First hirings contribution reduction restricted for start-ups and small employers belonging to a group of companies

Since 2022, qualifying for the contribution reduction for first hirings is subject to much stricter conditions for so-called ‘technical business units’.     

In this context, a ‘technical business unit’ (TBU) is understood to mean a group of companies that are or were linked to each other. Can a start-up that is part of a TBU create the right to the first hirings reduction? Until now, there were no provisions in the regulations to answer this question clearly and precisely and the application was inconsistent, which could lead to improper use via start-ups connected to larger companies. This has changed: since 2022, the new regulations define the notion of technical business unit (TBU) and provide for a number of modalities that strictly regulate and restrict the reduction within a TBU. 

For your information: the new principles that apply to all employers are also applicable within a TBU, see our previous Infoflashes of 30 November 2021 on the new amount for the first hiring and of 28 February 2022 on the new application in general.

What is a technical business unit (TBU)?  

The regulations now stipulate that a technical business unit consists of several legal entities, which have a demonstrable social link AND a simultaneous or historical socio-economic interdependence.

The social link means that the legal entities have at least one person in common, with the status not being a criterion: employee, partner, business manager, self-employed, ...

There is one exception: the takeover of employees affected by bankruptcy (chapter III CLA 32bis) does not create a social link or a technical business unit. A new legal entity that takes over (part of) a bankrupt company can therefore apply the reduction for the first six employees. Note: if the takeover involves at least one person without employee status (e.g. a former partner of the bankrupt company holds a position with the transferee), there is a social link.

Socio-economic interdependence refers to the cooperation in practice, which can take various forms: the different legal entities have activities adapted to each other, offer independent services within the same group, ... The NSSO assesses this interdependence on the basis of a combination of criteria such as the same operating address, common customers, joint publicity, a common logo and/or website, ...

The socio-economic interdependence determines whether it is a simultaneous or historical technical business unit.

Simultaneous vs. historical technical business unit (TBU) 

A simultaneous TBU consists of legal entities operating side-by-side that have a social link AND a current socio-economic interdependence. A simultaneous TBU functions largely as a single entity but formally consists of different legal entities. Examples: same business manager (or partner, or at least one employee) and complementary activities, the same customers, a common website, ...

A historical TBU consists of legal entities that have a social LINK AND a socio-economic interdependence that lies in the past. This is the case when legal entities which once functioned jointly but after e.g. a split-up, a departure of an involved party who founded his own business .... have gone their separate ways and function independently (or even become competitors).

A simultaneous TBU continues to have impact as long as the criteria are met, in principle without time limit.

A historical TBU has an impact for 12 months after its ‘emergence’: e.g. the split-up, the legal transformation, the moment a partner has set up his own business, ... This is the logical consequence of the fact that every hiring has to be assessed over a reference period of the previous 12 months: at some point, there will be a hiring with a reference period that no longer includes the event that formed the basis of the historical TBU.

Impact on the reduction for first hirings - old vs. new situation  

Until 31.12.2021, the reduction for first hirings was applied relatively flexibly within a technical business unit. A start-up (legal entity) that was part of a TBU could create the right to the reduction for the first six hirings, provided that those hirings constituted additional employment at the level of the TBU and regardless of the size of the global TBU.

An example of the former situation:

Newly established employer A is part of a technical business unit with B and C. A is making a first hire on 01.01.2021 → when assessing at the level of (only) A, the first ranking is applicable. In the reference period of 2020, B and C employed 5,000 employees. A was entitled to the reduction for first hirings if on 01.01.2021 (date of hiring), A, B and C together employed at least 5,001 employees.

For hirings from 1 January 2022, the conditions are much stricter:

• In a simultaneous TBU, the ranking is now determined at the level of the TBU, and the employer can no longer benefit from the reduction if the global TBU already has six employees.
• In a historical TBU, the different legal entities can still create the right to the reduction at their level, if there is additional employment at the level of the global TBU. The assessment of that additional employment is subject to strict calculation rules, and shifting jobs between employers of the same TBU will considerably limit the right to the reduction.

The new stricter rules for creating the right to the reduction apply to all hirings from 01.01.2022 onwards.

Reductions (1st to 6th ranking) for which the employer qualified prior to 2022 (by a hiring no later than 31.12.2021) remain active and are applied for the remaining quarters, even if the hiring would no longer be compliant under the new rules.

Reduction in a simultaneous technical business unit   

New principles from 2022

1.

Entitlement to the reduction at the level of the simultaneous TBU

In practice, the 12-month reference period is counted at the level of the simultaneous TBU. Main consequence: if the global simultaneous TBU employed 6 employees during the reference period, new hirings by a legal entity that is part of that TBU will no longer create the right to the contribution reduction.

2.

If it is still possible to rank the reduction (1st to 6th) after assessing the reference period at the level of the TBU, that ranking will be attached to the legal entity making the hire as regards the minimum number of employees on the date of hiring, and the minimum number of employees in the quarter of the application of the reduction. Only this employer can apply the ranking order (if effectively opened), therefore the application cannot alternate between different employers of the same simultaneous TBU.

3.

According to the regulations, hiring at the level of the simultaneous TBU must constitute additional employment compared to the number of employees in the reference period, and that additional employment must be maintained for at least one month. At the level of the simultaneous TBU, this condition is theoretical because the legal entity making the hire must itself employ the number of employees corresponding to the opened ranking. This number is, by definition, the number of employees employed at the level of the TBU during the reference period plus one (see point 2 above). However, please note that the additional employment resulting from the hiring must be maintained at the level of the global TBU for at least one month. This is a very technical point and we will not analyse it in detail; for the principle see also Example 2 below. 

4.

Within the simultaneous TBU, the same ranking can be opened and applied in parallel only once. This is important for legal entities that hire at the same time.

The combined application of the previous principles means that it becomes very difficult, if not impossible to open/apply a ranking within a simultaneous TBU.

Example 1

A forms a simultaneous TBU with B and hires a first employee on 01.05.2022. Reference period for the assessment for opening a ranking: 01.05.2021 - 30.04.2022

Assume the following: during the reference period, 4 employees were simultaneously employed by B.

In theory, A can open the 5th ranking, but then it must employ at least 5 employees on the date of hiring and there is only one employee → no reduction for A

Assume the following: during the reference period, 6 employees were simultaneously employed by B.

A can no longer open a ranking → no reduction for A

Example 2

A forms a simultaneous TBU with B and hires its first 3 employees on 01.05.2022. Reference period for the assessment for opening a ranking: 01.05.2021 – 30.04.2022.

Assume the following: during the reference period, 2 employees were simultaneously employed by B.

A can effectively open the 3rd ranking; on the hiring date A actually employs 3 employees. The additional employment of one employee (in relation to the reference period) must be maintained for at least one month by A and B jointly: A and B must therefore be able to demonstrate that their joint workforce amounts for at least one month to 3 employees (regardless of their identity, hirings from 01.05.2022 may be replaced during that month).

Example 3

A forms a simultaneous TBU with B. A and B each hire their first employee on 01.05.2022. The reference period is exactly the same for A and B: 01.05.2021 - 30.04.2022, with 0 employees.

In theory, both hirings can open the first reduction ranking, but the principle of single opening/application within a simultaneous TBE prevents this. There are no rules for exclusive application - A and B are supposed to agree on which legal entity (A or B) will open the 1st ranking. The choice is final: it is not possible to alternate the application of the reduction between the legal entities.

Reduction in a historical technical business unit  

New principles from 2022

1.

The counting (maximum number of employees employed at the same time) in the reference period of 12 months is first done at the level of the legal entity

2.

The hiring must constitute additional employment at the level of the global historical TBU, and that additional employment must be maintained for at least one month.

In this context, the legislator now provides for 5 ‘days of tolerance’, i.e. the 5 days during the reference period with the highest number of employees may be neutralized.

3.

Each newly hired employee who takes a job, taken over from another legal entity within the TBU, is considered a ‘replacement’ and is added to the workforce of the reference period at the level of the legal entity.  

This has two important consequences for the hiring employer:

• as soon as the actual number of employees during the reference period of 12 months, increased by the number of ‘replacements’, reaches 6, it is no longer possible to open any ranking; 

• if any rankings are still possible, they will be the least advantageous rankings, with the highest number due to the addition of the ‘replacements’.

4.

Once the ranking is finally determined, it will be attached to the level of the legal entity with regard to the minimum number of employees employed on the date of hiring and the minimum number of employees employed in the quarter of the application of the reduction.

The combined application of the principles means that opening a ranking is a lot more difficult than before, particularly in the case of jobs transfers between employers of the same TBU. 

Step by step application - example

A forms an historical TBU with B and makes its first 4 hirings on 01.02.2022.

Reference period for the assessment for opening a ranking: 01.02.2021 – 31.01.2022.

Assume the following: the reference period of B is as follows: 300 days with 45 employees, 60 days with 50 employees and 5 days with 55 employees. B has 48 employees left on 01.02.2022.

STEP 1: assessment of the reference period at the level of A itself, and determination of rankings

A had no employees employed at A in the reference period, 4 hirings → rankings 1, 2, 3, 4 are possible

STEP 2: assessment additional employment at the level of TBU

The number of employees in the TBU on the date of hiring must be higher than the number of employees in the TBU during the reference period. The positive balance quantifies the additional employment.

For the counting in the reference period, the 5 days with the highest number of employees may be neutralized → 5 days with 55 employees are neutralized, which gives a result of 50 employees.

Additional employment: 52 (on 01.02.2022 = 48 + 4 ) - 50 (reference period) = 2

STEP 3: if the additional employment (STEP 2) is less than the number of hirings: correction of the reference period and final determination of rankings

A makes 4 hires and the additional employment is only 2, which means that 2 ‘replacements’ have been hired. Those replacements are added to the STEP 1 reference workforce, which is increased to 2. Of the initial STEP 1 ranking, only the 3rd and 4th remain.

Adjusted: if A had 4 employees in the reference period, none of the 4 hirings would create the right to the reduction because there would be already 6 employees in the reference period (4 actual staff + 2 added replacements).

STEP 4: assessment of the number of employees at the level of the legal entity

The actual opening of the rankings finally determined in STEP 3, is subject to the condition of the number of employees who are employed on the date of hiring corresponding to these rankings.

Since A hired 4 employees on 01.02.2022, the number of employees simultaneously employed on this date amounts to 4, which creates the right to open rankings 3 and 4.

STEP 5: maintaining additional employment for one month after hiring

If A applies rankings 3 and 4, employment in the global TBU must be maintained at at least 52 employees for the entire month of February 2022. Failure to comply with this condition will result in the removal of the ranking that is not covered by a month of additional employment of 1 employee (for all possible quarters). 

 

Source:

• Programme Act of 27 December 2021, Belgian Official Gazette of 31 December 2021
• Royal Decree of 27 January 2022, Belgian Official Gazette of 10 February 2022
• portal NSSO