The Complete Guide: Payroll in Belgium and Things You Must Know

Belgium is known to many as a multicultural country—its culture is an incorporation of multiple rich and diverse cultures from other countries across the world. There are two spoken languages in Belgium. One is Dutch, and the other is French. Similarly, their labor law can also be divided into two types—white-collar and blue-collar.

White-collar workers are commonly associated with office works. Their task is to perform intellectual, clerical, managerial, and administrative duties. It includes consulting, accounting, marketing, and tech. In contrast, blue-collar workers do manual labor. Some examples include food service, construction, manufacturing, retail, and others.

Regardless of the type of job, employers are required to provide an employment contract. However, the wages, responsibilities, and tasks are widely different. As stated in Belgian Law, the types of contacts are the following:

• **Replacement contract. This contract stipulates that an employee’s employment has a term, delivery rate, and quantity. **
• **Open-term employment contract. There is no fixed-term indicated in this type of agreement. The employment can be categorized as continuing, indefinite, or permanent without a fixed end date. **
• Fixed-term employment contract. The date of the termination is already indicated in the contract. It is no surprise for the employees that their employment contract will end at a given date.
• Temporary employment contract. It goes the same way with fixed-term employment, where employees are not expected to become permanent. However, the employer can opt to extend the contract depending on the availability and demand. Despite having a temporary arrangement, employees are still entitled to the rights of others.

Now that you have a basic knowledge of Belgian labor law. Let us dig deeper into the payroll policies and regulations.

Minimum Wage

According to the Federal Public Service Employment, Labor, and Social Dialogue, the minimum wage in Belgium is 1,562.59 EUR every month. It is strictly implemented that workers are not allowed to exceed eight working hours every day. They can only work between 6:00 AM up to 8:00 PM since Belgium has a night work ban.

In some cases, employees can reach nine hours given that they only work less than 5 ½ hours per day in a week. The good thing is that employees who are residing away from their homes are entitled to work ten hours. Moreover, the Law promulgated in 2003 states that workers cannot work more than 40 hours per week.

Overtime Pay

Although there are policies regarding the maximum working hours, employees can still get overtime and get compensated, providing that they have been employed for more than three months. Based on the regulations, 11 hours per day and 50 hours per week is the minimum. For the overtime pay, more than 50% of the employee’s regular wage is given to them, and it will be doubled if they overtime on a Sunday, holiday, or company’s day off.

The following are the public holidays in Belgium:

• New Year’s Day (January 1)
• Easter Monday (April 2)
• Labor Day (May 1)
• Ascension (May 10)
• Pentecost (Monday after Pentecost)
• Belgian National Day (July 21)
• Assumption of Mary (August 15)
• All Saints’ Day (November 1)
• Armistice Day (November 11)
• Christmas Day (December 25)

Taxes

Every organization or company must comply with the tax regulations. In Belgium, employers must automatically deduct withholding taxes from the salaries of their employees. In terms of the date, taxes should be paid to the authorities every quarter or every month. Keep in mind that employers are responsible for providing annual tax slips to the tax authorities and their employees. It is a good practice of transparency. With this, employees would know how much taxes have been deducted from their wages.

Resident employees are responsible for filing an annual tax return on June 30 and September 30 for non-resident employees. However, there will be some changes with the dates if they would like to file electronically.

The income tax rates range from 25% up to 50% depending on the employee’s income. Like social security contributions, taxes change every year, whether at a local or national level.

Taxes also vary based on the size of an organization. For big corporations, a rate of 25% will be taxed. For small-to-medium-sized businesses, 20% will be taxed for the first 100,000 EUR of net income. The 2% crisis tax is no longer applicable starting 2021.

Paid Leave

As mentioned above, employees in Belgium will get paid leave, mainly if they work on public holidays. The paid leave varies depending on how long the employee is working in the company. Twenty days or four weeks are given to employees who were employed the previous year.

Employers give white-collar workers their holiday pay directly to them. In blue-collar workers, their holiday pay will be given to them through a social security fund.

On the one hand, white-collar workers receive a 30-day of paid sick leave. On the other hand, blue-collar workers can only have full ill pay for the first seven days. When a blue-collar employee cannot go back to work immediately due to illness, they are entitled to receive 85% of pay from days 8 to 14.

Belgium’s maternity and paternity leave is one of the best around the world. Almost 3 ½ months or 15 weeks with pay are given to the mothers. It also includes prenatal care and postnatal. It is not just that; Belgium’s National Health Service pays 82% of the total pay for the first month and 75% for the remaining days of leave. How amazing is that?

For paternity leaves, a father or co-parent is entitled to have a maximum of ten days of paid leave, four months after the child’. Employers must give the total salary for the first three days of paternity, and the remaining days will be paid at 82% of the insurance fund.

Social Security System’s Programs

There is a lot of benefits and advantages an employee can get from rendering service in Belgium. One of which is the programs of the Social Security System. It is guaranteed that the social contributions of all the employees will go directly to their SSS accounts.

Employers deduct a monthly social contribution from their employees’ monthly wages. The rates vary from one employer to another. It is based on the salary of the employee. The higher wages you receive, the higher the social contribution will be. According to the 2018 standard policies, 45.57% is charged for employers and a maximum of 13.07% for employees. It can be paid quarterly or monthly.

There is nothing to worry about it since the contributions fund the social security of each employee. Some benefits include pensions, medical allowances, family allowances, injury and hazard allowances, unemployment benefits, etc.

Final Thoughts

Belgium is indeed a great country to expand your business. The government is lenient with payroll and tax compliance. However, changes are inevitable, and you need to adapt and adjust to these changes quickly to thrive in the market. Having a global payroll solution on your side that could back you up and help whenever you need it is a reasonable consideration.

Talk to us at Rivermate about how we can help you and your business hire remote employees and global payroll.