Starter jobs for young people as from 01 March 2019

Halfway through last year, the government launched the starter jobs: a measure to help young people with little or no professional experience to find a job more cheaply. Legislative work dragged on until April 2019, but finally starter jobs are a reality, retroactively from 1 March 2019.     

In a nutshell

In starter jobs, young people get to keep the net salary they would normally earn, but it costs less for employers to employ them. There are three steps in the process:

1. the gross salary is reduced by an age-related percentage
2. the net salary is supplemented by a compensatory allowance that exactly covers the net loss due to the lower gross salary
3. Finally, this compensatory allowance is converted into an exemption from paying withholding tax

 

Provisos for employers

Starter jobs are only intended for employers who:

1. are covered by the CLA regulations (Law of 5 December 1968 on CLAs and Joint Committees), so who belong to the private sector
2. do not belong to a joint committee with a degressive youth scale, unless this is limited to students.

For example, employers of JC 200 (additional joint committee for non-manual workers) are excluded because of the degressive youth scale in this sector.

3. pay their under 21s according to the applicable sectoral salary scale.

The measure does not apply to employers who pay their under 21s a salary over and above the sectoral salary scale, because the legislator considers that they accept a higher cost of employment for this age group in any case.

Provisos for the young people

 

The employee simultaneously satisfies all the following conditions:

1. under the age of 21 (a starter job ceases to apply as from the month of the 21st birthday);
2. hired at the earliest on 01 March 2019;
3. on the day prior to hiring the young person was registered as a job seeker with the competent Regional authority.
4. hired with “minimal” professional experience (read below);
5. hired under a type-1 starter job contract, i.e. a part-time contract, at least 50%, without reference to training – a clause on the reduction in gross salary and the net compensatory allowance must be included in the contract
6. hired with a theoretical gross salary (before the starter job reduction) no higher than the sectoral salary minimum;

The following do not qualify: apprenticeships, young people in dual training schemes, student contracts, flexi-jobs.

 

Minimal professional experience

 

Experience is said to be minimal if in the sixth quarter up to and including the third quarter before the quarter of recruitment the young person was not employed more than 80% full time for more than one quarter, for any employer and in any industry.

 

Example

Young person hired on 01 July 2019.

The reference period (sixth to third quarter inclusive before the quarter of recruitment) is the first quarter of 2018 up to and including the fourth quarter of 2018. If, in that reference period, the young person was employed more than 80% of a full time job for at least two quarters, a starter job cannot be given. 

 

Not all work performance in the registered declarations count.

Performances do NOT count if declared:

• in a flexi-job;
• as an apprentice;
• as a student within the contingent that serves as a basis for the solidarity contribution;
• as a limitedly liable young person until 31.12 of the year of his 18th anniversary;
• as an occasional employee in agriculture, horticulture and the hotel and catering industry (‘horeca’)

The social security office assesses professional experience on the basis of the Dimona declaration. In the notification of the Dimona it is stated, if applicable, that the young person concerned has insufficient professional experience, for which a starter job is permitted provided that all other conditions are met.

 

The young person's pay

The young person is paid a reduced gross salary, to which a net compensatory allowance is added.

1. The reduced gross salary

The young person's basic gross salary is the sectoral salary scale equivalent reduced by a percentage based on his or her age at the end of the month in question:

age	% reduction
< 19	18 %
19	12 %
20	6 %

For 19-year-olds with 6 months' seniority and 20-year-olds with 12 months' seniority, the gross salary with reduction may not be lower than the increased pay guarantee of CLA 43:

Age	Seniority	Increased average minimum monthly income (GMMI) (amounts since 01 September 2018)
19	6 months	€ 1,636.10
20	12 months	€ 1,654.90

 

2. The compensatory allowance

As there must be no net loss for the young person, the employer pays a compensatory allowance each month. This allowance is equal to the net loss of earnings, i.e. the difference between the net salary based on the normal (not reduced) gross salary and the net salary based on the reduced gross salary.

In order to obtain the net salary on the basis of the non-reduced gross salary, the employer has to make a fictitious gross-net calculation in the background, starting from the normal gross salary (without reduction) to which the young person would be entitled.

Increase for manual workers

The annual holidays office (RJV/ONVA) and the holiday funds calculate the holiday pay on the basis of the reduced gross salary indicated in the dmfa.  In order to avoid that manual workers in a starter job suffer an additional loss of salary through their holiday pay, their compensatory allowance is increased by a certain amount. This amount is the result of a percentage calculated on the reduced gross salary of the month concerned:

age	Increase =  % calculated on reduced gross
< 19	2.82%
19	1.75%
20	0.82%

 

Exemption from payment of withholding tax

The net allowance must not increase the cost of employment to the employer and is converted to a new exemption from payment of withholding tax.

Principles

• the sum of the net compensatory allowances is the amount exempted from withholding tax;
• the exemption applies to the company's overall withholding tax, so not just the withholding tax on starter jobs
• this exemption takes lowest priority, after all other income withholding tax exemptions have been applied.

Roll-over in the same calendar year

If, once the other exemptions have been applied, the withholding tax for a given month is lower than the sum of net compensatory allowances, the balance of these allowances may be deducted from the withholding tax for the ensuing months of the same calendar year.

Impact on deductible business expenses

The withholding tax exemption is not deductible as a business expense. However, the balance of any net compensatory allowances which could not be converted to withholding tax exemptions by the year-end does qualify as a deductible business expense.

 

Social security and taxes

The young person is registered and insured on the basis of the reduced gross salary. In other words, the social contributions are calculated using the reduced gross salary.

The net compensatory allowance is not subject to social security contributions and is not included in any benefits calculations. No personal income tax (or indeed income withholding tax) is due.

 

Sources: Law of 26 March 2018 concerning the strengthening of economic growth and social cohesion (Belgian Official Gazette of 30 March 2018) - Law of 7 April 2019 on the social provisions of the jobs deal (Belgian Official Gazette of 19 April 2019)