A September 24 2013 royal decree (published in the Belgian Official Gazette on September 27 2013 (2nd ed)) has extended the scope of remuneration taken into account for the calculation of social security contributions. From October 1 2013, almost all allowances paid to an employee after termination of his or her employment contract will be subject to social security contributions (both the employer's contributions and the employee's contributions). However, two exceptions to the definition of 'remuneration' have been provided.
Until October 1 2013, classic severance payments, severance protection paid to staff representatives (pertaining to the works council or the health and safety committee) and union representatives, and allowances relating to non-compete clauses concluded before the end of the employment contract were all subject to social security contributions. An exemption from social security contributions was also provided for goodwill indemnities due to sales representatives.
However, it was unclear whether certain allowances (eg, compensation for non-compliance with a job security clause) were subject to social contributions. Moreover, the issue of whether social security contributions were due on non-compete compensation paid under an agreement concluded after termination of the employment contract remained delicate. Some employers had been tempted to use this type of compensation in order to avoid payment of social security contributions on part of the amount due to the employee after termination of his or her employment contract.
The new rules provide as follows:
- The remuneration taken into account to determine whether social security contributions are due has been extended to allowances paid to a former employee under a non-solicitation commitment and/or a non-compete commitment contained in a contract between the employer and the former employee that was entered into within 12 months of the end of the employment contract.
- Certain exceptions that limited the definition of 'remuneration' for social security purposes have been deleted from the text of the royal decree, so that all allowances paid after termination of the employment contract are henceforth subject to social security contributions. From now on, the following are thus subject to social security contributions:
o goodwill indemnities;
o indemnities for protected workers (eg, maternity, time credit, paid educational leave, harassment and discrimination);
o indemnities for non-compliance with a stability clause or a job security clause in a collective or individual agreement; and
o indemnities for unlawful dismissal of a white-collar employee.
- Compensation for closure remains excluded from the definition of 'remuneration'. The same applies for compensation due in case of collective dismissal under Collective Bargaining Agreement 10 and compensation for abusive dismissal of a blue-collar employee, provided that this right originated before January 1 2014.
These reforms also apply to indemnities paid by an employer to an employee during the execution of the contract which cover, for example, an injury suffered by a worker due to an employer's breach of its obligations (eg, the obligation to provide a car).
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