Flemish Region – New target group reduction for people aged 55 and over

In the draft decision of the Flemish Government, 1 July 2016 is put forward as the starting date of a new Flemish target group reduction for older employees. The following is a tentative overview of what is new.

Two types of reductions

The Flemish reduction for older employees is divided into two types:

1. a generally applicable reduction for employees starting from 55 years of age, which we call “retention reduction” because it has the purpose of stimulating older employees to continue working
2. a specific (higher) recruitment reduction in case of recruitment between 55 years of age and the legal retirement age

For which sectors?

The reduction is reserved for employers/employees that belong to category 1 in the structural reduction. That corresponds mostly with the private profit sector.

There is no reduction for employers/employees of these joint committees (that belong to the categories 2 and 3 in the structural reduction):

• JC 319 for upbringing and accommodation
• JC 327 for sheltered and social workplaces (only for sheltered workplaces)
• JC 329 for the socio-cultural sector
• JC 330 for health institutions and services (excluding dental prosthesis)
• JC 331 for the Flemish welfare and healthcare sector
• JC 332 for the French-language and German-language welfare and healthcare sector

For which employees?

For both types of reduction, the employee must meet the following general conditions:

• depend on an establishment unit in the Flemish Region
• be at least 55 years of age at the end of the application quarter
• earn a reference quarterly income (composition as in the structural reduction) of less than €13,400.00.

In addition, there are a number of specific conditions connected to the recruitment reduction (below).

The recruitment reduction

The recruitment reduction is the significantly higher reduction that applies during eight quarters when recruiting a person of 55 years or older.

Specific conditions when recruiting

The employee must meet the general conditions and the following extra conditions:

• recruited on 1 July 2016 at the earliest
• recruited between 55 years of age and the legal retirement age (the age at the end of the recruitment quarter is decisive)
• non-working and seeking work when recruited

Restriction to legal retirement age

The recruitment reduction is not meant for new recruits at legal retirement age - that is the age determined in the Pension decision of 23.12.1996:

• 65 years until 2024
• 66 years from 2025 to 2029
• 67 years starting from 2030

Non-working and seeking work status when recruited

The newly recruited employee must be registered at the VDAB as a non-working person seeking work. Only the VDAB is authorised to certify this condition to the RSZ.

Registration at FOREM or ACTIRIS is not eligible. Persons seeking work in the Walloon and Brussels regions will also have to register at VDAB in order to be eligible to recruitment reduction if they are employed in the Flemish Region.

This working method fits in with the logic of regionalisation, but in practice it is not very realistic. Therefore we must wait and see whether the (announced) cooperation agreement between the regions and the federal government will allow smoother implementation.

Successive recruitments

There is no new reduction if the recruitment occurs within four quarters after termination of the previous employment contract between the same employer/employee. If previous employment provided right to the reduction, it can be continued for the remaining quarters.

Basic amount and number of quarters of the recruitment reduction

age on the last day of the recruitment quarter	Basic amount	number of quarters
55 to 59	€1,150.00	recruitment quarter + 7 quarters
60+, but younger than legal retirement age	€1,500.00	recruitment quarter + 7 quarters

The retention reduction

The retention reduction is the basic reduction for all persons of 55 years and older.

It is applied as soon as there is no right to the recruitment reduction (any more).

In practice, the retention reduction is aimed at the following employees:

• persons of 55 years and older recruited before their 55th birthday
• persons of 55 years and older recruited on their 55th birthday at the earliest but at that time not looking for work
• persons of 55 years and older at the moment when their legal pension age has been reached
• persons of 55 years and older recruited on their 55th birthday at the earliest but who have used up the recruitment reduction
• ... and generally persons of 55 years and older recruited before 1 July 2016.

Conditions

The employee must only meet the general conditions, there are no other specific conditions.

There is no certification (not by the VDAB nor by any other institute).

Basic amount and number of quarters of the retention reduction

age on the last day of the application quarter	Basic amount	number of quarters
55 to 59	€600.00	number of quarters of employment in this age group
starting from 60	€1,150.00	unlimited (up to and including quarter of termination of employment)

Transition from federal to Flemish reduction on 1 July 2016

In the Flemish Region, the previous federal reduction for older people ends on 30 June 2016 and there is no phasing out scenario after this date.

The Flemish recruitment reduction can take effect for recruitments starting from 1 July 2016.

Employees recruited before 1 July 2016 and who are at least 55 years of age on 30 September 2016 are included in the Flemish retention reduction, which may be more or less than the previous reduction.

In a following Infoflash, we compare the age categories.

Sources: Decree of 4 March 2016 containing the Flemish target groups policy, Belgian Official Gazette 4 April 2016; Draft decision of the Flemish Government in implementation of the Decree of 4 March 2016 containing the Flemish target groups policy, approved in principle by the Flemish Government.

Author:

03/06/2016