Earlier this week, the long awaited Royal Decree setting the real wage norm for 2025-2026 at 0% has officially been published in the Belgian Official Gazette. The wage norm is the maximum margin for labour cost development and says how much the average wage costs may rise during a two-year period. As the wage margin has been set at 0%, Belgian employers are bound hand and foot. Indeed, with a general exception for mandatory indexation and scale increases, the total labour cost on a company level may not increase over the 2 years.
Freedom of negotiation
In principle, employers and employees are free to negotiate the salary that will be granted in an employment relationship. Indeed, salary is an essential element of an employment contract and is in principle freely negotiable (except from the legally mandatory minimum boundaries). Even during the execution of an employment contract, it is perfectly possible to agree on a higher salary based on performance review on an individual level.
Wage cost handicap & wage norm
Nevertheless, the freedom of negotiation is limited by the so-called ‘wage norm’. The wage norm is the maximum margin for labour cost development and, in other words, says how much the average wage costs may rise during a two-year period. The wage standard is a legally provided mechanism that aims to eliminate the wage cost handicap – being the difference between wage cost development in Belgium on the one hand and in the Netherlands, France and Germany on the other – and thus maintain Belgium’s competitiveness.
The rationale behind the wage norm stems from the fact that Belgium is a small state with an open economy which is dependent on the exportations to neighboring countries. Should salaries increase in Belgium more rapidly than the ones of the neighboring countries, the Belgium market competitiveness would decrease, which would in the long run impact the employment market.
For the current period of two years (2025-2026), the social partners couldn’t reach an agreement on the increase rate, as a result of which the Belgian government has now set the maximum margin for salary increases at 0%.
Consequently, any salary raise exceeding the wage norm would be considered in non compliance with the latter. Put differently, employers employing staff in Belgium are in principle restricted and cannot increase the salary (above the index) based on performance if such increase would not comply with the wage norm. Individual raises remain, however, possible, provided that the total labour cost on a company level remains the same.
No Belgian concepts without exceptions
It would not be a Belgian concept, if there would not be a number of exceptions to the wage norm. This includes the indexations, scale increases, a growth of headcount,…. Furthermore some elements are excluded from the calculation of the wage cost development (such as profit-sharing as defined by law, payouts in respect to employee participation, contributions to pension schemes under certain conditions, the CLA 90 bonus…).
Lastly, it is important to be aware of the fact that, within a context of global mobility, the wage norm can only be imposed in respect to activities performed on the Belgian territory. Moreover, when foreign employers employ employees onto Belgian territory, it is unclear how, in practice, the wage cost development can be verified, in absence of Belgian statutory accounts being filed.
Vialto Partners Belgium is of course happy to help determine how, in these “war-for-talent” times, you can remain competitive within the legal boundaries!
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Martijn De Meulemeester
Director
Nadja De Bie
Senior Manager
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