Payments made upon termination of employment and non-compete payments - Almost all now subject to social security contributions

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Date:
30 Sep 2013

<p>As from 1 October 2013, the non-compete payments paid under an agreement concluded within 12 months following the end of the employment contract are subject to social security contributions. This also applies to compensations for protected status and compensations for loss of clientele.</p>

As from 1 October 2013, the non-compete payments paid under an agreement concluded within 12 months following the end of the employment contract are subject to social security contributions. This also applies to compensations for protected status and compensations for loss of clientele.

The Royal Decree of 24 September 2013, published in the Belgian Government Gazette of 27 September 2013, is part of the government's fight against social fraud.

The non-compete and non-solicitation compensations, paid under an agreement concluded within 12 months following the end of the employment contract, are henceforth subject to social security contributions.

Moreover, the compensations for protected status (with regard to maternity, time-credit, etc.) and the compensation for loss of clientele of sales representatives are also now subject to social security contributions.

Only the following payments remain exempted from social security contributions:

  • legal compensation on the closing of a business;
  • collective dismissal compensation;
  • compensation of unfair dismissal of blue-collar workers (article 63 of the Act of 3 July 1978) the entitlement to which arose before 1 January 2014.

The Royal Decree of 24 September 2013 comes into force on 1 October 2013 and does not contain any transitional measure.

 

> Action point

Dismissal costs are increased through employer's social security contributions, which now apply to almost all compensations paid in this context. 1 October 2013 and does not contain any transitional measure.