Corona impact for employers in Belgium social and labor law updates

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EY Belgium Tax

23 Mar 2020
Subject Tax alert
Categories Covid-19
Jurisdictions Belgium

The COVID-19 containment measures introduced by the Belgian National Security Council on 17th March 2020, do have direct and far-reaching implications for employers in Belgium.

Companies are obliged to organize telework for every function where this is possible. For the cases where telework is not possible, social distancing on the workfloor is to be observed meticulously. Companies who are unable to guarantee the safety of their employees, are obliged to close operations.

Until further notice, these measures will remain in force until 5 April.

Whichever of the above situations is applicable, companies will need to take measures in relation to the workforce to address this disruption. In this alert from People Advisory Services, we list the tools available to take such measures.

Work from home

As from Wednesday 18th March, homeworking has become mandatory at all “non-essential companies”, regardless size, and such for all functions possible. This obligation has been laid down in a ministerial decree of the same date.

  • Home-work policy

    At companies where telework exists under normal circumstance, the existing arrangements can continue to be applied. Where existing policies would restrict telework to e.g. one day per week, deviation from the existing policy can be done without further need for action, the ministerial decree being a higher source of law than company policy or individual agreements.

    Where telework is not allowed under normal circumstances, introducing the full policy or agreement which normally is required, is practically unworkable. Taking into account good governance principles, a clear communication to the affected employees with the restrictions and expectations during this period of compulsory telework, stays recommendable.

    It is also recommendable to generally review your existing company HR policies and the standing working regulations, to communicate temporary deviations from normal practice and instructions.

  • Taxes: costs proper to the employer

    Under impulse of the need to organize telework, the Belgian ruling commission introduced a fast track procedure to obtain a ruling to address employee needs during the COVID-19 crisis.

    Also, employers are allowed to grant their employees the following facilities:

    • The granting of a net cost allowance up to 126 EUR per month, aimed at covering the extra costs to be borne by the employees in order to work from home;
    • Providing IT material to the employees, or;
    • Intervention in the costs of the employees for private IT material and private internet-connections.
  • Labor accident insurance

    A teleworker is covered by the labor accident insurance to the extent the accident happens during and as a result of the execution of the employment agreement. Technically, a document (company policy or agreement) needs to be in place that clarifies the place and time of the telework. In cases where such document does not exist, coverage of the labor accident insurance remains guaranteed, to the extent that a possible victim of an accident provides evidence the accident occurred during and as a result of the execution of the employment agreement.

Intra-company measures: social distancing

Companies that cannot introduce telework, are obliged to observe social distancing. Apart from general staff guidelines around social interaction, companies may want to consider other options to make social distancing workable. Without pretending to be exhaustive, here below we touch upon a few possible scenarios and the legal points of attention.

  • Change of workplace within the company

    Businesses may want to distribute employees to other company locations, as to spread concentrations of staff. Do bear in mind that in case the employee does not explicitly or implicitly agrees to this, it is important to clearly communicate that the change in the work location must be temporary and it should be clear they are necessary for safeguarding the workers’ health. Involvement of the occupational physician is highly recommended.

    It is important to prevent the employee from invoking the termination of the employment contract due to a unilateral change in the essential terms and conditions of the employment.

  • Alternative work

    The function of the employee is also an essential condition of the employment contract and can therefore not be changed unilaterally. A unilateral change can be considered as the termination of the contract, as a result of which a severance payment will be due.

    In view of this very special circumstance however, the employer’s request to carry out another function (temporarily and only to the necessary extent), cannot be considered as an intention to terminate the employment agreement. In this way, technical workman can carry out administrative work from home in this time of need.

  • Flexibility in planning and timetables

    For companies where telework is not an option, a number of planning options exist to decrease the number of employees that are working at company premises.

    • Paid time off:
      • Vacation: employees can of course be incited to take holidays to bridge part of the crisis period. Do take into account that statutory vacation can only be taken in mutual agreement, and employees can thus not be forced to take up vacation. Extralegal vacation granted under company policy can of course be made compulsory
      • Garden leave: if economically feasible, companies can allow their staff to stop performing their duties. As paying the salary is one of the obligations of the employer, forcing staff to stay at home unpaid is legally however not possible, so salary payments will need to continue
      • Overtime: in principle, it is not obligatory to have an agreement about when compensation rest due to overtime must be taken. It is of course advisable to determine by mutual agreement when the rest will be taken. Be sure to check the labor regulations, because it is possible that they contain rules on the granting of catch-up rest.
    • Part time workers: For employees who work part-time with a variable work schedule, you can easily decide when he works more or less hours. It must be borne in mind however that the working time must be respected over reference period. Additionally, employers can decide to temporarily downsize the employment of full time employees to a part-time occupation, provided the conditions for temporary unemployment benefits are met (see below).
    • Small flexibility: Companies that have introduced ‘small flexibility’, can have employees work peak schedules when it’s busy or off-peak schedules when there is less work. This system is strictly regulated and should be laid down in the labor regulations, so cannot be introduced only to face the current crisis. Those businesses that do have a small flexibility scheme in place however, could of course switch to a off-peak schedule, as there is less work due to the coronavirus.

Company closure

Employers who need to close down, either because they are active in the sectors for which the government ordered closure, or because they cannot guarantee social distancing are no longer bound to the obligation to pay the wages of their absent employees.

Instead, in certain circumstances they may apply for temporary unemployment benefits for their staff.

  • Force majeure

    Mandatory closure

    Force majeure is a sudden and unforeseeable event, beyond the will of the employer and the employees, which temporarily makes it completely impossible to perform the employment contract as foreseen in Article 26 of the Law of 3 July 1978 on employment contract. The Belgian government officially recognizes the coronavirus as a reason for force majeure. This recognition is provisionally accepted until 30 June 2020. There must however be a direct link between the coronavirus and the impossibility to work for the force majeure to be invoked.

    Companies that are completely closed as a result of the aforementioned measures may apply for temporary unemployment benefits on grounds of force majeure.

    For those cases where only partial closure is imposed or for those wo are still able to offer limited services, temporary unemployment benefits may be requested for those days on which the workers cannot be employed.

    Belgian companies affected because they are dependent on suppliers from an affected region, can also benefit from the system. Vice versa, benefits can also be claimed by workers from suppliers of companies affected by an imposed closure.

    Voluntary closure

    It is important to note that companies who are voluntarily closing down as a precautionary measure to prevent their employees from becoming infected by the virus, cannot apply for temporary unemployment benefits if other options remained open.

    When the worker(s) are however quarantined preventively by the doctor, or when the company doctor decides that is it no longer possible to work in safe conditions, temporary employment for reasons of force majeure can be invoked for these employees.

  • Temporary unemployment for economic reasons

    Temporary unemployment for economic reasons exists if there is decrease in customers, orders, turnover or production as a result of which it is not possible to increase to normal level of employment. Although economic difficulties, like force majeure, can be caused by a sudden event beyond the control of employer and employee, the essential difference with force majeure is that employment is not completely impossible.

  • Benefits

    Temporary unemployment benefits

    In case of temporary unemployment due to force majeure, the employee is exempted from its waiting time. He does not have to prove a number of working days before he is entitled to benefits (as is normally the case).

    In normal circumstances, the employee receives 65% of his average capped salary (capped at €2.754,76 a month). Until 30 June 2020, this amount will be increased by the authorities to 70% of the average capped salary. A withholding tax of 26,75% will be deducted from this amount.

    On 20th March 2020, the government announced an extra increase of 150 EUR to the temporary unemployment benefit. Further details on this adaptation will follow in a separate EY PAS alert.

    How to claim the benefit?

    Under impulse of the corona-crisis, the newly formed cabinet Wilmes II has issued new simplified procedures on 20th March 2020. The exact details, formalities and requirements of the new corona-procedure will be subject of an EY PAS alert.

    Additional payment by the employer

    As indicated above, employees in temporary unemployment due to corona are entitled to receive an amount of 70% of the salary (capped at 2.754,76 EUR).

    For employer who need to close down due to force majeure, a complement to the unemployment benefits can be considered to be granted to the employees. Such a complement would be free of social security contributions, if granted with the intention to effectively alleviate the financial burden of the employees and is an additional payment by the company to the employer (rather than the requalification of payment always due).

    In order to meet the condition the additional payment is made with the intention to alleviate financial burden of employees, the amount should remain restricted. This means that the complement paid by the employer cannot exceed the 30% of the normal salary, nor should the total amount (unemployment allowance + additional employer’s payment) exceed the salary cap of 2.754,76 EUR.

    Finally, for employers who invoke temporary unemployment for economic reasons, the complement to the salary is disrecommended as this additional payment would be incompatible with the nature of the temporary unemployment.