salary package (Payroll Belgium)

Inspiring tricks for salary package in Belgium

What is a good salary?

After a long search, you finally found your ideal candidate . That makes you happy and excited about the future.

However, you are uncertain about the salary package you want to offer. On the one hand, the net salary must be attractive for the employee, but on the other, you as the employer would like to keep control on the cost related to the employment. Your question is how to tackle this issue.

This post gives an overview of the components of the salary package in Belgium, and suggests how to match a high net salary with a reasonable employer cost.

Gross salary

Fixed salary

Salary in Belgium can be divided into fixed and variable salary. The fixed salary is the agreed upon gross compensation the employee receives for the fact that he or she performs work for the employer. The fixed salary is the standard remuneration and is mentioned in the individual employment agreement. The gross fixed salary is subject to changes in the cost of living. The salaries are linked to the flattened health index and fluctuate at variable times. When determining the gross salary, an employer must respect the monthly minimum salary as determined by the applicable joint committee.

Also part of the fixed salary are the holiday pay and the year-end-premium, otherwise known as the 13th month.

  • Holiday pay

Apart from the national minimum salary that you have to respect at all times, employees are also entitled to holiday pay. White-collar workers are entitled to vacation allowance, paid by the employer. They get a 92% salary on top when taking their principal vacation. Blue-collar workers are also entitled to holiday pay but this is financed by the employer through the social security contributions and is paid by the holiday fund of the sector of industry to which the employer belongs.

  • 13th-month salary

The total salary package and the number of instalments for employees is again different from sector to sector. This is due to the fact that the 13th month (or Christmas bonus), is regulated by the collective bargaining agreements. In the meantime, the 13th month is applicable in almost all sectors in Belgium.

Variable salary

Variable salary is a way of remunerating the employees who have performed exceptionally well. This can be done via bonuses, warrants, stock options, etc.

woman paying with mobile phone in cafe - salary package Belgium

Net salary

To determine the net salary, the gross salary must be reduced by the employee’s social security contributions and the income tax. The social security contribution for employees in Belgium is 13,07% and the income tax depends on the gross salary and the personal situation of the employee. Belgium has progressive income tax rates, which means that the more you earn, the more income tax you will pay. However, you can receive a tax reduction for having a spouse or a child at charge.

Fringe benefits

fruit and vegetables at a market salary package Belgium

Due to the heavy tax burden in Belgium, extra-legal benefits are quite common and popular. A few of these benefits are exempt from social security, given that certain conditions are met. The very popular company car however, is considered taxable. Despite recent new tax measures, the company car is still very popular in Belgium. The most popular extra-legal benefits are:

  • Meal vouchers, sports and culture vouchers, and gift vouchers
  • Hospitalization and/or additional pension plan through group insurances
  • Private use of mobile phone, laptop and internet
  • Company car
  • Mobility budget
  • Non-recurring result related bonus plan
  • Profit participation bonus
  • Equity incentives such as warrants, stock options and RSU’s

A common mistake is to think that office allowances and indemnities for homework are part of the salary package. As costs related to homework are relatively small and difficult to prove, it is accepted to estimate these costs on a lump sum basis, and to pay them out on a monthly basis. However, these amounts cannot be considered as salary.

Agreement or policy

In order to prevent future problems with your employee about any of the salary components given, don’t forget to include them into a written employment contract or a policy.

Conclusion salary package

Now that you have learned how different components of the salary package can be fine tuned, you might come to the conclusion that you need an expert’s assistance to find out which is the best salary package for your employee. Depending on the employee’s function, the result of this exercise could be an increase in the net salary and a decrease in employer cost. If you need assistance in this department, look no further. Pro-Pay has the in-house salary package expertise to guide you. Use the contact sheet to reach out to them.

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