Corona crisis: temporary working time reduction

Author: Els Poelman (Legal Expert)
Date:

The temporary working time reduction is one of the supporting measures decided in the Inner Cabinet of 12 June.

In a nutshell

A company can reduce the working time collectively and therefore respond to reduced production and/or turnover as a result of the corona crisis. 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 contribution.

This measure is a near-exact copy of the 2009-2011 crisis working time reduction. For 2020/2021, the Special Powers Decree has been published, but on several points we have to wait for an implementing order.

Which employers?

The measure is intended for companies in the private sector in difficulty or undergoing restructuring in accordance with the criteria and procedure of the system of unemployment with company supplement (RCC/SWT, the former bridging pension). A prior recognition by the Minister of Work is therefore necessary.

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.

Procedure

The working time reduction will be 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

This measure is possible from 1 July 2020, but all depends on the recognition as a company in difficulty or undergoing restructuring. The starting date of that period of recognition shall be from 1 March 2020 to 31 December 2020.

The period of the working time reduction may not exceed one year and should entirely fall within the period of recognition as a company in difficulty or undergoing restructuring.

Working time reduction

Only a reduction of one fourth or one fifth 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 a 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

1/4th

no 

750,00 €

1/4th

yes

1 150,00 €

1/5th

no

600,00 €

1/5th

yes

1 000,00 €

The reduction in employer’s 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 hours worked
  • combination with the structural reduction, but not with other target group reductions
  • limitation to the sum of the basic employer’s contribution and the wage moderation 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 3/4th of the basic amount of the target group reduction for wage compensation.

 

working time reduction

basic amount

target group reduction                      

 minimum quarterly amount

wage compensation

 

1/4th

750,00 €

562,50 €

1/4th + 4-day work

1150, 00€

862,50 €

1/5th

600, 00 €

450,00 €

1/5th + 4-day work

1000, 00 €

750,00 €

The wage compensation are wages subject to tax and social security deductions respectively 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 the full-time wage without the reduction

Extra cost with guaranteed 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 1/4th or 1/5th. 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 wage. New consultations with the FPS Employment, Labour and Social Dialogue will bring clarity and, as always, we are following this closely.

 

Source: Royal Decree no. 46 of  26 June 2020 implementing art., § 1, 5th of the Act of 27 March 2020 authorising the King to take measures in the fight against the spread of the coronavirus Covid-19 to support the employers and the employees, Belgian official Gazette of 1 July 2020.

The Partena Professional website is a channel for making information available in an understandable form to affiliated members and non-members.

Partena Professional strives to provide up-to-date information and this information is compiled with the greatest care (including in the form of Infoflashes).

However, as social and fiscal legislation is constantly changing, Partena Professional cannot accept any liability for the correctness, the up-to-date or the completeness of the information consulted or exchanged via this website.

Further provisions can be read in our general disclaimer that applies to every consultation of this website. By consulting this website, you expressly accept the provisions of this disclaimer. Partena Professional can unilaterally change the content of this disclaimer.