Benelux Employment Update - December 2022

Working as an EOR is risky under Belgian laws, as it is prone to creating a situation of illegal labour leasing, whereby an employer A puts its employees at the disposal of another employer B, in such a way that any aspect of employer A’s authority would be (fully) transferred to employer B.

This is in general prohibited in Belgium unless legal exceptions apply.

So if employment contracts, processing of payroll, taxes, benefits, etc. are signed with or processed by employer A (the EOR), whilst the concerned employees would in fact receive their working instructions from employer B (the client of the EOR), then this could clearly create a situation of illegal labour leasing. Such a situation of illegal labour leasing would entail severe criminal, civil and tax liabilities.

EOR is allowed under Dutch laws. In the Netherlands there are two ways to use a worker from a third party.

First, it is possible to hire an agency worker from a temporary agency. According to Dutch law an agency worker is an employee of the temporary agency. All statutory regulations that apply to employees are also applicable to agency workers.

Second, it is possible to hire a worker and place this worker on the payroll of a third company while he exclusively works for the hiring company. This is called payrolling. In practice “payrolling” occurs when the payroll company has an agreement with a third party to lease employees. The payroll company provides employees under the supervision and management of the third-party to perform work and the payroll company may only provide the employee to another company with the permission of that third party.

In Luxembourg, EOR is considered an illegal provision of manpower, (ie placing employees at the disposal of a third party who exercises over them the administrative and hierarchical authority normally reserved for the employer). Breach of this prohibition entails criminal sanctions.

But there are exceptions:

• An employer can hire a temporary worker through a temporary agency to perform a specific task or in specific cases.
• An employer can be authorized by the Minister of Labour, after consultation with ADEM and under strict conditions, to place an employees at the temporary disposal of other employers.
• An employee can have an employment contract with several employers within the framework of a Global Employment Contract, where one of the employers acts as lead employer and takes over most of the administrative formalities surrounding the contract. Although this situation is common in practice, it’s not recognised by the law or case law. 

Belgian laws provide for two different types of structural remote working, i.e. working from a remote location chosen by the employee during at least 1 day per week on average (considered over one month):

• “Structural telework”, whereby the employer can, via IT-systems, carry out direct supervision over the remotely working employee.

This type can however not apply to ‘mobile workers’, e.g. field-based employees or sales representatives without a fixed place of work.

• “Classic homework”, whereby an employee works remotely without being subject to the direct control of the employer. This type can be used for both ‘mobile’ and ‘non-mobile’ workers.

The distinction between both is important, among others because of the different legal framework and the way how remote working expenses must be covered by the employer.

Remote working can be freely chosen by mutual agreement between an employer and an employee. Where regular monitoring is performed, the employment contract must include mandatory provisions such as the place from which the employee works. 

Introducing and modifying a remote working scheme is done after informing and consulting the staff delegation. For companies with more than 150 employees, the staff delegation has to agree on any modifications.

Remote workers have the same rights and are subject to the same obligations as other company employees.

For cross-border workers living in neighbouring countries, remote working doesn’t affect their social security contributions and taxation if some thresholds are not exceeded.

There are several mechanisms for aligning the employees’ salaries with fluctuations of the cost of living:

• An automatic salary indexation, varying per sector. In most sectors, this entails an automatic indexation of the sectorial minimum wage scales and the effectively paid wages, according to the fluctuations of the consumer price index or the health index; plus
• Additional mandatory increases to improve the employee’s ‘purchasing power’, which are defined every two years, and usually indeed take the form of an extra salary increase figured in % of the employees’ salaries.

Both are mandatory, without any opting out possibility or possibility to replace these by employer-specific merit increases.  

To prevent excessive salary increases, specific restrictions apply to increases granted on top of these mandatory increases.

There is no automatic salary indexation in the Netherlands. The Dutch legislator leaves it to the sectors and their trade unions to negotiate about salary increases. Trade unions can agree in a collective bargaining agreement how they manage to deal with inflation. Therefore, an automatic salary indexation may be agreed in the collective bargaining agreement of a specific sector.

Wages, salaries, and social benefits (including the social minimum wage) are indexed to changes in the cost of living.

When the consumer price index increases by 2.5% during the previous six months, salaries are in principle adjusted by the same proportion. On an exceptional basis, the Luxembourg government might decide that a triggered index will be delayed. The consumer price index and its impact on the wage sliding scale are published monthly by the National Institute for Statistics and Economic Studies (STATEC).

If an index is triggered, all wages and salaries will automatically increase by 2.5%.