January 2021: time for a practical update!
13 Jan 2021
1 January is not only the day on which new year’s resolutions are made (and sometimes already broken), but traditionally it also marks the entry into force of new legislation and the application of indexation mechanisms. Below follows an explanation of the indexation of the salaries within Joint Committee (JC) no. 200, the indexation of the thresholds applicable for collective bargaining agreement (CBA) no. 90 concerning non-recurring, results-linked benefits, and the new regulations on birth leave.
Indexation of the salaries within JC no. 200
The index mechanism within JC no. 200 provides for a mandatory yearly indexation of salaries, on 1 January. This year, the evolution of the health index resulted in an indexation of salaries with 0.95%. As a result, both the minimum wage scales and the actual wages paid out within JC no. 200 must increase with 0.95% as from January 2021.
Indexation of the amount of CBA nr. 90
CBA no. 90 introduced a system of non-recurring, results-linked benefits, which allows employers to grant their employees tax-friendly bonuses on the basis of achieving collective objectives during a certain reference period.
If such a system of results-linked benefits is introduced in the company and the conditions of CBA no. 90 are met, the amounts paid out will not be subject to regular social security contributions in this context, provided that they do not exceed EUR 3,169 (non-indexed amount) per employee per year.
This threshold is indexed each year and will amount to EUR 3,447 per year for 2021 (instead of EUR 3,413 per year in 2020). Note, however, that - if this threshold is observed - specific solidarity contributions will be due, amounting to 13.07% for the employee and 33% for the employer. If the threshold is not observed, regular social security contributions will be due on the part of the amount that exceeds the threshold.
For income tax purposes, the amounts paid out are exempt up to a maximum of EUR 2,996 per year per employee in 2021 (instead of EUR 2,968 per year in 2020).
Gradual increase in birth leave
Duration
Up until 1 January 2021, parents of new-born children were entitled to 10 days of birth leave (previously known as paternal leave, currently applicable for the father of the child or the co-mother), which must be taken within four months of the date of childbirth.
By means of the Program Act of 20 December 2020, the number of days of birth leave will gradually increase, first to 15 days for children born on or after 1 January 2021 and afterwards to 20 days, for children born on or after 1 January 2023. Under the new scheme, the employee is still free to choose when to take up birth leave, be this within 4 months following the birth.
Birth leave allowance
Under the new scheme, parents-employees still retain their normal salary for the first three days of absence, after which they are entitled to a birth leave allowance from their health insurance fund for the remainder of the days of birth leave. As such, the extension of the system of birth leave is cost-neutral for the employer: the first three days remain at his expense whilst the allowance for the other 12 days (15 days as from 1 January 2023) is at the expense of the employee’s health insurance fund.
If you have any questions regarding the above, do not hesitate to contact us.
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