Brexit: working time reduction with contribution reduction for employers in difficulty

Author: Els Poelman (Legal Expert)
Date:

A measure that was pushed out by the series of corona aid measures, but which may gain in importance after September 30.

In a nutshell

Temporary reduction of working time is one of the three aid measures to help cushion the impact of the Brexit, alongside a specific system of temporary unemployment or time credit.

A company can reduce the working time collectively and in this way respond to reduced production and/or turnover as a result of Brexit. The employees concerned receive a converted wage supplemented by a flat-rate wage compensation, which covers (all or part) of the wage loss and is financed by a temporary reduction in the employer's social security contributions.

Because of the flexible application of temporary unemployment due to corona, this form of working time reduction has remained unused, but that may change when corona unemployment ends on 30 September.

Which employers?

The measure is intended for private sector companies, which are experiencing economic difficulties as a result of the Brexit and which are compensating for their reduced activity through a temporary collective reduction in working time of 1/4 or 1/5 , whether or not combined with a four-day week.

Economic difficulties’ in this context means a decrease of at least 5% in turnover, production or number of orders as a result of Brexit.

Procedure

A prior recognition by the Minister of Work is necessary. The application must be made to the FPS Work and provide proof of a decrease of at least 5% in turnover, production or number of orders as a result of Brexit. The FPS Work informs the NSSO of the decision and the period of recognition.

On the basis of the recognition, the reduction of working time is introduced:

  • by means of a collective bargaining agreement in the company
  • or, in the absence of a trade union delegation in the company, by means of an amendment to the employment regulations

Period of application

The period of recognition can be between 22 March 2021 and 21 March 2022, i.e. the period of application of the regulations implementing the three Brexit measures. The period of working time reduction must fall entirely within the period of recognition.

Which employees?

The working time reduction is collective, for the entire company or for a specific category of employees. It is not allowed to implement it on an individual basis.

In principle, this involves a reduction of the full-time working hours. Part-time employees are not excluded, and can be included in the system depending on their employment fraction.

Reduction of working time

Only a reduction of 1/4 or 1/5 is allowed. A full-time working week of 38 hours can therefore be reduced to 30.40 hours or 28.50 hours.

Basis of departure is the average weekly working time of a full-time employee, determined by collective bargaining agreement or in the employment regulations. The reference is therefore the working time of the individual company, even if it is lower than in the collective bargaining agreement in the sector.   

For full-time employees, there is the possibility of combining it with the temporary implementation of a four-day week and a higher target group reduction.

Social security target group reduction

The basic amount of the reduction varies according to the extent of the working time reduction and (only for full-time employees) the possible combination with a four-day week.

working time reduction four day week basic amount/employee/quarter
1/4 no €750.00
1/4 yes €1,150.00
1/5 no €600.00
1/5 yes €1,000.00

The reduction in employers’ contributions is synchronized with the course of the working time reduction over the same period.                                       

All the principles of target group reductions are applied:

  • conversion of basic amount based on the employee's quarterly days/hours worked
  • combination with the structural reduction, but not with other target group reductions
  • limitation to the basic employer contribution

The NSSO can recover the target group reduction if it is found that the employer does not observe the provisions regarding the working time (e.g. observation of work schedules, payment of overtime).

Wage compensation

In principle, the working time reduction leads to a loss of wages, as wages are converted in accordance with the new (reduced) working time.

In order to compensate (at least partially) for this loss, the employer must use at least 3/4 of the basic amount of the target group reduction for wage compensation.

working time reduction basic amount minimum quarterly amount
  target group reduction wage compensation
1/4 €750.00 €562.50
1/4 + 4 day work week €1,150.00 €862.50
1/5 €600 €450.00
1/5 + 4 day work week €1,000.00 €750.00

The wage compensation are wages subject to tax and social security deductions resp. contributions.

The basic amount of the wage compensation is calculated once at the beginning of the working time reduction, and remains constant throughout the period of application. The amount actually paid out is variable, as the basic amount is reduced pro rata the unpaid hours worked.

The gross sum of the reduced wage and wage compensation may not exceed the initial gross wage (prior to the working time reduction). This does not take into account any indexations or adjustments of wage scales that have been complied with. Wage compensation shall in any event be capped at this maximum.

Termination of employment contract

In the event of a dismissal by the employer, the severance pay must be calculated on the basis of full-time wage without the reduction

Extra cost with guarantee minimum wage 

The government's interpretation of this type of measures has always been that the (initially) full-time employees continue to be considered as full-time employees and are declared to the NSSO on a full-time basis.  This also means, for example, that they retain the right to the sector/company's full-time minimum wage even if their working time is reduced by 1/4 or 1/5. An important point, which will cause the real cost for the employer to go up if the wage compensation is not sufficient to guarantee the full-time minimum wage.

 

Source:

  • Act of 6 March 2020 on retention of employment following the withdrawal of the United Kingdom from the EU, Belgian Official Gazette of 25 March 2020
  • Royal Decree of 31 January 2021 determining the dates of entry into force and expiry of titles 1 and 2 of the Act of 6 March 2020..., Belgian Official Gazette of 15 February 2021

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