, companies may grant a one-off reward of up to 500 euros in the form of “consumption vouchers” (chèque consommation/consuptiecheque), which are tax-free to employees (but subject to an employer social security contribution of 16.5%) and are also excluded from the salary norm. Consumption vouchers may be used to purchase goods and services from participation providers in sectors that have been particularly affected by the COVID-19 pandemic.
  • The current system of different monthly minimum wages based on age and length of service as set by collective labor agreements will be replaced by one universal minimum wage of €1,702 as of April 1, 2022, an increase of almost €76 on the lowest rate currently payable. It will increase by €35 in 2024 and again in 2026.
  • Full harmonization of supplemental pension plans of salaried and hourly employees, originally to be completed by 2025, has been postponed to 2030. Companies and sectors affected by this harmonization will be obliged to finance the costs with a portion of pay increases from 2023 to 2028, subject to amending the laws governing supplemental pensions.
  • Special, voluntary overtime (up to 120 hours per year) introduced for certain sectors in response to the pandemic will be extended to all industries in 2021 and 2022. Under the regime, employers are not required to provide overtime pay beyond normal pay, but any such pay received is exempt from income tax for the employee and social security contributions for the employer. In addition, the limit on regular overtime (130 hours per year) is extended to 180 hours until June 30, 2023.
  • The age limit of 60 will be set for all situations (except for disabled workers) when employees affected by dismissals may qualify for pre-pension (‘Unemployment with Company Supplement’) scheme before reaching early retirement age. This adds to previous, successive reforms to introduce more rigid age requirements for new participants of the scheme.
  • The new IPA extends the partial retirement scheme introduced by the previous IPA (2019 to 2020), allowing employees ages 55 to 59 to reduce working hours by 20% or 50% until full retirement; however, it discontinues the earlier exceptions that allowed partial retirement already at age 50. Since January 1, 2021, due to the expiry of the previous IPA, social security has not been granting a “Time Credit” allowance for new applicants for reduced work time, thereby greatly reducing the attractiveness of partial retirement at ages 55 to 59.

Employer implications

Employers should prepare to review their policies and practices in light of the new IPA for 2021 to 2022. At the time of writing, the social partners have obtained approval from their respective constituencies to ratify the new IPA, and the government has given its first approval (two are needed to become effective) for the salary norm and one-off consumption vouchers.

Contact

Antoine Michel
HR Survey Analyst
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