Employee Benefits and Compensation in Belgium: A Comprehensive Guide

What are Employee Benefits?

Employee benefits include the perks given to employees and their base pay. Employee benefits may cover health insurance, retirement, and paid time off. Depending on the company’s policies, these benefits can be either monetary or non-monetary. 

Employee benefits serve both – an employer and employee. Such perks help employers show gratification to their employees and make their workplace happy. Employers can keep employees satisfied and happy while retaining them for an extended period. When the employees felt cared for and appreciated in the organization, they tend to grow and contribute significantly to the company’s growth. 

In countries like Belgium, the Labour law ensures that the employees receive these benefits. Some mandatory benefits in the country include disability benefits, spouse’s pension, maternity, medical, and retirement. 

Firms planning to set up their business in Belgium must know everything about the employee benefits in Belgium. Once you understand these benefits, you can draft a flexible compensation package for all your employees. The guide will help you understand all the aspects of Belgium’s compensation and benefits policy.

Compensation Laws in Belgium

The existing Belgium compensation laws influence the compensation and benefits policy in Belgium. These laws regulate all the employee benefits in Belgium. Some of these laws include:

• The compensation laws apply to both foreign nationals and the nationals working in the organization. 
• The Act on Collective Bargaining Agreements and Joint Committees of 1968 allow the existence of collective bargaining agreements where the employer is also one of the parties. 
• According to the Federal Labour Laws of Belgium, all employees are entitled to a minimum wage. However, the minimum wages are not decided by the Government but by the collective agreements accepted by the National Labour Council. As of 2022, the minimum wage remains fixed at EUR 1658.2 per month. 
• The Labour Act of 1971 lays down the minimum working hours and the work conditions that must prevail in an organization. 
• According to the Act on Employment Contracts 1978, all employees must get written individual employment contracts. The contract can be terminated if there is a force majeure and stringent conditions under which the employment agreement is terminated.

All of these compensation laws must be adhered to while drafting the compensation structure in Belgium. You should also consider all the collective bargaining agreements before you draft a compensation policy in Belgium. 

How to Design an Employee Benefits Program in Belgium?

The benefits program is essential as it will help you ascertain the total cost the company will have to bear for the welfare of the employees.

As an employer, you should be aware of the different needs of the employees before building a benefits program. To develop an effective benefits program, consider the challenges employees face in the workplace. However, you cannot go overboard with making your employees feel at home. You must consider the budget and contract flexibility while creating a compensation package in Belgium.

Some steps that you must take to curate the best compensation package and benefits program for your employees are:

Step 1: Have clear goals and budget

As an employer, you must list all the objectives of the benefits program to get an overall picture of the company’s vision and how you can meet the employees’ needs without compromising on the company’s goals. You must factor in the size of the company, the industry in which it operates, and the collective bargaining agreements that drive it.

While some companies can have broad objectives for a benefits program, others might focus on only including benefits that employees need. The benefits provided to the employees should be in line with the demands of the employees and the environment where the business operates.

You can fix a budget you want to dedicate to these benefits before you start finalizing the list of benefits. Some goals that can help you in streamlining the process are:

• Retaining the existing set of employees and attracting new talent
• Try to incorporate benefits within the allocated budget
• Complying with the Belgium labor laws while drafting the benefits policy

Step 2: Be aware of the industry standards and the expectations of your employees

Having a budget helps, but offering competent and valuable employee benefits is crucial to improving work satisfaction. You can research the industry standards and what your competitors are offering. 

You must also conduct an internal survey to understand what your employees expect from a benefits program. The survey will help you in chalking out the kind of employee compensation and benefits Belgium’s employees expect from their employers. You will also get a fair idea of the benefits you can add to attract better talent to your organization. Also, if you already have a benefits plan in place, the survey will help you understand the plan’s flaws, and you can remove the benefits that the employees do not use. This will help you cut some costs. 

Step 3: Draft a flexible compensation package

Once you have gathered sufficient data from different surveys and analyses, you can start by drafting a framework for worker’s compensation in Belgium.

Employees have different needs, so one framework fits all approach may not work in this case. The package should be flexible and accommodate the diverse needs of all employees. Employers can suggest a structure to their employees, and the employees can choose the benefits they want. This way, you will be able to remove the unutilized benefits and cut down the company’s costs to a great extent. 

Step 4: Communicate

Now that you have a benefits policy, you must inform all the stakeholders and employees. Here, open communication will help. You can ask the company employees to review the policy and the compensation structure and then take their feedback. You must ensure that you keep all the channels of communication open so the employees can give their input without inhibitions. 

Step 5: Assess the benefits package that you have generated

The dynamic nature of business and the economy can impact the benefits program. To determine the benefits package’s effectiveness and suitability, you must hold periodic assessments. To ensure the plan is error-free, you must evaluate the program’s components before putting it into practice. You can establish precise measurements to determine whether the benefits package is effective for the employees and, if necessary, take corrective action.

Types of Guaranteed Benefits in Belgium

The employees are entitled to several employee benefits in Belgium. Some of these benefits include:

Minimum wage

• In Belgium, the minimum wage is decided by collective bargaining agreements. The minimum wage is EUR 1,658.2 per month, which translates to EUR 19,898 annually.
• The minimum wage has seen a 2% increase from the last year with EUR 32.5 per month increase. 

Working hours

• In Belgium, the workers are not allowed to work more than 8 hours daily. Additionally, these 8 hours are performed within the fixed timeframe of 6 am to 8 pm. 
• However, the employees can work 9 hours a day if they are not working for more than 5.5 days in a week. 
• The employees should work at least 38 hours a day and must try not to exceed their working hours beyond 40.
• Several collective agreements have reduced the working hours from 38 to a lower number in some industries.

Overtime compensation

• If an employee in Belgium works more than 9 hours a day or more than 40 hours weekly, they are entitled to overtime pay.
• Even the employees who are asked to work beyond the maximum working hours decided by the collective bargaining agreements are entitled to overtime pay. 
• The employees are entitled to an overtime payment equivalent to 1.5 times their regular pay if they work for additional hours during the week.
• However, if the employees are asked to work on Sundays or a public holiday, they will be entitled to overtime pay equivalent to twice their regular pay.
• The amount of overtime compensation must be determined using regular remuneration or the average hourly salary that should have been received for the day or week the employee worked overtime.

Paid time off

• Once an employee completes a year working in Belgium, they will be entitled to 20 days of paid annual leaves. 
• If these leaves are unused till the end of the year, the employees are compensated at 1.92x of their regular salary for these leaves.

Sick leaves

• If the employee is sick, they can avail of statutory pay for the first 30 days of their absence.
• If the employee wants to avail themselves of the sick leaves, they must inform the employer in advance with a medical certificate supporting the illness.
• However, blue-collar employees are paid in full for the first seven days of absence due to sickness. After that, the workers receive a portion of their wage per company policies.
• If the sickness exceeds 30 days, the employee needs to contact his health insurance provider for compensation during the illness. 

Maternity leaves

• In Belgium, a pregnant employee can avail of maternity leave of 15 weeks. However, if the employee carries more than one child, they can help of maternity leave for 17 weeks which can be extended up to 19 weeks. 
• Employees can also split the maternity leave into pre and post-maternity leave, where the employees can take a pre-maternity rest of up to 6 weeks.
• The mothers are paid out of their health insurance for their maternity leaves.
• Employees in Belgium are also entitled to breastfeeding breaks of 30 to 60 minutes during their work.

Paternity leaves

• In Belgium, an employee can take paternity leave of up to 20 days once the child is born.
• Employees can take these leaves within the first four months after the baby is born.
• The employees are paid in full for the first three days of their paternity leave. The health insurance funds pay the employees 82% of the regular wage for the remaining days.

Year-end bonus

• Belgium has no legal requirements for paying a year-end or Christmas bonus. 
• However, several employers pay an annual bonus to their employees at the end of the calendar year. The calculation of the premium varies from one industry to another.

Parental leaves

• Once the employee’s child grows, the employee is entitled to parental leave. 
• Employees who work in a private sector company can take a parental leave of 4 months (per child).
• However, the employees must be employed with the company for at least 12 months before availing of these leaves. Also, employees must inform their immediate boss at least three months before taking these leaves.

Senior vacation

• After an employee turns 50, they become eligible for a senior vacation. This vacation or leave can extend up to 4 weeks. 
• The employees are paid via the National Employment Office for these leaves, receiving a payment equivalent to 65% of their regular wage.

Small leaves

• In Belgium, the employees can take a small leave for personal reasons. Several occasions are covered under these leaves. 
• Employees can take these leaves during the employee’s marriage or the marriage ceremony of their family members, the death of a spouse or any family member, participation in the jury, etc.

Employee Benefits for Expatriates

The ex-pats working in Belgium enjoy similar benefits as national employees. The ex-pats are entitled to all kinds of leaves that employees can avail themselves of in Belgium. The employees are also entitled to health coverage, travel allowances, and others. Some other benefits enjoyed by the ex-pats are:

• Accommodation expenses
• Relocation and travel benefits

How are Employee Benefits Taxed in Belgium?

The income tax in Belgium applies to the basic pay and to the benefits the company offers. The employees’ benefits in Belgium are categorized as fringe benefits; hence, they are subject to taxes. The employers also have to pay social security taxes ranging from 25% to 30.43%. Also, 13.07% of the employee’s wages are paid to the Government by the tax.

Restrictions for Belgium Benefits and Compensation

In Belgium, certain employee benefits, such as social security benefits, fuel costs, etc., fall under the income tax umbrella. Therefore, businesses must determine the cash value of all the benefits they offer to understand the costs associated with each employee. You can calculate payroll tax deductions using these benefits, which are significant payroll components.

According to the federal rules in effect in Belgium, the companies are required to pay taxes every month.

Supplemental Benefits for Employees in Belgium

The employees in Belgium also enjoy some supplemental benefits over and beyond the mandatory benefits. Some of these additional benefits include:

• Insurance: Several Belgium companies offer supplementary health and workplace accident insurance to their employees. Though Belgium provides universal healthcare coverage, employees might fail to get free treatment in some hospitals. Therefore, private health insurance might incentivize them to stay in your company. 
• Disability benefits: The employees are entitled to a disability benefit. This might be calculated using a step-rate method or an offset method. However, the employer must pay the employee in full for the first month of disability. Employees employed on an hourly basis will get a total one-week income with three weeks’ salary at a lower rate.
• Death benefits: In the unfortunate event of an employee’s death, the employee and their spouse are entitled to the employee’s pension payments. Some plans allow a lump-sum payment of death benefits. The spouse receives an 80% of the pension amount that the employee would have received post-retirement. However, the spouse will be unable to avail of the pension benefits if they remarry.
• Retirement benefits: All the employees in Belgium are entitled to a few retirement benefits. The social security benefits and the pension payments are linked to Belgium’s cost of living index. Hence, with every 2% increase in inflation, the amount deposited in these accounts is adjusted. Also, the employees can apply for pre-retirement by the age of 62 and have access to the money in these accounts.

How Can Multiplier Help with Benefits Management in Belgium?

Starting a business and hiring in a foreign country can be daunting. Employers must comply with the local regulations while drafting employment contracts and providing employee benefits. Here, worldwide employment solutions like Multiplier can be used to assist you throughout the process. 

By working with Multiplier, employers can comply with and understand Belgium’s labor regulations and global employee talents. Our experienced staff can assist you in successfully managing without setting up separate entities in the country. As a result, you can decrease your hiring expenses and research new markets.