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When an employee takes paid annual holidays – which they built up during the previous calendar year – the employer will be required to pay (single and double) holiday pay. As most employers calculate and pay out the double holiday pay in May (for the entire workforce at the same time), this is the perfect time for a refresher on the principles of calculating the double holiday pay of white-collar workers.
This newsletter only discusses holiday pay for employees in service, not leave and anticipated holiday pay. Particular holiday schemes such as starter holidays, senior holidays or European holidays aren’t covered either.
Double holiday pay is a supplementary amount of holiday pay that an employee receives and which equals 92% of the employee’s gross monthly salary. Employees who didn’t work during the entire preceding calendar year will receive 1/12th of that amount for each month they did work (or is considered equivalent) during that year.
The double holiday pay is paid out once a year. In theory, this should happen in the month during which the employee in question takes their main holidays. In practice, however, most employers pay out the double holiday pay in the month of May, as it’s more practically convenient for an employer to make all the double holiday pay calculations – i.e. for the entire workforce – at the same time.
Double holiday pay is calculated on both the fixed and the variable salary elements of the employee’s remuneration package, but only insofar as these salary elements are subject to regular social security contributions.
For the calculation of double holiday pay on fixed salary, the fixed salary components (if subject to regular social security contributions) of the month in which the employee’s main holidays start, have to be taken into account. As indicated above, in practice, the gross monthly salary of the month of May is considered.
Examples of salary components are:
|Fixed salary element||
Included in calculation base
for double holiday pay?
|Private use mobile phone/laptop/iPad||Yes|
|Private use company car||No|
|Premiums into pension plan||No|
|Premiums into hospitalisation plan||No|
|Reimbursements cost proper to employer||No|
Under Belgian law, for employees whose remuneration is (partially) variable, holiday pay must be calculated on these variable remuneration elements as well, provided they’re subject to regular social security contributions.
The law defines variable remuneration components as commissions, extra payments, percentages, discounts and, more generally, variable bonuses of which the attribution is linked to an assessment of the employee's performance, the employee’s productivity, the company’s result or any criterion making the payment uncertain and variable, notwithstanding the periodicity or the time of payment of such bonuses.
The Belgian Court of Cassation added to this that, where the attribution or payment of the remuneration element is certain yet only the amount of the remuneration element is variable, the remuneration element cannot be considered as variable salary for the calculation of holiday pay.
Bonuses of which the entitlement is already certain (i.e. the employee is certain that they will receive a bonus), with only the exact amount of the bonus still being variable, would therefore not be subject to holiday pay.
However, the question of whether or not the attribution of a bonus is certain entails a highly factual assessment that usually causes a lot of discussion. As a result, employers often decide to take a prudent approach and calculate and pay holiday pay on bonuses of which it might be argued that the attribution is nevertheless certain.
Note in this respect that single holiday pay on variable salary itself is considered as variable salary. This is because the Belgian Court of Cassation has (repeatedly) confirmed that the single variable holiday pay received by the employee has to be considered as part of the calculation base for determining the (single and double) holiday pay of the next year.
To calculate the double holiday pay on variable salary, a monthly average of all gross variable salary elements received by the employee during the 12 months preceding the month during which the employee’s main holidays start has to be taken into account. To calculate the single holiday pay on variable salary, a daily average of all gross variable salary elements received by the employee during the 12 months preceding the month in which the day of leave is taken must be taken into account.
In practice, however, we see that most employers calculate both the single and the double holiday pay on each variable salary element (separately) at the time when the variable salary element is paid out, or once a year (combined) in the month of the main holidays, which is generally in May.
|Double holiday pay (92% of gross monthly salary)||Social security contributions||Withholding taxes|
|85% of gross monthly salary||/||Special contribution of 13,07%||According to exceptional scales (to be withheld by employer)|
|7% of gross monthly salary (referred to as additional double holiday pay)||/||/||According to exceptional scales (to be withheld by employer)|
If you have any questions regarding annual leave in general and the calculation of double holiday pay specifically – including on the analysis of whether holiday pay is due on a particular variable remuneration element –.do not hesitate to reach out; we’d love to hear from you!