15 October 2013

The Belgian government has decided by Royal Decree of 24 September 2013 to extend the application scope with respect to social security contributions.

As from 1 October 2013 the majority of indemnities due when an employment contract is terminated (so called “termination indemnities”) are considered as salary and therefore subject to ordinary social security contributions.

Intended indemnities

It concerns the following indemnities:

  • Indemnities directly or indirectly granted to the employee when a non-competition and/or non-solicitation clause has been agreed upon during a 12-months’ term after termination of the employment contract. Non-competition indemnities that are agreed upon in the employment contract, were already subject to social security contributions prior to 1 October 2013;
  • Client indemnities for sales representatives;
  • Indemnities due by the employer in case of violation of legal, contractual or statutory obligations (other than the normal compensation in lieu of notice which was already subject). It concerns amongst others the indemnities that are due in case the employer ends an employment contract of an employee legally protected against dismissal for instance pregnant employees, employees on parental leave or time credit, union representatives, employees who have submitted a complaint against harassment, inappropriate sexual behavior, violence or discrimination, etc.

Excluded from the notion ‘salary’

Some termination indemnities are or remain excluded from the notion ‘salary’ and are not subjected to social security contributions.

It concerns the following compensations:

  • Indemnity due upon closure of an enterprise;
  • Indemnity in case of arbitrary dismissal of a blue-collar worker, provided that the right to this indemnity is acquired before 1 January 2014 (most likely this will be abolished in the framework of the harmonization of blue and white collars);
  • Collective dismissal indemnities.

Effective date

The new conditions regarding the termination indemnities are applicable from 1 October 2013. The law does not provide for any transitional arrangements.

The practical impact of situations which occurred before this date remains uncertain.

To be continued…


Any questions regarding this publication? Please get in touch with your regular BDO contact or our Competence Center Employment Tax and Legal Services.