A new benefit: The purchase power premium

The Belgian labour market is unique in the sense that most workers are covered by a system of automatic indexation of remuneration. Belgium also has legislation that restricts the increases of remuneration an employer can grant. The Act of 26 July 1996 enhancing employment and aimed at preventive safeguarding of the competitiveness (the Salary Moderation Act) starts from the principle that labour costs in Belgium should not increase faster than they do in the Netherlands, Germany and France to keep Belgium competitive. Increases in remuneration resulting from the indexation are disregarded under the Salary Moderation Act.

The combination of high inflation in 2022 and the fact the Netherlands, Germany and France do not have an equivalent of the automatic indexation in Belgium, meant that labour costs in Belgium increased far quicker compared to the neighbouring countries. For the 2023-2024 negotiation round, there was no margin at all for any increases of remuneration under the Salary Moderation Act.

Similar to the compromise that was reached in 2020 concerning the COVID-19 premium, a compromise was reached by introducing the purchase power premium. The basic idea is that no increases of remuneration are granted during 2023 or 2024 (other than the indexations), but a non-recurring purchase power premium can be granted in 2023 in companies that achieved good results in 2022. If all legal conditions are met, the purchase power premium is exempt from all taxes and normal social security contributions. A special employer social security contribution of 16.5% is due on a purchase power premium.

The purchase power premium can be maximum EUR500 in companies that managed to obtain “high profits” during 2022. It can even be maximum EUR750 in companies that managed to obtain “exceptionally high profits” during 2022. Both the notion of “high profits” and “exceptionally high profits” are not defined in the legislation itself, but should be defined in a collective bargaining agreement at the level of the joint committee or at company level. A purchasing power premium can only be granted on the basis of an agreement with the individual worker if a company has no trade union delegation or if the worker has a role for which it’s not common to sign collective bargaining agreements (for instance senior management).

It will depend on the precise wording of the collective bargaining agreement at the applicable joint committee whether or not workers are entitled to a purchasing power premium. In some joint committees, the auxiliary joint committee for white collar workers (joint committee n° 200), an agreement has already been reached. But negotiations are still pending in other joint committees. Most joint committees with an agreement agreed on amounts substantially lower than the maximum of respectively EUR500 and EUR750.

The fact a purchasing power premium is exempt from all taxes makes it an interesting benefit. Before starting negotiations to give a purchasing power premium, the precise wording of the collective bargaining agreement should be verified at the level of the joint committee. An individual employer and employee cannot deviate from a collective bargaining agreement made generally mandatory by Royal Decree, which is generally the case for collective bargaining agreements concerning benefits. An agreement with an individual worker on a purchase power premium exceeding what is foreseen at the level of the joint committee will only be possible if the collective bargaining agreement at the level of the joint committee does not prohibit a more favourable treatment of the workers.

Like meal vouchers and ecovouchers, the purchase premium takes the form of an electronic cheque. The word “premium” is a bit misleading, because it is not a cash bonus.

Another similarity with meal vouchers and ecovouchers is that the purchase power premium can only be used to buy goods that can be bought with meal vouchers (food) or ecovouchers.

The purchase power premium can be granted up to 31 December 2023 and is valid up to 31 December 2024.