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際際滷s Di Rupo Measures 22 May 2012

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The document summarizes changes to early pension, bridge pension, time credit and other employment measures from Belgium's Di Rupo I coalition agreement. Key changes include gradually increasing the minimum age and career length required for early pension from 2013-2016. Bridge pensions will also require longer careers of 35-40 years and the age will increase to 60 by 2015. Time credit can now be taken for up to 36 months for specific reasons like childcare or training.

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Di Rupo I coalition agreement: Relevant changes for HR practice Paul Windey President, National Labour Council Stefan Nerinckx, Partner Employment & Benefits department at FFW Brussels Professor of employment law at the University College Brussels 22 May 2012 1
Contents Early pension Bridge pensions Time credit Special social security contributions Summary Employment plan for employees aged 45 and + Age pyramid in cases of collective dismissal Joint and several liability Annual vacations Other measures provided for in Elio Di Rupo I - coalition agreement Tax measures Company cars recent legal changes Other individual tax measures 2
Early pension Currently, an employee with a working career of 35 years may claim early pension as from age 60. The requirements for taking early pensions change on 1 January 2013: Minimum age Minimum Exception in case of long Year (years) working career (years) career 2012 60 35 - 2013 60.5 38 60 if career of 40 years 2014 61 39 60 if career of 40 years 2015 61.5 40 60 if career of 41 years 60 if career of 42 years 2016 62 40 61 if career of 41 years 3
Early pension Transitional measures => 60 years continues to be possible Employment agreement terminated by employer serving notice period Notice period must start before 1 January 2012 and end (or should have ended) after 31 December 2012 Individual (written) end-of-career agreement Entered into before 28 November 2011 Not conventional bridging pension Individual agreement is entered into in the framework of the following sources of law: - Work regulations: copy sent to regional labour inspectorate before 28 November 2011 - Collective labour agreement: filed with FPS Employment before 28 November 2011 - Pension regulations: in force before 28 November 2011 - legal or regulatory provisions or similar provisions Employees fulfil all conditions stipulated in these sources of law no later than 28 November 2011 Examples: time credit, sabbatical, etc. ! Underlying documents must be sent to National Office for Pensions (RVP/ONP) 4
Bridge pension Half-time bridge pension: no new arrangements as of 1/1/2012 Bridge pension became unemployment scheme with payment of a company allowance General scheme: as of age 60 Exception: as of age 58 long-term careers Exception: as of age 58 physically demanding occupations Different scheme for companies in difficulties or restructuring Changes in statutory social security benefits (pension) < 60 years (exceptions) >< Canada Dry schemes for employees who do not fulfil the age and career conditions 5
Bridge pension General scheme Old scheme Age: 60 years Career: 25 years but increased gradually by Generation Pact New scheme If a collective (bargaining) agreement is entered into for the first time after 31/12/2011: - Required length of working career as from 1/1/2012: 40 years If a collective (bargaining) agreement was either entered into and filed before 1/1/2012 or entered into after 31/12/2011, but is an uninterrupted continuation of a collective (bargaining) agreement entered into and filed before 1/1/2012: - Required length of working career: As from 1/1/2012: 35 years for male employees / 28 years for female employees; As from 1/1/2015: 40 years for male employees / 31 years for female employees (gradually increasing to 40 years as of 1/1/2024). 6
Bridge pension Exception 1: as from 60 years of age long-term career If a collective (bargaining) agreement is entered into for the first time after 31/12/2011: Required length of working career: - Male employees: 40 years as from 1/1/2012; - Female employees: 35 years as from 1/1/2012, 38 years as from 1/1/2014, 40 years as from 1/1/2015. Still as from 58 years of age, if a collective (bargaining) agreement was either entered into and filed before 1/1/2012 or entered into after 31/12/2011 but is an uninterrupted continuation of a collective (bargaining) agreement entered into and filed before 1/1/2012: Required length of working career: - Male employees: 38 years as from 1/1/2012, 40 years as from 1/1/2015; - Female employees: 35 years as from 1/1/2012, 38 years as from 1/1/2014, 39 years as from 1/1/2016, 40 years as from 1/1/2017. Age as from 1/1/2015: 60 years! 7
Bridge pension Exception 2: as from 60 years of age physically demanding occupation If a collective (bargaining) agreement is entered into for the first time after 31/12/2011: Required length of working career: - Male employees: 40 years as from 1/1/2012; - Female employees: 35 years as from 1/1/2012, 37 years as from 1/1/2014, 40 years as from 1/1/2015. Still as from 58 years of age, if a collective (bargaining) agreement was either entered into and filed before 1/1/2012 or entered into after 31/12/2011 but is an uninterrupted continuation of a collective (bargaining) agreement entered into and filed before 1/1/2012: Required length of working career: - Male employees: 40 years as from 1/1/2015; - Female employees: 38 years as from 1/1/2014, 39 years as from 1/1/2016, 40 years as from 1/1/2017. Age as from 1/1/2015: 60 years! 8
Bridge pension Different schemes for companies in difficulties or restructuring: Company in difficulties Age: 52 in 2012 (increases gradually to 55 as from 2018) 2012 : 52 years 2015: 53.5 years 2013: 52.5 years 2016: 54 years 2014: 53 years 2017: 54.5 years As from 2018: 55 years Company in restructuring Age: 55 as from 1/1/2013 Exception : 52.5 as from 1/1/2013 (increases gradually to 55 as from 2018) - Cumulative conditions: Announcement of the collective dismissal of at least 20% of all employees; Collective dismissal concerns either all employees of the technical operating unit or all employees of an entire business segment (segment complet dactivit辿 - volledig activiteitensegment) (still to be defined); Technical operating unit or business segment must have existed for at least 2 years at the time of the announcement (still to be defined). 9
Bridge pension No change with regard to: Special scheme for those aged 56 + career of 33 years (20 years of night work / construction business) valid until 31/12/2012 Special scheme for those aged 56 + career of 40 years extended until 31/12/2015 (no further working activities before age 17) Calculating company allowance: (Net reference salary unemployment benefit) / 2 Personal social security contributions: 6.5% of total sum of unemployment benefit and company allowance Replacement obligation: up to age 60 (expected increase to 62 years) 10
Time credit Difference between time credit for Working time reduction (duration) and allowances specific reasons (36 or 48 months)/without reason to take care of children up to age 8 (also for adoption); to administer palliative care (any form of care: medical, social, administrative, psychological); to assist or take care of a member of their household or family who is seriously ill; to undergo training recognized by the Communities or by the sector, lasting at least 360 hours or 27 credits a year, or 120 hours or 9 credits per quarter or uninterrupted period of 3 months; to undergo education in a recognized educational institution for basic education or training to obtain a secondary education certificate; the limit is fixed at 300 hours a year or 100 hours per quarter or uninterrupted period of 3 months. 11
Time credit These employees are entitled to the interruption allowances (for time credit) for a total of 36 months this period of 36 months is not calculated proportionally in cases of part-time time credit, Periods during which interruption allowances are awarded for time credit for specific reasons for up to 48 months (next slides) are deducted from the 36 months (with exception of the first 12 months) Conditions: 2 years seniority with the current employer No requirement of an existing working career of 5 years as an employee! 12
Time credit Employees suspending or reducing their working time: to take care of their disabled child up to age 21 (at least 66% disability or suffering from a condition leading to recognition of at least 4 points in the first pillar of the medical-social scale in the framework of the regulations with regard to family benefits); to assist or take care of their child or a child who is a part of their household, who is seriously ill. These employees are entitled to the interruption allowances (for time credit) for a total period of 48 months this period of 48 months is not calculated proportionally in case of part-time time credit, Periods during which interruption allowances are awarded in the abovementioned cases (for time credit for specific reasons of up to 36 months) are deducted from the 48 months Conditions: 2 years seniority with the current employer No requirement of an existing professional career of 5 years as an employee! 13
Time credit Without specific reasons Maximum length of time credit during entire career (allowances): 12 months full-time time credit; 24 months half-time time credit; 60 months 1/5 time credit; or A combination of the above No possibility to extend by CBA Conditions: Written notification to the employer; 5 years seniority as employee (with any employer) + exceptions; 2 years seniority with the current employer (exceptions); Exception: employees who have used up their right to parental leave for all children and wanting to take full- or half-time time credit immediately after parental leave. Switch between schemes 14
Time credit (50+/55+) The special scheme for end-of-career time credit is maintained for employees: as from 50+ (working career of 20 years) for working time reduction; as from 55+ (working career of 25 years) for the additional allowance Exception: age 50 for employees working in a physically demanding occupation (5 years in past, 10 years or 7 years in past 15 years), provided the occupation is on the list of critical occupations (shortage of labour) No maximum duration applies (pensionable age at 65) Assimilation period for statutory pension will be different (pensions as from 1 January 2013) Time credit without specific reasons Time credit < 60 years and 60 years Unemployment third period Canada Dry Bridge pension < 60 years 15
Time credit (50+/55+) part-time employment Act 28/12/11 RDs 28/12/2011 RD 12/12/2001 20-year career 25-year career CBA no. 77bis No replacement Act 3 July 1978 12 months Min. 6 months full time (!) 80% Min. 3 months Age 55 Age 65 50% Exceptions: for physically demanding occupation and 3 years seniority Age 50 night shift in company 5% threshold but exceptions are possible Benefits Inconveniences as of age 50 (55 years for allowance) threshold 50 to 80% reduction of work company and career seniority entitlement (but 5% threshold) RVA/ONEM allowance as from age 55 continued seniority loss of statutory pension entitlement (part) no replacement supplementary pension (fiction?) 16
Alternatives: Time credit (50+/55+) Allowance Statutory pension Age 50 Age 55 Age 60 Age 65 80/20? 50/50? 50/50? Age 50 Age 55 Age 58 Age 60 Age 65 end of contract (Act of 12 April 2012) 17
Special social security contributions Employer social security contributions on company allowances under unemployment scheme, Canada Dry scheme and time credit: significant increases Bridge pension / Unemployment Scheme with Canada Dry Company Allowance Dismissal after 15/10/2009 Dismissal after Dismissal after 15/10/2009 Dismissal after 28/11/2011 and bridge pension as from 28/11/2011 and USCA and company allowance as and company allowance as 1/4/2010 as from 1/4/2012 from 1/4/2010 from 1/4/2012 < 52 50% became 55% 100%? 50% became 55% 100%? 52 - < 55 40% became 44% 95%? 40% became 44% 95%? 55 - < 58 30% became 33% 85%? 30% became 38.82% 85%? 58 - < 60 20% became 22% 55%? 20% became 38.82% 55%? As from 60 10% became 11% 25%? 10% became 38.82% 38.82%? Time Credit The 32.25% percentage increases to 38.82% as from 1 April 2012, also for the current supplementary compensation on time credit. No social security contributions are due in the case of time credit inter alia in the following exceptions: the supplementary compensation is already paid prior to age 45; the supplementary compensation was already paid prior to 1 January 2006; the employee was dismissed prior to 1 October 2005; granted in case of thematic holidays; the employee is in receipt of an allowance for half-time time credit for employees over 50. 18
Employment plan for employees of 45 and + Employers obligation At the level of the technical operating unit + every calendar year before 31 March (first 2013) Exception: companies 20 employees Content: Measures that will be taken during the calendar year aimed at maintaining and increasing the number of employees aged 45 and +: Selection and recruitment of new employees Skills and qualifications development (including training) Career development and coaching within the company Possibilities of horizontal transfer to switch to a position suited to the employees new abilities and skills Possibilities for adjusting working time and work conditions Health, safety and eliminating physical and psychosocial impediments aimed at maintaining employment Systems of recognition of acquired skills Evaluating previous calendar years employment plan Consultation 19
Age pyramid in the case of a collective dismissal Applicable in the case of a collective dismissal Not applicable in the case of bankruptcy, judicial winding-up or full closure of the compan The number of dismissals must be proportionally spread over: Age group < 30; age group 30 - < 50; age group 50 Only applicable to employment agreement for undefined duration (exceptions) If only certain business segments or divisions are concerned: only applicabl to the employees of those segments or divisions Deviation of 10% per age group is allowed Sanction: loss of reduction in social security contributions A royal decree is still expected for calculation method and coming into force 20
Joint and several liability Current system of joint and several liability for tax and social liabilities: only applicable in the construction sector Extension to other fraud-sensitive sectors and salary A principal who engages a contractor or a contractor who engages a subcontractor with social security, tax and/or salary debts may be held liable for those debts and would in have to pay them. In principle, liability is limited to the invoiced amount of the services. Avoiding liability by correctly applying the withholding duty The principal / contractor must withhold the following amounts from the invoiced amount (exclusive of VAT): - For social security debts: withhold and pay 35% to the National Social Security Office; - For tax debts: withhold and pay 15% to the tax authorities. Knock-on liability: If a main contractor fails to comply with its withholding duty and cannot settle the social security, tax and salary debts of his subcontractor, the principal will subsequently be liable to pay the debts. A royal decree will enact the legislation and determine which sectors are concerned Explanatory Statement to the Act: meat sector, catering industry (horeca) and security services sectors 21
Joint and several liability Also applicable in international employment scenarios: If a Belgian principal / contractor enters into a service agreement with a foreign (sub)contractor active in one of the sectors concerned, it may be held liable for the tax, social security and salary debts of its (sub)contractor (if a foreign (sub)contractor sends employees to Belgium on assignment, he must respect the minimum salary levels that apply in the sector in question). Also applicable to (prior) social security debts of a foreign employer/(sub)contractor who lawfully assigns employees to Belgium? Recommendation: precautionary clauses in service agreement Automatic termination of the service agreement if the manpower inspectorate notifies the principal / contractor that its (sub)contractor has seriously breached its duty to pay salary in time Covenant to respect minimum salary levels that apply in the relevant sector in Belgium throughout the time for which the employee(s) assigned to Belgium. This does not rule out the joint and several liability of the Belgian principal / contractor, but allows it to recover the amounts from the (sub)contractor afterwards. 22
Other measures provided in Elio Di Rupo I - coalition agreement Measures against social security fraud: Measures against sham self-employment (proposed bill): the legislation of 27 December 2006 and criteria remain unchanged + refutable presumption of link of subordination if several economic dependence criteria are fulfilled for three sectors concerned: transport, construction, surveillance sector criteria: investment, responsibility for financial means, power of decision on pricing (products), working in the contract partners (employers) premises, one and only client, no results-driven contract, using material/tools put at the disposal of the contract partner, etc. + change to section 344(1) Income Tax Code (WIB/CIR) management/consultancy companies Revision of restrictions on loans of personnel (nothing specified yet) 23
Other measures provided in Elio Di Rupo I - coalition agreement Annual vacations The current Belgian legislation provides for 4 weeks annual vacation and the corresponding vacation pay, in the calendar year following the calendar year of performance of the employment: This means that in principle employees are not entitled to vacation or vacation pay during their first working year; EU-level legislation lays down that each employee is entitled to 4 weeks vacation on full pay during the working year; To comply with these rules, Belgian holiday legislation has recently been amended: vacation pay is awarded for each 3-months working period, during the last week of the 3-month period concerned. This vacation pay is later deducted from the double vacation pay or leaving vacation pay. 24
Other measures provided in Elio Di Rupo I - coalition agreement Abolition of distinction between white-collar and blue- collar workers Education: increased penalties for non-compliance with required level (1.9%) of investment in education measures for paid educational leave will be extended: increase of maximum duration from 100/120 hours to 200 hours Voluntary continuation of work after age 65 25
Tax measures Company cars recent legal changes Taxable benefit The taxable benefit in kind is 6/7 of the cars list price, multiplied by the CO2 emissions coefficient Valuation The list price is defined The benefit in kind takes into account the age of the car, by multiplying the list price by a percentage according to the time since first registration of the car The reference CO2 coefficient is 5.5% for a diesel engine producing 95g/km or for petrol, lpg and gas engines producing 115g/km; The benefit in kind can be reduced by the amount of personal contribution paid by the employee 26
Other individual tax measures Withholding tax on dividends and interest & new surcharge tax Capital gains on shares Free housing for company executives Tax regime of stock options Energy-saving tax measures Green car premiums Tax reduction for service vouchers Increase in tax allowance Supplementary pensions Notaries and bailiffs for services VAT on company cars Increase of 30% in stock exchange tax . 27
Questions? This presentation (which shall be deemed to include any materials provided with the presentation) (Presentation) has been prepared for the recipient for information purposes only. This Presentation summarises certain aspects of the law, but does not purport to contain complete descriptions of all arrangements. This Presentation does not purport to be all inclusive or contain all of the information that the recipient may require. No representation or warranty, express or implied, is or will be made, and no responsibility or liability is or will be accepted by Field Fisher Waterhouse LLP or any of its advisors as to the accuracy, adequacy or completeness of the information within this Presentation. This Presentation is not intended to form the basis of any decision or other evaluation by the recipients and does not constitute and should not be considered as a recommendation. The information disclosed in this Presentation is confidential and intended for the recipient only and may not be forwarded to third parties. 28

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際際滷s Di Rupo Measures 22 May 2012

  • 1. Di Rupo I coalition agreement: Relevant changes for HR practice Paul Windey President, National Labour Council Stefan Nerinckx, Partner Employment & Benefits department at FFW Brussels Professor of employment law at the University College Brussels 22 May 2012 1
  • 2. Contents Early pension Bridge pensions Time credit Special social security contributions Summary Employment plan for employees aged 45 and + Age pyramid in cases of collective dismissal Joint and several liability Annual vacations Other measures provided for in Elio Di Rupo I - coalition agreement Tax measures Company cars recent legal changes Other individual tax measures 2
  • 3. Early pension Currently, an employee with a working career of 35 years may claim early pension as from age 60. The requirements for taking early pensions change on 1 January 2013: Minimum age Minimum Exception in case of long Year (years) working career (years) career 2012 60 35 - 2013 60.5 38 60 if career of 40 years 2014 61 39 60 if career of 40 years 2015 61.5 40 60 if career of 41 years 60 if career of 42 years 2016 62 40 61 if career of 41 years 3
  • 4. Early pension Transitional measures => 60 years continues to be possible Employment agreement terminated by employer serving notice period Notice period must start before 1 January 2012 and end (or should have ended) after 31 December 2012 Individual (written) end-of-career agreement Entered into before 28 November 2011 Not conventional bridging pension Individual agreement is entered into in the framework of the following sources of law: - Work regulations: copy sent to regional labour inspectorate before 28 November 2011 - Collective labour agreement: filed with FPS Employment before 28 November 2011 - Pension regulations: in force before 28 November 2011 - legal or regulatory provisions or similar provisions Employees fulfil all conditions stipulated in these sources of law no later than 28 November 2011 Examples: time credit, sabbatical, etc. ! Underlying documents must be sent to National Office for Pensions (RVP/ONP) 4
  • 5. Bridge pension Half-time bridge pension: no new arrangements as of 1/1/2012 Bridge pension became unemployment scheme with payment of a company allowance General scheme: as of age 60 Exception: as of age 58 long-term careers Exception: as of age 58 physically demanding occupations Different scheme for companies in difficulties or restructuring Changes in statutory social security benefits (pension) < 60 years (exceptions) >< Canada Dry schemes for employees who do not fulfil the age and career conditions 5
  • 6. Bridge pension General scheme Old scheme Age: 60 years Career: 25 years but increased gradually by Generation Pact New scheme If a collective (bargaining) agreement is entered into for the first time after 31/12/2011: - Required length of working career as from 1/1/2012: 40 years If a collective (bargaining) agreement was either entered into and filed before 1/1/2012 or entered into after 31/12/2011, but is an uninterrupted continuation of a collective (bargaining) agreement entered into and filed before 1/1/2012: - Required length of working career: As from 1/1/2012: 35 years for male employees / 28 years for female employees; As from 1/1/2015: 40 years for male employees / 31 years for female employees (gradually increasing to 40 years as of 1/1/2024). 6
  • 7. Bridge pension Exception 1: as from 60 years of age long-term career If a collective (bargaining) agreement is entered into for the first time after 31/12/2011: Required length of working career: - Male employees: 40 years as from 1/1/2012; - Female employees: 35 years as from 1/1/2012, 38 years as from 1/1/2014, 40 years as from 1/1/2015. Still as from 58 years of age, if a collective (bargaining) agreement was either entered into and filed before 1/1/2012 or entered into after 31/12/2011 but is an uninterrupted continuation of a collective (bargaining) agreement entered into and filed before 1/1/2012: Required length of working career: - Male employees: 38 years as from 1/1/2012, 40 years as from 1/1/2015; - Female employees: 35 years as from 1/1/2012, 38 years as from 1/1/2014, 39 years as from 1/1/2016, 40 years as from 1/1/2017. Age as from 1/1/2015: 60 years! 7
  • 8. Bridge pension Exception 2: as from 60 years of age physically demanding occupation If a collective (bargaining) agreement is entered into for the first time after 31/12/2011: Required length of working career: - Male employees: 40 years as from 1/1/2012; - Female employees: 35 years as from 1/1/2012, 37 years as from 1/1/2014, 40 years as from 1/1/2015. Still as from 58 years of age, if a collective (bargaining) agreement was either entered into and filed before 1/1/2012 or entered into after 31/12/2011 but is an uninterrupted continuation of a collective (bargaining) agreement entered into and filed before 1/1/2012: Required length of working career: - Male employees: 40 years as from 1/1/2015; - Female employees: 38 years as from 1/1/2014, 39 years as from 1/1/2016, 40 years as from 1/1/2017. Age as from 1/1/2015: 60 years! 8
  • 9. Bridge pension Different schemes for companies in difficulties or restructuring: Company in difficulties Age: 52 in 2012 (increases gradually to 55 as from 2018) 2012 : 52 years 2015: 53.5 years 2013: 52.5 years 2016: 54 years 2014: 53 years 2017: 54.5 years As from 2018: 55 years Company in restructuring Age: 55 as from 1/1/2013 Exception : 52.5 as from 1/1/2013 (increases gradually to 55 as from 2018) - Cumulative conditions: Announcement of the collective dismissal of at least 20% of all employees; Collective dismissal concerns either all employees of the technical operating unit or all employees of an entire business segment (segment complet dactivit辿 - volledig activiteitensegment) (still to be defined); Technical operating unit or business segment must have existed for at least 2 years at the time of the announcement (still to be defined). 9
  • 10. Bridge pension No change with regard to: Special scheme for those aged 56 + career of 33 years (20 years of night work / construction business) valid until 31/12/2012 Special scheme for those aged 56 + career of 40 years extended until 31/12/2015 (no further working activities before age 17) Calculating company allowance: (Net reference salary unemployment benefit) / 2 Personal social security contributions: 6.5% of total sum of unemployment benefit and company allowance Replacement obligation: up to age 60 (expected increase to 62 years) 10
  • 11. Time credit Difference between time credit for Working time reduction (duration) and allowances specific reasons (36 or 48 months)/without reason to take care of children up to age 8 (also for adoption); to administer palliative care (any form of care: medical, social, administrative, psychological); to assist or take care of a member of their household or family who is seriously ill; to undergo training recognized by the Communities or by the sector, lasting at least 360 hours or 27 credits a year, or 120 hours or 9 credits per quarter or uninterrupted period of 3 months; to undergo education in a recognized educational institution for basic education or training to obtain a secondary education certificate; the limit is fixed at 300 hours a year or 100 hours per quarter or uninterrupted period of 3 months. 11
  • 12. Time credit These employees are entitled to the interruption allowances (for time credit) for a total of 36 months this period of 36 months is not calculated proportionally in cases of part-time time credit, Periods during which interruption allowances are awarded for time credit for specific reasons for up to 48 months (next slides) are deducted from the 36 months (with exception of the first 12 months) Conditions: 2 years seniority with the current employer No requirement of an existing working career of 5 years as an employee! 12
  • 13. Time credit Employees suspending or reducing their working time: to take care of their disabled child up to age 21 (at least 66% disability or suffering from a condition leading to recognition of at least 4 points in the first pillar of the medical-social scale in the framework of the regulations with regard to family benefits); to assist or take care of their child or a child who is a part of their household, who is seriously ill. These employees are entitled to the interruption allowances (for time credit) for a total period of 48 months this period of 48 months is not calculated proportionally in case of part-time time credit, Periods during which interruption allowances are awarded in the abovementioned cases (for time credit for specific reasons of up to 36 months) are deducted from the 48 months Conditions: 2 years seniority with the current employer No requirement of an existing professional career of 5 years as an employee! 13
  • 14. Time credit Without specific reasons Maximum length of time credit during entire career (allowances): 12 months full-time time credit; 24 months half-time time credit; 60 months 1/5 time credit; or A combination of the above No possibility to extend by CBA Conditions: Written notification to the employer; 5 years seniority as employee (with any employer) + exceptions; 2 years seniority with the current employer (exceptions); Exception: employees who have used up their right to parental leave for all children and wanting to take full- or half-time time credit immediately after parental leave. Switch between schemes 14
  • 15. Time credit (50+/55+) The special scheme for end-of-career time credit is maintained for employees: as from 50+ (working career of 20 years) for working time reduction; as from 55+ (working career of 25 years) for the additional allowance Exception: age 50 for employees working in a physically demanding occupation (5 years in past, 10 years or 7 years in past 15 years), provided the occupation is on the list of critical occupations (shortage of labour) No maximum duration applies (pensionable age at 65) Assimilation period for statutory pension will be different (pensions as from 1 January 2013) Time credit without specific reasons Time credit < 60 years and 60 years Unemployment third period Canada Dry Bridge pension < 60 years 15
  • 16. Time credit (50+/55+) part-time employment Act 28/12/11 RDs 28/12/2011 RD 12/12/2001 20-year career 25-year career CBA no. 77bis No replacement Act 3 July 1978 12 months Min. 6 months full time (!) 80% Min. 3 months Age 55 Age 65 50% Exceptions: for physically demanding occupation and 3 years seniority Age 50 night shift in company 5% threshold but exceptions are possible Benefits Inconveniences as of age 50 (55 years for allowance) threshold 50 to 80% reduction of work company and career seniority entitlement (but 5% threshold) RVA/ONEM allowance as from age 55 continued seniority loss of statutory pension entitlement (part) no replacement supplementary pension (fiction?) 16
  • 17. Alternatives: Time credit (50+/55+) Allowance Statutory pension Age 50 Age 55 Age 60 Age 65 80/20? 50/50? 50/50? Age 50 Age 55 Age 58 Age 60 Age 65 end of contract (Act of 12 April 2012) 17
  • 18. Special social security contributions Employer social security contributions on company allowances under unemployment scheme, Canada Dry scheme and time credit: significant increases Bridge pension / Unemployment Scheme with Canada Dry Company Allowance Dismissal after 15/10/2009 Dismissal after Dismissal after 15/10/2009 Dismissal after 28/11/2011 and bridge pension as from 28/11/2011 and USCA and company allowance as and company allowance as 1/4/2010 as from 1/4/2012 from 1/4/2010 from 1/4/2012 < 52 50% became 55% 100%? 50% became 55% 100%? 52 - < 55 40% became 44% 95%? 40% became 44% 95%? 55 - < 58 30% became 33% 85%? 30% became 38.82% 85%? 58 - < 60 20% became 22% 55%? 20% became 38.82% 55%? As from 60 10% became 11% 25%? 10% became 38.82% 38.82%? Time Credit The 32.25% percentage increases to 38.82% as from 1 April 2012, also for the current supplementary compensation on time credit. No social security contributions are due in the case of time credit inter alia in the following exceptions: the supplementary compensation is already paid prior to age 45; the supplementary compensation was already paid prior to 1 January 2006; the employee was dismissed prior to 1 October 2005; granted in case of thematic holidays; the employee is in receipt of an allowance for half-time time credit for employees over 50. 18
  • 19. Employment plan for employees of 45 and + Employers obligation At the level of the technical operating unit + every calendar year before 31 March (first 2013) Exception: companies 20 employees Content: Measures that will be taken during the calendar year aimed at maintaining and increasing the number of employees aged 45 and +: Selection and recruitment of new employees Skills and qualifications development (including training) Career development and coaching within the company Possibilities of horizontal transfer to switch to a position suited to the employees new abilities and skills Possibilities for adjusting working time and work conditions Health, safety and eliminating physical and psychosocial impediments aimed at maintaining employment Systems of recognition of acquired skills Evaluating previous calendar years employment plan Consultation 19
  • 20. Age pyramid in the case of a collective dismissal Applicable in the case of a collective dismissal Not applicable in the case of bankruptcy, judicial winding-up or full closure of the compan The number of dismissals must be proportionally spread over: Age group < 30; age group 30 - < 50; age group 50 Only applicable to employment agreement for undefined duration (exceptions) If only certain business segments or divisions are concerned: only applicabl to the employees of those segments or divisions Deviation of 10% per age group is allowed Sanction: loss of reduction in social security contributions A royal decree is still expected for calculation method and coming into force 20
  • 21. Joint and several liability Current system of joint and several liability for tax and social liabilities: only applicable in the construction sector Extension to other fraud-sensitive sectors and salary A principal who engages a contractor or a contractor who engages a subcontractor with social security, tax and/or salary debts may be held liable for those debts and would in have to pay them. In principle, liability is limited to the invoiced amount of the services. Avoiding liability by correctly applying the withholding duty The principal / contractor must withhold the following amounts from the invoiced amount (exclusive of VAT): - For social security debts: withhold and pay 35% to the National Social Security Office; - For tax debts: withhold and pay 15% to the tax authorities. Knock-on liability: If a main contractor fails to comply with its withholding duty and cannot settle the social security, tax and salary debts of his subcontractor, the principal will subsequently be liable to pay the debts. A royal decree will enact the legislation and determine which sectors are concerned Explanatory Statement to the Act: meat sector, catering industry (horeca) and security services sectors 21
  • 22. Joint and several liability Also applicable in international employment scenarios: If a Belgian principal / contractor enters into a service agreement with a foreign (sub)contractor active in one of the sectors concerned, it may be held liable for the tax, social security and salary debts of its (sub)contractor (if a foreign (sub)contractor sends employees to Belgium on assignment, he must respect the minimum salary levels that apply in the sector in question). Also applicable to (prior) social security debts of a foreign employer/(sub)contractor who lawfully assigns employees to Belgium? Recommendation: precautionary clauses in service agreement Automatic termination of the service agreement if the manpower inspectorate notifies the principal / contractor that its (sub)contractor has seriously breached its duty to pay salary in time Covenant to respect minimum salary levels that apply in the relevant sector in Belgium throughout the time for which the employee(s) assigned to Belgium. This does not rule out the joint and several liability of the Belgian principal / contractor, but allows it to recover the amounts from the (sub)contractor afterwards. 22
  • 23. Other measures provided in Elio Di Rupo I - coalition agreement Measures against social security fraud: Measures against sham self-employment (proposed bill): the legislation of 27 December 2006 and criteria remain unchanged + refutable presumption of link of subordination if several economic dependence criteria are fulfilled for three sectors concerned: transport, construction, surveillance sector criteria: investment, responsibility for financial means, power of decision on pricing (products), working in the contract partners (employers) premises, one and only client, no results-driven contract, using material/tools put at the disposal of the contract partner, etc. + change to section 344(1) Income Tax Code (WIB/CIR) management/consultancy companies Revision of restrictions on loans of personnel (nothing specified yet) 23
  • 24. Other measures provided in Elio Di Rupo I - coalition agreement Annual vacations The current Belgian legislation provides for 4 weeks annual vacation and the corresponding vacation pay, in the calendar year following the calendar year of performance of the employment: This means that in principle employees are not entitled to vacation or vacation pay during their first working year; EU-level legislation lays down that each employee is entitled to 4 weeks vacation on full pay during the working year; To comply with these rules, Belgian holiday legislation has recently been amended: vacation pay is awarded for each 3-months working period, during the last week of the 3-month period concerned. This vacation pay is later deducted from the double vacation pay or leaving vacation pay. 24
  • 25. Other measures provided in Elio Di Rupo I - coalition agreement Abolition of distinction between white-collar and blue- collar workers Education: increased penalties for non-compliance with required level (1.9%) of investment in education measures for paid educational leave will be extended: increase of maximum duration from 100/120 hours to 200 hours Voluntary continuation of work after age 65 25
  • 26. Tax measures Company cars recent legal changes Taxable benefit The taxable benefit in kind is 6/7 of the cars list price, multiplied by the CO2 emissions coefficient Valuation The list price is defined The benefit in kind takes into account the age of the car, by multiplying the list price by a percentage according to the time since first registration of the car The reference CO2 coefficient is 5.5% for a diesel engine producing 95g/km or for petrol, lpg and gas engines producing 115g/km; The benefit in kind can be reduced by the amount of personal contribution paid by the employee 26
  • 27. Other individual tax measures Withholding tax on dividends and interest & new surcharge tax Capital gains on shares Free housing for company executives Tax regime of stock options Energy-saving tax measures Green car premiums Tax reduction for service vouchers Increase in tax allowance Supplementary pensions Notaries and bailiffs for services VAT on company cars Increase of 30% in stock exchange tax . 27
  • 28. Questions? This presentation (which shall be deemed to include any materials provided with the presentation) (Presentation) has been prepared for the recipient for information purposes only. This Presentation summarises certain aspects of the law, but does not purport to contain complete descriptions of all arrangements. This Presentation does not purport to be all inclusive or contain all of the information that the recipient may require. No representation or warranty, express or implied, is or will be made, and no responsibility or liability is or will be accepted by Field Fisher Waterhouse LLP or any of its advisors as to the accuracy, adequacy or completeness of the information within this Presentation. This Presentation is not intended to form the basis of any decision or other evaluation by the recipients and does not constitute and should not be considered as a recommendation. The information disclosed in this Presentation is confidential and intended for the recipient only and may not be forwarded to third parties. 28