Salary increases seriously limited for 2011 and 2012

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Date:
01 Apr 2011

As already known, the social partners did not succeed in concluding an inter-professional agreement for 2011-2012. In recent years, they always succeeded in doing so and thus fixed an indicative margin determining how remuneration costs could change in the two years subsequent to finalizing their agreement. Industry branches and afterwards companies could then proceed to remuneration negotiations within this margin. The margin was indicative, not binding.

As already known, the social partners did not succeed in concluding an inter-professional agreement for 2011-2012. In recent years, they always succeeded in doing so and thus fixed an indicative margin determining how remuneration costs could change in the two years subsequent to finalizing their agreement. Industry branches and afterwards companies could then proceed to remuneration negotiations within this margin. The margin was indicative, not binding. 

In the absence of such agreement and after a Government attempt to mediate, the King can, by law, fix the maximum margin for changes in remuneration costs, by a Royal Decree which has been discussed in the Cabinet. Such a Royal Decree has now been published and this time the maximum margin is binding rather than indicative. This has far-reaching legal consequences.

As stated, this margin is no longer indicative but binding. Thus CBA’s concluded in industry branches or in companies as well as individual agreements, etc, may not grant anything above the available margin. Hence, employers must ensure that they respect the margin, on top of the indexation and the pay scale increases. More specifically, all employers must respect a margin for the increase in remuneration costs of 0% for 2011 and 0.3% for 2012. An individual employer is not permitted to give more. Although it might seem surprising that the Government interferes in such an important way in what companies can pay their employees, it is not the first time that it does so. By Royal Decree of 20 December 1996, a similarly binding margin of 6.1% (including pay scales and index) was imposed for the years 1997 and 1998.

An employer who is confronted with an industry branch CBA which foresees a higher increase in the remuneration costs than the one permitted by inter-professional agreement or Royal Decree can even refuse to execute it. This is exactly what the Antwerp Labour Court decided in its judgment of 14 June 2000, in the framework of the previous binding margin for the period 1997 and 1998. Even though the Remuneration Moderation Act of 26 July 1996 provides criminal sanctions and administrative penalties, these are not (yet) applicable.