Temporary unemployment due to COVID-19 - significant simplification of procedure

24 Mar 2020

During last Friday’s Council of Ministers’ meeting, it was confirmed that all cases of temporary unemployment due to COVID-19 will be considered as temporary unemployment due to force majeure during the period from 13 March until 5 April (possibly extended until 30 June). In addition, the application procedure was strongly simplified for both employers and employees.

Introduction

In Belgium, two types of temporary unemployment exist for companies that can no longer put their employees to work or maintain their employees’ normal working schedules: temporary unemployment due to force majeure and temporary unemployment for economic reasons. During periods of temporary unemployment, the employee’s employment agreement is suspended and no salary is due by the employer; the employee will be entitled to unemployment benefits instead. During the last 2 weeks, with increasingly stringent COVID-19 countermeasures being adopted by the government, companies that were affected by the virus or its countermeasures either had to revert to force majeure (e.g. companies that had to shut down on government’s orders) or to economic reasons resulting from the pandemic (companies that were confronted with a reduction in their customer base, production, turnover etc.) as grounds for temporary unemployment, a distinction that was sometimes difficult to assess. Important to point out in this respect is that the procedure for applying temporary unemployment for economic reasons is rather burdensome.

Taking into account the above - and in order to assist affected companies as much as possible - the Council of Ministers decided to streamline all COVID-19 related temporary unemployment by considering all cases of temporary unemployment resulting from the COVID-19 pandemic as temporary unemployment due to force majeure. In addition, the procedure to apply for such COVID-19 related temporary unemployment was further eased.

Temporary unemployment due to COVID-19 - principles

According to the instructions of the National Employment Office (NEO - “RVA”/”ONEM”), the simplified COVID-19 system of temporary unemployment now exists for all companies that are affected by the coronavirus pandemic in such a way that they can no longer put their employees to work or maintain their employees’ normal working schedules, starting 13 March. This temporary measure is valid until 5 April but can be prolonged if the application of the current set of COVID-19 sanitation rules is extended by the government - but not beyond 30 June.

This implies that all earlier COVID-19 related applications for temporary unemployment due to force majeure or for economic reasons that were submitted last week for the period starting 13 March 2020 but before the simplified procedure had been announced will be converted to this new COVID-19 procedure. Consequently, employers who already applied for temporary unemployment for economic reasons can stop drafting business plans or collecting data for the 10% decrease in turnover/production rule and revert to the simplified COVID-19 procedure.

It’s important to point out that, in the system of temporary unemployment due to COVID-19, it is not required to put employees on full-time unemployment. If companies are not forced to close and can still partly put their employees to work, there’s a possibility to combine working days and unemployment days in a flexible manner.

Simplified formalities for the employer

Going forward, employers that want to apply for temporary unemployment due to COVID-19 in principle no longer have to submit a declaration for temporary unemployment with the NEO. The payroll agency simply has to apply the correct wage codes in the payroll calculation as from the start of the temporary unemployment (or possibly retroactively as from 13 March - see above). By doing so, the temporary unemployment is correctly declared to the NEO. On the basis of these declarations, the NEO will determine the amount of the unemployment benefit.

Note that if you work with temporary agency workers, the temp agency is considered the employer and is responsible for the correct processing in this respect.

Simplified formalities for the employee

The employee must submit a simplified form C3.2 to his trade union or, if not unionised, to the Auxiliary Employment Benefit Fund to request his unemployment benefits. During the period of simplified procedure, the employee is also exempt from being in possession of the C3.2A control card, regardless of the reason for temporary unemployment.

Unemployment benefit

Employees who become temporarily unemployed due to the coronavirus pandemic in the period from 1 February 2020 until 30 June 2020 are immediately entitled to unemployment benefits.

These unemployment benefits have increased to 70% (instead of the usual 65%) of the capped gross salary (cap currently set at EUR 2.754,76 gross per month). A withholding tax rate of 26.75% applies. Due to the overload of applications for unemployment benefits, the NEO temporarily grants a fixed unemployment benefit of EUR 1.450 per month. On top of their unemployment benefit, employees who are temporarily unemployed due to COVID-19 receive a daily supplement of EUR 5.63 to be borne by the NEO.

Moreover, employers can grant an additional allowance on top of the above amounts - free from social security contributions - as long as the total sum received by the employee does not exceed his normal net salary.

Temporary unemployment and group insurance - points requiring special attention

The Belgian system of temporary unemployment is - as a result of the coronavirus pandemic - currently being used by more employers than ever before. It’s, however, essential to make sure there are no unintended consequences as a result of deploying temporary unemployment in the company. Against that backdrop, it’s important to point out that group insurance policies generally disregard temporary unemployment in terms of old-age pension build-up, death and disability coverage, medical coverage etc. Indeed, a period of temporary unemployment is a period of suspension of the employment agreement during which no salary is due and the payment of insurance premiums is normally suspended. Depending on the policy, this in turn could mean that coverage for death or disability is lost during the period of temporary unemployment. In order to avoid any adverse effects in this respect, you might consider making the necessary adjustments.

Conclusion

Employers that are confronted with the impact of the restrictive COVID-19 measures can now use the simplified and temporary COVID-19 procedure to apply for temporary unemployment due to force majeure. As such, the employees will soon receive their increased unemployment benefits. On top of that, employers can grant an additional allowance free from social security contributions as long as the total sum granted to the employee does not exceed his normal net salary.

If you have any questions regarding the above, don’t hesitate to reach out.

Contact us

Bart Elias

Bart Elias

Partner, PwC Legal BV/SRL

Tel: +32 473 91 06 02

Pascale Moreau

Pascale Moreau

Partner, PwC Legal BV/SRL

Tel: +32 479 90 02 76

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