The full exemption from basic contributions will be replaced by a quarterly exemption of maximum 4,000.00 EUR.
Global evaluation of this aid measure
The reduction in employer’s contributions for the six first hirings up till now has been organised as follows:
- a total exemption from basic contributions for an indefinite period if a first employee is hired;
- a flat-rate reduction for a fixed number of quarters, when a second to sixth employee is hired.
In particular, the unlimited reduction for the first hiring has been under scrutiny for some time because of its high cost versus insufficient (proven) effect on employment. The unlimited reduction was extended once more at the beginning of 2021, pending the global evaluation of this measure announced in the current coalition agreement.
This evaluation has now been completed and contains a series of recommendations to make the reduction more efficient. In this context, the Programme Act of the end of 2021 will impose changes as of 1 January 2022. The final texts are not yet available, but the NSSO has already released information on the limitation of the reduction for the first hiring.
Reduction for the first hiring from 1 January 2022
As of the first quarter of 2022, the reduction for the first hire will be:
- a quarterly lump sum of 4,000.00 EUR (instead of a full exemption from basic contributions)
- still unlimited in time
The lump sum of 4,000.00 is the quarterly amount for full-time work over a complete quarter and is processed on the basis of the classic calculation rules of all target group reductions:
- calculation on a pro rata basis for part-time work/incomplete quarter
- cumulative with the structural reduction:
- capped, if necessary, at the amount of the basic employer contribution
The specific application of this reduction remains unchanged, including for the first hiring. The employer can still optimise, i.e. choose in each quarter of application for which employee he will apply the reduction.
There is no transition period: current reductions (first hiring prior to 2022) will also turn into the lump sum as of 1 January 2022. In practice, this will only affect the highest salaries, more specifically quarterly salaries from +/- 16,000.00 EUR (for which the basic contribution of 25% exceeds 4,000.00 EUR).
Reduction for the second to sixth hiring
The reduction for the second to sixth employee will remain unchanged. The quarterly lump sum and the number of quarters of application linked to each of these reductions will not be adjusted.
What's to be expected?
When several (legal) employers have a social and socio-economic link, they are referred to as a "technical business unit" (TBE). Until now, as a starter in an (even large) TBE, it was quite easy to benefit from the reduction for six hirings. The government wants to drastically restrict that possibility - some of the expected changes include:
- legally define the criteria that determine when different legal entities constitute a TBE;
- determine the ranking (first to sixth employee) at TBE level instead of at legal entity level
We will inform you again as soon as we have more information.
Source: info NSSO