Attention – (Double) vacation pay is just around the corner

Employees looking forward to receiving an extra penny for vacation or for other purposes are in luck: the double vacation pay is just around the corner.

Consequently, we hereby briefly recap the main principles for calculating and paying the vacation pay.
 

1. Principles

The legal vacation days in Belgium are paid vacation days. For white-collar workers, the employer is responsible for the calculation and payment of the vacation pay.

The amounts are included in the payroll and, where relevant, subject to Belgian social security contributions (employee and/or employer) and withholding tax.

In Belgium, vacation pay for white-collar workers can be divided in:

• Single vacation pay (on fixed salary)
  
  The single vacation pay is the continued payment of the regular salary during the legal vacation days. It is paid in every month during which the employee takes a legal vacation day.
  
  The single vacation pay basically guarantees that the employee will receive the same salary during all 12 months of the year, despite the fact that he is not working a full month during months he takes a number of legal vacation days.
  
  
• Double vacation pay (on fixed salary)
  
  The double vacation pay (sort of a “vacation bonus”) is equal to 92% of the monthly gross remuneration of the employee. It is paid in the month during which the employee is considered to take his main vacation (although in Belgium, from an administrative point of view, generally paid in May/June).
   

Please note that the vacation pay is not only due on regular fixed salary (as explained above), but also on variable salary elements. The calculation and pay-out of vacation pay due on variable salary elements is generally done at the same time with the double vacation pay on fixed salary. 
 

2. European vacation days – double vacation pay

Based on European regulations, each employee is entitled to 4 weeks of legal vacation per year as from the first year of employment in Belgium.

Due to the specific regulations on the build-up of legal vacation days in Belgium (i.e. entitlement to legal vacation days during year X based on professional activities performed in previous year X-1), some employees will not be entitled to these 4 weeks.

Therefore, the specific system of the European vacation days is available to these employees. In application of the European vacation system, the employee will be able to accrue one week of paid vacation days per 3 months of activities during the same year (without the need to have performed activities in the year X-1).

When taking the European vacation days, the employee will continue to receive his regular salary from his employer.

The payment of the regular salary during these vacation days should however be considered as an advanced payment of the double vacation pay to which the employee will be entitled.

This implies that the amount representing the regular salary during the European vacation days taken in 2023 should be deducted from the double vacation pay in 2024. 
 

3. Exit vacation pay - settlement

When an employee leaves a job and takes up a new one, both the former and the new employer will face several legal requirements regarding the entitlement to vacation days and the vacation pay to be granted for these days.

In the event the employee has not been in service during the entire vacation service year (X-1), he will only be entitled to a pro rata amount of the vacation pay in the vacation year (X).

As mentioned in our previous alert, the settlement of the single exit vacation pay received from a previous employer has changed significantly as of the beginning of this year.

However, the settlement of the double exit vacation pay remained unchanged. Therefore, employers should remember to settle the double exit vacation pay for recently hired employees when paying the (pro rata) double vacation pay in the month of May/June.
 

4. Key takeaways

Given the above, the following actions should be kept in mind in the following months:

• Calculation and pay-out of the (pro rata) double vacation pay;

• Check whether employees have taken any European vacation days in the previous year and deduct the necessary amounts from the double vacation pay;

• Check requirement of settling the double exit vacation pay for new hires. 
   

Our payroll professionals can help you optimize the (global) payroll and reduce compliance risk so you meet all payroll requirements today and in the future. EY Payroll Operate answers a clear demand in the market: a global payroll solution that provides a single framework that can be scaled by you as your business needs evolve. EY professionals operate clients’ payroll as a managed service from data collection, preparation, execution right up to statutory reporting, payment preparation and employee communication.

In case of any questions with regard to your specific company or a specific employee, please do not hesitate to reach out to us: payrolloperate@be.ey.com.