Setting up for business
Paying an employee
The computation of the salary of an employee is governed by a variety of laws, regulations and collective bargaining agreements and varies depending on the industry sector. Payroll agencies exist to assist in carrying out these tasks in exchange for a reasonable fee.
A white-collar employee is paid per month, usually before the end of the month by wire transfer. Salaries are usually negotiated on a monthly basis. Most collective bargaining agreements stipulate that an employee is entitled to a 13th month additional payment (100% of normal monthly salary), and double vacation pay (an additional payment that is roughly equivalent to 89% of the monthly salary). Salaries are inflation-adjusted.
An employer can also remunerate an employee using other forms of compensation better known as ‘benefits in kind’. Most of these alternative forms of remuneration are attractive from a fiscal point of view and enable a company to reduce its social security contributions.
Benefits in kind can include:
- Company car.
- Mobile phone.
- Group insurance.
- Pension fund.
- Stock options.
Reductions in social security contributions
Various government measures exist to promote employment. The measures limit social security contributions or exempt employers from having to pay them.
- Structural reduction: this general measure reduces the social security contributions for all employees subject to the Belgian social security scheme.
- Target group reductions: these measures concern particular categories of employees, namely the first three employees to be hired by an employer, elderly and young employees, employees who were previously laid off, and the long-term unemployed. A target group reduction can be combined with a structural reduction. However, it is not possible to combine two or more target group reductions. An employer can only apply for one target group reduction per employee.
The National Social Security Office (ONSS/RSZ) calculates the reductions in the social security contributions based on a multifunctional declaration submitted by the employer each quarter. Other measures to reduce social security charges are linked to reductions in working time.