Enhancement of the Flemish target group reduction for older people and young people

The Flemish government has adopted a Decree that will increase the target group reduction for certain young and older employees from 2019 onwards.

Context

Since July 2016, the Flemish Region has had its own regional target group reduction for young and older employees. An evaluation of both measures shows that some groups need additional support, including unskilled young people, older job seekers and in particular persons of 60 years and older. The new Decree provides for a further reduction for these groups as from 2019.

Target group reduction young people

Which young people?

The conditions attached to the employee do not change - in broad terms:

1. the employment takes place in an establishment unit in the Flemish Region
2. the employee is aged under 25 at the end of the recruitment quarter
3. the employment occurs under an ordinary employment contract
4. the employee is low-skilled (no secondary school diploma) or medium-skilled (secondary school diploma at most)
5. the level of education was certified in due time in the electronic file of the VDAB (Flemish Department Of Employment Agency)
6. the reference quarterly wage is lower than € 7,500 (recruitment quarter + 3 quarters) or € 8,100 (following quarters)

New for recruitments as from 1 January 2019

For low-skilled young people recruited as from 1 January 2019, the reduction is no longer limited to a lump sum. The employer will be fully exempted from the basic contribution and the wage moderation contribution (total 25.00%).

Reduction

Target group reduction older people

Which older people?

The target group reduction for older people consists of two parts: a "present" employee reduction for all older employees and a recruitment reduction for newly recruited older employees.

For both reductions, the employee meets the following conditions:

1. be employed in the Flemish Region
2. be subject to all basic social security branches
3. be employed under category 1 structural reduction (profit sector)
4. be at least 55 years of age at the end of the application quarter;
5. the reference quarterly wage must be lower than the wage limit fixed by the Flemish government - the amount changes, see below

For the (higher) recruitment reduction, the older person must be younger than the statutory retirement age at the time of recruitment and be a non-working job seeker.

New as from 2019

There is a double adjustment of the wage cap for all older people regardless of the date of recruitment:

• By default, the wage cap is increased to € 13,945.00 per quarter
• The wage cap will be increased to € 18,545.00 in each fourth quarter - this in order to prevent the reduction from being lost when the end-of-year premium is paid.

For older people recruited as from 1 January 2019, the recruitment reduction is no longer limited to a lump sum. The employer will be fully exempted from the basic contribution and the wage moderation contribution (total 25.00%).

In addition, the reduction present employee for employees aged 60 and older will be increased to € 1,500.00 per quarter, regardless of the recruitment date.

Recruitment reduction

Reduction 'present' employee

Source: Decree of the Flemish Government implementing various provisions of the Decree of 4 March 2016 on the Flemish target group policy, approved by the Flemish Government on 13 July 2018 - not yet published.

Author: Els Poelman

27/07/2018