New dismissal regulation: special compensation contribution to be paid on the termination indemnification

The Royal Decree of 9 March 2014 (published in the Belgian State Gazette on 20 March 2014) determines the method of calculation.

The new dismissal regulation provides for a so-called 'special compensation contribution' to be paid on the termination indemnification. The amounts concerned are the indemnification in lieu of notice in case of dismissal by the employer, and the termination indemnification the employer pays in case of termination of the employment agreement with mutual consent.

The money raised through this additional contribution will be used for the Indemnification Fund for the Closing-down of firms. This way, the legislator tries to mitigate the increased cost of the new dismissal regulation for companies with a maximum of 20 employees through a decrease in their contributions to the Fund.

The contribution (put on par with a social security contribution) will be calculated only on the part of the termination indemnification that accrued through performance since 1 January 2014. The amount depends on the annual salary of the employee:

The annual salary is calculated based on the salary and performance data of the last quarter during which performances were declared, in accordance with the following formula:

- for full-time employees: (A/B)X260

- for part-time employees: ((A/C)XD/5)X260

with:

A = amount of the salary

B = number of days

C = number of hours

D = number of hours of the measure person / week.

(for employees whose vacation money is paid by a holiday fund, A has to be multiplied by 1,08).

The Royal Decree of 9 March 2014 defines salary, days and hours. It entered into force on 1 January 2014.

> Action point

Check whether you have to pay an additional contribution on the indemnification in lieu of notice or the termination indemnification in case of termination of the employment agreement with mutual consent.