Flemish target group reduction “older employees” as from 1 January 2022

Author: Els Poelman (Legal Expert)
Date:

The Flemish government's September declaration announced that the reduction for "present" older employees would gradually be limited to the age group of 61 and over. Now the details are known, following the draft decree.

New as from 1 January 2022

The Flemish target group reduction for older employees consists of two parts: a “present" employee reduction for all older employees and a hiring reduction for older jobseekers.

The age for the "present" employee reduction will be gradually increased over the period 2022-2024 and will be limited to the age group 61+ in 2024, but transitional measures will be introduced.

What is meant by "older" employees?

For both reductions, the employee must meet 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. have a minimum age at the end of the quarter of application (see below for exact age limits from 2022)  
  5. earn a reference quarterly salary of less than €13,945 (amount increased to €18,545 each first quarter for temporary agency workers and each fourth quarter for other employees)
  6. not be exempt from performing work for the entire quarter, except in the case of statutory suspensions of the employment contract or during a period of notice.

 

For the (higher) hiring reduction, the older employee must be younger than the statutory retirement age at the time of hiring and be a non-working jobseeker. 

Hiring reduction - no change

The reduction for newly hired aged 58+ who have not yet reached the statutory retirement age and who are registered with the VDAB (Flemish employment service) is not limited to a fixed amount. The employer will be fully exempt from the basic contribution and the salary moderation contribution (in total, 25% on the gross salary) during the hiring quarter and the following 7 quarters.

Nothing will change in this respect on 1 January 2022: the age limit for hiring will remain 58 years.

"Present" employee reduction: higher age limits

This reduction should promote the retention of older employees and is a quarterly fixed amount of €600 or €1,500 for full-time work during a full quarter. These amounts are respectively linked to an age limit. In the period 2022 - 2024 that age limit will be gradually increased.

Situation until 31 December 2021

Age at the end of application quarter

Quarterly fixed amount for the reduction

aged under 58

no entitlement

aged 58 to 59

€600

aged 60 and over

€1,500

In 2022, 2023 and 2024 the age limit, linked to the fixed amount of €600 and €1,500 respectively, will be increased by one year after each year

Situation as from 1 January 2022

Age at the end of application quarter

Quarterly fixed amount for the reduction

aged under 59

no entitlement

aged 59 to 60

€600

aged 61 and over

€1,500

Situation as from 1 January 2023

Age at the end of application quarter

Quarterly fixed amount for the reduction

aged under 60

no entitlement

aged 60 to 61

€600

aged 62 and over

€1,500

Situation as from 1 January 2024

Age at the end of application quarter

Quarterly fixed amount for the reduction

aged under 61

no entitlement

61

€600

aged 62 and over

€1,500

The new decree provides for flexible transitional measures.

Persons who on 31 December 2021:

  • are aged at least 57, continue to be entitled to the quarterly fixed amount of €600 until the quarter preceding their 61st birthday
  • are aged at least 60, continue to be entitled to the quarterly fixed amount of €1,500 until the quarter preceding their 62nd birthday

The transitional measures ensure that no employee falls back on a lower reduction than could be expected under the "old" arrangements until 2021, even if the hiring takes place in 2022 or later. In practice, this has a significant impact, here are some examples:

1.

Date of birth: 15 June 1964, hiring: 1 April 2022

The employee is aged 57 on 31 December 2021, the transitional measures apply: 

  • €600 from the 2nd quarter 2022 until the 2nd quarter 2026
  • €1,500 from the 3rd quarter of 2026 onwards

2.

Date of birth: 15 November 1961, hiring: 1 January 2022

The employee is aged 60 on 31 December 2021, the transitional measures apply. Therefore the reduction starts immediately at €1,500 from the 1st quarter of 2022 onwards

3.

Date of birth: 15 July 1966, hiring: 1 April 2022

The employee is aged 55 on 31 December 2021, the transitional measures do not apply:

  • no reduction from the 2nd quarter 2022 until the 2nd quarter 2027
  • €600 from the 3rd quarter 2027 until the 2nd quarter 2028
  • €1,500 from the 3rd quarter of 2028 onwards

 

 

Source:  Draft Decree of the Flemish Government amending art. 6 of the Royal Decree of 16 May 2003 implementing Chapter 7 of Title IV of the Programme Act of 24 December 2002 (I), concerning the harmonisation and simplification of social security contribution reduction schemes and art. 2 of the Decree of the Flemish Government of 17 February 2017 on awarding hiring incentives for long-term jobseekers, adopted in the Flemish Council of Ministers of 12 November 2021. Subject to final approval and publication.

 

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