Starter jobs for young people as from 1 July 2018

Degressive pay schemes for young people have generally disappeared from sectoral salary scales, but they are now again being reintroduced in the form of starter jobs: a new measure designed to lower the cost of employing young people with minimal professional experience.

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 young person’s gross salary scale is reduced by an age-related percentage;
2. to offset the net loss (due to the lower gross salary) the employer pays a net monthly allowance;
3. this net allowance is then converted into an exemption from paying withholding tax.

Conditions for employers

Employers may offer starter jobs only if they:

• are covered by the CLA regulations (Law of 5 December 1968 on CLAs and Joint Committees);
• pay their under 21s the sectoral salary scale equivalent.

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

Conditions for 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 1 July 2018;
3. hired with “minimal” professional experience;
4. hired under a type-1 starter job contract, i.e. a part-time contract, at least, without reference to training and containing clauses on the reduction in gross salary and the net allowance;
5. hired with a theoretical gross salary (before the starter job reduction) no higher than the sectoral salary minimum;
6. on the day prior to hiring the young person was registered as a job seeker with the competent Regional authority.

The following do not qualify: apprenticeships, young people in alternance training schemes, student contracts.

Insufficient professional experience

Experience is said to be insufficient if in the sixth quarter up to and including the third quarter before the recruitment quarter the young person was employed more than 80% full time equivalent for at most one quarter, for any employer or in any industry. The social security office assesses professional experience on the basis of the Dimona declaration.

Example

Young person hired on 1 October 2018

The reference period (sixth to third quarter inclusive before the quarter of recruitment) is the second quarter of 2017 up to and including the first quarter of 2018. If, in that reference period, the young person was employed more than 80% full time equivalent for at least two quarters, a starter job cannot be given.

Not all the professional experience in the Dimona declarations counts.

Professional experience does NOT count if declared:

• in a flexi-job;
• as an apprentice;
• as a student in the solidarity contribution contingent;
• as a young person not fully subject until 31.12 of the year of his or her 18th birthday;
• as a seasonal worker in agriculture and horticulture

The young person’s pay

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

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 at end of month	% reduction
< 19	18%
19	12%
20	6%

The net allowance

As there must be no net loss for the young person, the employer pays a net monthly allowance. This is a fixed monthly sum based on the young person’s age and the normal full-time salary scale. Details of how the allowance is to be calculated will be regulated by Royal Decree.

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 allowances is the amount exempted from withholding tax;
• the exemption applies to the company’s overall withholding tax, so not just to the withholding tax on starter jobs;
• this exemption takes lowest priority, after all other 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 allowances, the balance of net 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 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 declared 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 allowance is not subject to social security contributions and not included in any benefits calculations. No personal income tax (or indeed withholding tax) is due.

Source: Law of 26 March 2018 concerning the strengthening of economic growth and social cohesion (Belgian Official Journal of 30 March 2018).

The text of the Royal Decree regulating the net allowance is not yet available.

Author: Els Poelman

01/06/2018