Belgium: Expansion of the Flexi-Job System to 12 New Sectors with Stricter Rules

On 9 October 2023, the Federal Government concluded an agreement regarding the budget. The big trophy for the liberal parties within the government is the expansion of the flexi-job system. However, to concede to the worries of the socialist and green parties (and the trade unions), the system is also made stricter.

Flexi-jobs were initially created in 2015 for the hospitality sector (hotels, restaurants, and bars) to compensate for the introduction of stricter control mechanisms for VAT. In 2018, the system was expanded to 10 more sectors, including supermarkets, retail, bakeries, and hair and beauty salons. Now, the system is set to expand its reach to 12 additional sectors starting 1 January 2024.

In principle, flexi-jobs are smaller jobs that allow employees who are already working full-time or at least 4/5 elsewhere to earn additional income in a tax-friendly way, as the employee would not pay income tax nor social security contributions (only the employer had to pay social contributions of 25%) for their flexi-jobs.

The new sectors are:

– Education

– Childcare

– Public sports and culture sector

– Agriculture and horticulture

– Buses and coaches

– Automotive sector

– Food industry

– Funeral industry

– Moving industry

– Driving schools

– Event sector

– Real estate sector

In public sectors, such as education and childcare, it is up to the regions to decide whether they want to activate this system (the Flemish government already mentioned that it wishes to use it). For the private sectors that aren’t included in the list, an opt-in and opt-out system has been established. If both trade unions and employers in a specific sector reach a consensus, they can either introduce or cease the flexi-job system via the conclusion of a collective bargaining agreement, without political interference. However, the chances of such an expansion are rather slim, as the trade unions are, in general, against the system.

Further, starting in 2024, flexi-jobbers will be entitled to the applicable scale wage in the sector where they are employed, as opposed to the minimum wage before. There is an exception for the hospitality industry, where the minimum wage remains applicable and not the scale wage. Currently, the minimum wage for a flexi-jobber in this industry is 11.81 EUR per hour. However, the social partners can demand a higher wage (if they conclude a CBA).

To be eligible for a flexi-job, the employee must be retired or still work at least 4/5th of a full-time job. This is already the case. On top of that, starting in 2024, if a worker transitions from full-time to 4/5th employment, a waiting period of six months will be mandatory before he/she can start a flexi-job.

Additionally, it is no longer allowed to be both an employee and a flexi-jobber at affiliated businesses. This means that an employer cannot employ his employees for a lower cost under the flexi-job system in another business that he owns. The exact definition of “affiliated” will need to be clarified in the legal texts.

As said, flexi-jobbers enjoy the advantage of not having to pay taxes or social contributions on their earnings. Furthermore, there is no risk for flexi-jobbers to fall into a higher tax bracket because income derived from flexi-jobs does not need to be reported in their tax return, on the condition that their annual income remains below 12,000.00 EUR (or 7,190.00 EUR for early retirees). If this threshold is reached, income taxes will be imposed. In addition, starting in 2024, employers must pay an employer social security contribution on the employee’s salary of 28% instead of 25%. This slight increase is explained by the criticism of the trade unions and socialist parties that the system is undermining the social security system (as less social security contributions are paid). This means that flexi-jobs become more expensive for the sectors where the system is already applied.

The government will need to insert these new rules into a legislative proposal that must be approved by parliament before the end of the year. It remains to be seen whether the deadline of 1 January 2024 can be maintained (as in principle, the proposal will require the advice of the Council of State and the National Labour Council).