Stricter conditions for the exemption from payment of payroll tax for shift or night work

As of 1 April 2022, the rules for applying the exemption for shift or night work will become more stringent. The draft law on this topic has recently been adopted in the Chamber. In this Infoflash, we will summarise the new conditions.

The current exemption in brief

Companies in which shift or night work is performed and which allocate shift or night bonuses enjoy, under certain conditions, an exemption from payment of payroll tax. This exemption is equal to 22.8% of taxable remuneration and is increased to 25% in the event of round-the-clock employment.

Definitions

A company in which shift work is performed is a company in which work is performed in at least two shifts with at least two workers, doing the same work, both in terms of content as well as scope, and that follow each other during the course of the day without any interruption between the different shifts and without the overlap exceeding one-fourth of their daily work.

A company in which night work is performed is a company in which workers, in accordance with the employment regimes applicable in the company, work between 8 p.m. and 6 a.m., excluding:

• workers who only work between 6 a.m. and 12 a.m. and;
• workers who usually start working from 5 a.m.

Companies working in a round-the-clock employment regime are companies in which work is carried out in at least four shifts of at least two workers, who perform the same work as regards the content as well as the volume, who ensure a continuous occupation during the whole week and the weekend, and who succeed each other without an interruption between the consecutive shifts and without the overlap exceeding a fourth of their daily task. The operating time in such a company, the time the company operates, is at least 160 hours on a weekly basis.

The definition of a company that operates in a round-the-clock employment regime meets the tax conditions of a company in which shift work is performed.

1/3 standard

The exemption from payment of payroll tax is allocated only to workers who, in accordance with the employment regime in which they are employed, work for at least 1/3 of their working time in shifts or nights during the month concerned.

For the application of this standard, in addition to the time actually worked, the suspensions of the performance of the employment contract with continued pay are included in the numerator. Periods of suspension of the performance of the employment contract without pay, are not counted in the denominator.  

Stricter application conditions

The government chose to tighten certain application requirements to better define and target the scope of the exemption. These changes will take effect on 1 April 2022, unless otherwise stated.

Split between shift work exemption and night work exemption

The exemption from payment of payroll tax for shift or night work is split into two separate exemptions. The conditions that apply to the shift work exemption and those that apply to the night work exemption will be assessed separately from 1 April 2022.

Among other things, this affects the calculation of the 1/3 standard. Shift or night work can no longer be combined to determine whether the 1/3 standard has been met.

Minimum bonus

The bonus allocated will have to have minimum substance as of 1 April 2022:

• the shift bonus must be at least equal to 2% of the contractual gross hourly salary;
• the night bonus must be at least equal to 12% of the contractual gross hourly salary.

In evaluating whether a well-defined bonus qualifies as a shift bonus or a night bonus, one should not be guided by purely formal aspects, such as the name given to the bonus or the way the bonus is incorporated into the pay slip. This may result in a bonus that bears the name shift bonus not necessarily qualifying as a shift bonus for the exemption. Conversely, it is not excluded that a bonus that has a specific name in a CBA or employment regulations may be considered as a shift bonus for tax purposes.

In addition, it is perfectly possible for an employer to allocate a higher shift bonus than the minimum substance condition (2%) depending on which shift (morning, afternoon, evening, etc.) is worked. 

In the event that shift work is also performed at night, it is sufficient for an employer to allocate a bonus of at least 2% for this night work in order to apply the exemption for shift work. After all, it is the exemption for shift work that is then applied and not the exemption for night work.

As of 1 April 2024, the shift bonus or night bonus must be explicitly laid down in:

• a CBA, or
• the employment regulations, or
• the agreement between the employer and the worker.

If the bonus does not comply with this condition, it does not qualify. The exemption for night work or the exemption for shift work can then no longer be applied.

Assessment of the 1/3 standard

The 1/3 standard is adjusted. Henceforth, it is explicitly stated that this assessment must be done on an hourly basis. An assessment on a daily basis is not possible.

In addition, only the hours worked in shift or at night for which the employer has actually allocated a shift bonus or night bonus are included in the numerator. The hours for which the performance of the employment contract was suspended and for which the salary continued to be paid by the employer are also included in the numerator if it can be demonstrated that the worker, in accordance with his employment regime, would have been employed in shift work or night work and would also have received a shift or night bonus for these.

As previously communicated, shift and night work can no longer be aggregated to assess whether the 1/3 standard is met. On the other hand, one can continue to aggregate shift work and round-the-clock employment. Because the definition of a company that operates in a round-the-clock employment regime meets the tax conditions of a company in which shift work is performed.

Adjustment of the definition of shift work and round-the-clock employment

Shifts must be consecutive without interruption. Henceforth, a break of 15 minutes or less between consecutive shifts shall not be considered a break.

From 1 April 2022, all workers who work shifts or round-the-clock must also receive a shift bonus.

No combination of exemptions

The exemption from payment of payroll tax in the context of shift work cannot be granted if the exemption from payment of payroll tax in the context of night work is granted on the same remuneration (and vice versa).

For the combination of shift work and a round-the-clock employment regime, the increased exemption for a round-the-clock employment regime may only be applied to the payroll tax regarding shift work that meets the conditions regarding a round-the-clock employment regime.

Temporary work agencies

Temporary work agencies that assign temporary agency workers to companies where shift work or night work is worked, and that employ such temporary agency workers in a system of shift work or night work, are also entitled to the exemption for shift work or night work on the taxable remuneration of the temporary agency worker concerned.

In doing so, the temporary work agencies must be able to provide proof that they meet all the conditions of application of the applied exemption.

As of 1 October 2022, the exemption for shift work or night work will be allowed only on condition that the temporary work agencies have obtained the agreement of the company in which the temporary agency workers are employed to apply the exemption for shift work or the exemption for night work.

We are glad to help you

Do you have any questions about the more stringent application conditions? Or do you wish to incorporate a shift or night bonus in a CBA, employment regulations or employment contract? Please do not hesitate to contact our Legal Partners at legalpartners@partena.be.

Source: Draft law on reduction of labour charges, Doc parl. Chamber 2021/2022, no. 2522/006.