The 2010-2011 budget and its impact on employment and social security

Last week, the Belgian government reached an agreement on the 2010-2011 federal budget. The most important social security and employment law measures that will be taken in order to reach the targets set by the government can be summarised as follows...

Employers and employees

The employer’s contribution to indemnities paid out for bridge pensions and other forms of early retirement (Canada Dry) will be standardised and increased. Amounts payable by the employer will depend on the worker’s age at the time the employer starts paying the bridge pension or the benefits linked to other forms of early retirement. The employer’s contribution will be equal to 50 % (instead of 32.25 %) when the employee is 52 or younger when he/she enters the early retirement scheme. Participation from the employer will gradually decline according to the age at which the employee enters early retirement, to a minimum of 10 % when the employee is at least 60.

Currently, employees who have at least 1 year of seniority within the undertaking can benefit from time credit. However, this number will be raised to 2 years in the future. In addition, the authorised age to qualify for higher benefits in the context of time credit will be raised from 50 to 51.

Furthermore, employer contributions relating to accidents at work will be raised from 0.30% to 0.32%.

The temporary measures employers can take in order to keep white-collar workers at work instead of making them redundant will be prolonged by 6 months (economic unemployment benefits for white-collar workers, crisis time credits and temporary collective reduction of working hours). Instead of expiring on 31 December 2009, they will remain applicable until 30 June 2010, provided the social partners reach a unanimous vote in favour of this extension.

Hiring young people will cost employers less in 2010 and 2011. Employers will receive a subsidy of up to 1,000 euro per month during a 2 year period when they hire an employee who is not yet 26 years old, is unemployed for no more than 6 months and only has a secondary education diploma. No social security contributions will have to be paid during the first 2 years of employment for a new hire who is not yet 19 years old and has no real qualifications.

Hiring new employees who are at least 45 years old will also cost employers less in 2010 and 2011. Employers will receive a subsidy of up to 1,000 euro per month during a 2 year period for each new hire aged 45 and above.

Social security contributions relating to minimum wages will be lowered from 16.09 % to 15 % in 2010 and to 13.5 % in 2011.

Self-employed

Self-employed individuals will have to become affiliates to a social insurance fund as of day one of their self-employed activity. Until now, they had 90 days to select a social insurance fund.

Finally, the gap between the minimum legal pension for a self-employed person and that of an employee will be lowered by 50 % in the next two years.

Further information

Click here to read a recent Tax Alert published by Deloitte Belgium on proposed tax measures for the 2010 Budget.