Belgium: Significant and broad changes to employment law and social security proposed

Employer Action Code: Monitor

The Federal Coalition Agreement of the new Belgian government contains a wide-ranging series of measures that, if implemented, would bring the most significant changes to the country’s labor laws in many years. The agreement covers a range of areas — from compensation and benefits to dismissal and unemployment — aiming overall to increase the flexibility and efficiency of the labor market while ensuring job security and social protection.

Key details

Planned changes in the area of compensation and benefits under the agreement include:

• Mandating employer provision of occupational pension benefits for all employees, with a minimum employer contribution of 3% of pay by 2035
• Increasing the maximum tax-favored daily value of meal vouchers, from 8 euros to 12 euros per employee, offset by eliminating all other vouchers
• Establishing a legal framework for flexible compensation (“cafeteria” systems), subject to a maximum of 20% of annual gross salary for salary sacrifice
• Reforming “mobility budgets” (for company cars) to apply to all employees and basing the taxable value of transportation by car or other means on the real rather than deemed value
• Simplifying regulations on collective bonus systems, regarding tax-favored payments from profit-sharing and fixed non-recurring bonus schemes

More broadly, the goal is to increase net wages for low and middle income earners, by increasing the basic tax exemption, reducing special social security contributions and incentivizing the use of employment bonuses. Covered earnings for determining employer social security contributions would be capped, at an amount to be determined.

In terms of working time, the agreement would increase the flexibility of workforce management in relation to weekly working time, night work, part-time work, mandatory closing days (for retail operations) and overtime (among others). The agreement would also establish a single voluntary overtime regime (in place of the “permanent” and “temporary” overtime regimes) allowing for 360 overtime hours per year in almost all sectors. Overtime compensation for the first 240 hours would not be mandatory but would be exempt from income tax and social security contributions.

In the area of dismissal, the agreement would cap severance pay at 52 weeks (for new hires) and reintroduce a trial period with reduced notice requirements during the first six months of employment. Unemployment benefits would change, by linking duration of the entitlement to years worked and capping it at two years, as well as by extending eligibility for unemployment benefits (once per career) to employees who resign with at least 10 years of employment.

The agreement also includes measures to prevent absenteeism and encourage reintegrating employees on long-term sick leave back into the workforce. The simplest measure would reduce the right to be absent for a day without a medical certificate from three to two times per year. Reintegration measures include:

• A new obligation for large companies to pay 30% of the sickness benefit cost for the two months following the first 30 days of sickness
• A general obligation for all employers to assess the work capacity of absent employees after eight weeks of absence
• Penalties for employers (with 20 or more workers) that do not start the reintegration process within six months of the start of leave for employees who can work, as well as sanctions for uncooperative absent employees

Finally, as for social security retirement benefits, the criteria for early retirement would be modified to discourage retirement before normal retirement age. In addition, the number of “assimilated periods” (non-worked) that are counted as periods of work in calculating pensions would be significantly reduced. A separate Global News Brief on the proposed pension reforms will be published in April 2025.

Employer implications

The agreement has attracted a lot of attention due to its sweeping and ambitious nature, as well as due to the coalition government (which was formed after seven months of negotiations following midyear elections in 2024). The proposed reforms, only some of which are summarized above, will be challenging to implement but may bring about significant changes to the form and cost of compensation and benefits. Employers should monitor the progress of the agreement closely.