HR Law Focus Newsletter No.3

Extension of the salary concept for social security purposes - the future goes back...

In the framework of the efforts by the Belgian government to combat social security fraud, the salary concept for social security purposes was extended as from 1 October 2013 to all indemnities due as a result of the termination of an employment agreement. By a Royal Decree of 21 December 2013, the Government has now again partly repealed this change with retroactive effect as from 1 October 2013. The NSSO has very recently updated its administrative instructions.

Before 1 October 2013

By a Royal Decree (RD) of 24 September 2013 (published in the Official Gazette on 27 September 2013), the salary concept for the purposes of Belgian social security was modified. The changes took effect as from 1 October 2013 and were applicable for every payment - falling within the scope of the RD - which was made as from 1 October 2013.

Before 1 October 2013, merely all indemnities which were due by an employer to an employee as a result of a breach of his legal, contractual or statutory obligations were exempt from social security contributions. The exemption was repealed as a result of the RD of 24 September 2013. Hence, practically all indemnities resulting from the termination of an employment agreement became subject to social security contributions including:

compensation paid as a result of breach of the dismissal protection for pregnant employees, time credit, educational leave, filing of a complaint for moral harassment, having made remarks in the framework of the implementation of new work regulations or other indemnities due by an employer for breach of his legal, contractual or statutory obligations the clientele indemnity payment under a non-competition or a non-solicitation agreement, paid directly or indirectly by the employer within 12 months after termination of the employment agreement, .... As from 1 October 2013 retroactively

However, by Royal Decree of 21 December 2013 (published in the Official Gazette on 31 December 2013, with retroactive effect as of 1 October 2013), the Government has now again (partly) repealed some of the changes implemented by the RD of 24 September 2013.

As a result, the indemnities due by an employer, for example for breach of the dismissal protection for pregnant employees, time credit, educational leave, filing of a complaint for moral harassment, moral damages or...