The paycheck is a complicated and in many cases unstructured document that is hardly ever looked at by 7 out of 10 people. It doesn't help that the wage calculation in Belgium belongs to the top 3 most complex wage processes in Europe. Still, it's crucial to understand what's in your payslip. Below, we explain the main elements you'll find on your payslip and how you can interpret them.

Gross wage
The first thing you see on your payslip is your gross monthly wage, your wage before social security and tax deductions. This is the wage that you agreed upon with your employer and which is also reflected in your employment contract.

Social contributions to the NSSO (National Social Security Office)
The second point on your payslip are the contributions you pay for social security. These contributions amount to 13.07% for employees and are used to 1) provide payout to blue-collar and white-collar workers who do not work, and 2) for child support and health insurance.

Taxable wage
The amount that remains after the deduction of the social contributions to the NSSO is the taxable wage.

Withholding tax
Your pay slip logically continues with the withholding taxes. These are determined on the basis of a number of variables: for example, the amount of the wage, marital status and family situation. These variables have a direct influence on how much taxes you pay as an employee. So two employees with the same gross monthly salary on their payslip do not necessarily have the same net monthly salary.

Net Pay
The amount that remains on your paycheck after tax credits is your net pay.

Dimona stands for Déclaration Immédiate/Onmiddellijke Aangifte and is the electronic message that an employer uses to report when an employee starts working, leaves his job or works longer or shorter than planned. As an employer, you are obliged in both the private and the public sector to make this Dimona declaration as soon as one of these three things happens.

The Dimona declaration is also mandatory for all employees. Only for volunteers, persons working with a PWA-agreement and occasional employees working for provincial and local administrations you do not have to submit it. Also for certain trainees you do not have to declare Dimona.

‍

The cafeteria plan is one of the most flexible extralegal benefits on the market. Because employees can choose from a wide range of options - just like in a cafeteria - they can tailor their benefits to their individual needs. Last year's headline in De Tijd stated that the number of employees composing their salary via the cafeteria plan had increased by half. Yet, our survey shows that 84% of those surveyed have only just come into contact with the flexible wage package. That is a pity, because it creates a win-win situation.

On the one hand, the employee's freedom of choice is central to the cafeteria plan. They are encouraged to choose the fringe benefits that best suit their personal circumstances.

On the other hand, the introduction of a cafeteria plan concludes a modern wage policy for the employer, who can present him/herself as someone who is consciously aware of the real needs of his/her employees.

So how does the cafeteria plan work?

There are four parts to starting a cafeteria plan:

• The creation of a budget by the employer. Here, employer and employee agree to exchange part of the traditional salary package for (a mix of) fringe benefits.
• Determining the composition of the cafeteria plan. The employer chooses those fringe benefits that he/she wants to offer in the plan. Employees can then choose from these to optimize their pay package.
• The distribution of that budget by the employee. The employee decides which fringe benefits he/she wants in exchange for his/her normal salary package. Note: Only those fringe benefits offered by the employer can be chosen.
• Putting all this in legal order.

One of the rights that employees build up during their career is their holiday entitlement. Holiday pay is also part of this right. Both single holiday pay (the payment of the normal wage, also on the holiday days) and double holiday pay (an extra sum to pay for your holiday expenses)

For employees with a fixed salary, the single holiday pay is equal to the employee's regular net salary. The double holiday pay is calculated by multiplying the net monthly pay by 92%. Employees are in fact entitled to 4 weeks of leave, which can be reduced to 92% of a month.

A different calculation applies to employees with a variable salary. A reference period of 12 months is used for both single and double holiday pay. The single holiday pay amounts to 8% of the gross variable pay, the double holiday pay amounts to 7.67% of the gross variable pay.

For blue-collar workers, the single and double holiday pay are combined for the calculation. They receive 15.38% of their gross monthly salary at 108%.

When an employee earns 2,500 euros per month, both the employer and the employee pay a part for social contributions to the NSSO (National Social Security Office). The employer's social security contributions amount to approximately 25%. The social contributions for the employee are 13.07%. In addition, an employee pays taxes on the gross salary.

The difference between the total wage cost and the net wage quickly increases due to social and fiscal deductions, also when a raise is given: for the employer the wage cost is too high in relation to the net wage increase, for the employee the net wage is too low in relation to the gross wage increase.

It is from this approach that fringe benefits are an attractive alternative to a traditional salary. This can bring you the following benefits:

• Full tax and social security exemption
• A partial tax and social security exemption
• A reduced lump sum as a basis for calculating social security contributions and taxes

The cost of luncheon vouchers, for example, goes entirely to the employee: if you work with luncheon vouchers of EUR 7, the employee has EUR 140 extra per month. If you want to give them EUR 140 gross, then you as an employer pay a lot more and the employee gets less in the end.

Bicycle allowances of less than 0.24 euro per kilometre travelled are exempt from taxes and social security contributions. Is your bicycle allowance higher? Then only the part that exceeds EUR 0.24 is taxed. Company bicycles that are only used for the journey to and from work are also fully exempt from taxes.

The government consciously makes this fringe benefit fiscally attractive. Cycling employees are in fact fitter, which makes them more productive, less stressed and less sick.

Watch out: In 2020, the Constitutional Court annulled the mobility allowance regulation. It is no longer possible to offer this.

• When you give your employees a mobility budget they can distribute that sum of money themselves over different means of transport. This way, they can get to work more easily and in a more environmentally aware way. The mobility budget is perfect for combining means of transport when commuting to work, for example parking the company car on the edge of town and then continuing by bike.
• Until recently, you could also opt for the 'cash for car' system: the mobility allowance. Under certain conditions, employees could trade their company car for an amount of money.

A payroll provider is an organisation that carries out administrative tasks for approximately 90% of all Belgian companies. This mainly involves payroll administration, personnel management and the filing of social documents.

You can see them as your payroll partner that takes care of your payroll from A to Z. As HR-manager you only need to send the correct payroll information to your account manager: gross pay, leave, sick days, overtime, expenses, weekly schedule, time registration, etc.

1. The payroll provider pushes your payroll data you through the wage engine and calculates the wages of your employees.
2. The payroll provider draws up pay slips based on these pay calculations.
3. The payroll provider collects the contributions for the National Social Security Office (NSSO) and pays them.
4. The payroll provider collects and pays the withholding tax.
5. Net wages are paid, including compensation for overtime (overtime pay) and/or non-recurring wage components.
6. Holiday pay, end-of-year bonuses, severance payments and other supplements are also handled by the payroll provider.

Finally, the payroll provider is also responsible for the creation of documents with regard to the government, such as the Dimona: the immediate electronic declaration of recruitment and termination.

Sharing information with your teams about how and why certain positions are paid in that way is a good thing. The idea behind this is that transparency about the structure of your payroll promotes fairness, equality and flexibility within the process. It gives your employees the chance to provide feedback, which in turn allows you to optimize your payroll.

Do's

• Listen, negotiate and come to an agreement together
• Value employees as individuals and respond to their needs
• Create opportunities from an open-minded salary conversation

don'ts

• Do not make hasty, resolute decisions
• Do not lose sight of (the performance of) the team
• Avoid tensions and a stressful environment

‍

Employers can allow employees to work up to 120 voluntary overtime hoursto respond to peak periods. This overtime does not have to be paid in full.

With this type of overtime, employees are indeed entitled to their normal wages, plus the overtime bonus. However, they cannot recuperate them with catch-up rest or a payout of 150%. Moreover, the first 25 hours do not count towards the internal overtime limit.