As of 1 January 2018, pension and health insurance contributions are to be deducted directly from employees’ gross salaries .  The Law mentioned as of 1 January 2018, the amount of social contributions paid on employment income will be as follows:

Contributions deducted from gross salaries:

Pension insurance contribution – 25%

Health insurance contribution – 10%

A work insurance contribution of 2.25% of the gross salary due by employers

Additional pension insurance contributions of 4% and 8% due by employers for particular and special working conditions, respectively.

While the new levels of pension and health insurance contributions are lower than those currently in force (i.e. 26.3% and 10.7%, respectively), should employers decide to maintain current levels of staff net income (i.e. by increasing gross salaries), then the amount of social contributions paid to the state budget will increase.

For employees currently subject to the 16% income tax rate, this increase will be counterbalanced by the reduction to 10% of the income tax rate.

For income tax exempt employees (e.g. IT employees, disabled persons), the fiscal impact on net salaries and on the employers’ labour costs will need to be assessed carefully.

In view of the transfer of social contributions, the Government published Emergency Ordinance no. 82/2017, which introduces the following obligations: 

• During the period 20.11.2017 to 20.12.2017, employers that do not have collective labour agreements in place will be obliged to initiate collective negotiations to implement the transfer of social contributions; 
• During the same period, employers that already have collective labour agreements in place must negotiate (on a collective basis) addendums to these agreements for the same purpose; 
• In cases where trades unions affiliated to a representative union federation are not present the negotiations may be attended by representatives of the union federation and of the employees; 
• In cases where there are no trades unions, the negotiations may be attended by representatives of the employees together with a representative of the union federation at industry/national level.

The obligation to initiate or carry out collective negotiations applies to all employers, regardless of the number of employees. 

The Emergency Ordinance does not provide any specific sanctions in the event that its legal provisions are not observed. 

More info mail frjacobs@telenet.be 

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