Coalition agreement: reduction in employer's contributions for the first employee will be extended beyond 2020

The first employee hired after 31 December 2020 will no longer give rise to a reduction in the employer’s contributions, unless the applicable regulations are extended. However, the report of the formators indicates that this extension will take place.     

State of affairs

The reduction for the six first hirings is organised as follows:

• total exemption from basic contributions for an indefinite period if a first employee is hired by 31 December 2020 at the latest;
• a flat-rate reduction for a fixed number of quarters, when a second to a sixth employee is hired - here without any limit as regards the date of hiring.

If no changes are made to the regulations, the hiring of a first employee after 31 December 2020 will no longer entitle to a reduction in the employer’s contributions.

Government projects

The report of the formators of 30 September 2020 indicates what the new government intends to do with this target group reduction.

The reduction for the first employee will be extended so that it will also apply to hirings after 31 December 2020. It is generally expected that the conditions will not change: full exemption from basic contributions for an indefinite period. The regulations themselves still need to be adapted.

At the same time, it is announced that this target group reduction will be evaluated in the course of 2021, in consultation with the social partners. Simplification and automation should enable maximum use of this reduction, while simultaneously preventing fraud or improper use. Depending on the outcome of that evaluation, the (current) modalities and procedures may be adapted for each of the six first hirings.

Source: Report of the formators of 30 September 2020, Chapter II, 3 , pillar 1