Belgium: The Wage Indexation Cap on Wages Above 4000 EUR Per Month

A legislative proposal of 23 February 2026 introduces the so-called wage indexation cap (in Dutch also called the “centenindex”), a different approach to the existing indexation system.

The measure will apply to both the private and public sectors (and this moderation will also affect the civil servants) and provides for an adjusted wage indexation mechanism in two phases: a first intervention as from June 2026 and a second as from January 2028. The mechanism will only end when the moderating effect has been reached.

In essence, via the proposed mechanism, an indexation mechanism would only produce effects up to 2% of a “reference salary” (referteloon), capped at EUR 4,000 (threshold for the first moderation period).

 

How the indexation moderation works in practice in 2026 (the “two-step” effect)

Under the draft act, salaries up to 4,000 EUR gross per month would continue to be indexed according to the applicable sectoral mechanism.

For the portion of salary exceeding 4,000 EUR, however, indexation would be restricted.

The mechanism is best understood as a two-step approach when the applicable (cumulative) indexation exceeds 2%:

Step 1 (limited effect): indexation is applied up to 2% on a base that is capped at EUR 4,000 (the “reference salary” is capped for this step). 1.1

Step 2 (excess above 2%): the portion of indexation above 2% (i.e., the cumulative index percentage minus 2%) is then applied to the full reference salary. 1.3

A practical example  is that if the applicable indexation would be 3%, the first 2% is treated under Step 1 and the additional 1% under Step 2, leading to a lower total increase than full indexation on the entire salary.

Important nuance: this is not simply “a 2% cap on the part of salary above EUR 4,000”. The statutory drafting operates via the “2% effect” on a reference salary capped at EUR 4,000 (Step 1), plus the “above 2%” remainder applied more broadly (Step 2).

 

The reference salary

The moderation is linked to a statutory concept of “reference salary”, defined as the indexed fixed monthly base salary at full-time level.

The reference salary is the fixed monthly baremic salary, or (where there is no baremic scale, or where it is higher) the fixed monthly contractual base salary (each time at full-time level). The calculation is based solely on the full-time fixed base salary. Extra-legal benefits (such as bonuses, benefits in kind, or variable remuneration) will not be taken into account.

For part-time employment, calculations are made using a “performance fraction” (prestatiebreuk).

If pay is expressed as an hourly or daily wage, it is converted to a monthly salary using the statutory conversion methods. The explanatory note also indicates that the assessment is made per employment.

 

An illustrative example:

If the applicable indexation rate amounts to 3% and an employee earns a gross monthly salary of  5,000 EUR:

• Under the current system, 3% would be applied to the full 5,000 EUR = an increase of  150 EUR
• Under the proposed wage indexation cap:
  • 2% will be applied to  4,000 EUR = 80 EUR;
  • 1% (i.e. 3% – 2%) will be applied to the full EUR 5,000 = 50 EUR.
  • This leads to a total increase of 130 EUR.

The result is a lower overall wage increase compared to the traditional system.

 

Different forms of indexation according to the sector

It should be noted that Belgium does not have a single uniform indexation system. Each joint committee applies its own timing and formula. The practical impact of the measure may therefore vary depending on the sector concerned. E.g. for the largest sector, Joint Committee no. 200, the next indexation will only take place in January 2027.

The indexation cap will apply until the reduction to 2% has been applied. So in case the first indexation is less than 2%, the following indexation will also be capped.

An example:

An employee earns 10,000 EUR per month. A sector provides an indexation of 1% in July 2026 and an indexation of 1,5% in September 2026.

In July, the first 4,000 EUR will be indexed with 1% (40 EUR) until 10,040 EUR. The part above 4,000 EUR will not be indexed because the 2% has not yet been reached.

In September 2026:

• Again, the first 4,000 EUR will be indexed with 1% (40 EUR). Only with 1% because with this, the 2% is reached.
• Now the full salary of 10,040 EUR will be indexed with 0,5% (i.e. 2,5 – 2%) = 50.20 EUR
• Total indexation increase of 90.20 EUR

So, the two capped indexations lead to an increase of 130.20 EUR. Without the cap, this would have been 100 EUR in July and 151.5 EUR in September, leading to a total increase of 251.5 EUR.

 

Duration and end point

The draft act does not only set calendar dates; it also ties the end of each moderation period to the point at which the “moderation effect” is deemed achieved.

The first moderation period starts on 1 June 2026 and ends on the date on which the “moderation effect” is achieved for all salaries subject to an indexation mechanism, to be determined by Royal Decree (deliberated in the Council of Ministers).

The second moderation period is foreseen to start on 1 January 2028, but if the moderation effect is not yet achieved for all salaries by that date, the start date may be replaced by a later date set by Royal Decree (deliberated in the Council of Ministers).

The second period similarly ends on the date the moderation effect is achieved for all relevant salaries (Royal Decree).

 

Special Wage Moderation Contribution

Because of the restricted indexation, employers would pay slightly lower wage increases. Part of these savings would, however, be redirected to the State via a special wage moderation contribution. This contribution is due by private sector employers, but also certain explicitly named public sector employers (public sector companies) will need to pay this.

Legally, this contribution is set at 50% of the “proceeds of the wage moderation”.

Importantly, the “proceeds” are not limited to the gross wage difference. They are defined (per employee) as the difference between:
(i) the salary that would have been payable without the moderation measure plus the corresponding global employer social security contribution, and
(ii) the moderated salary plus the corresponding global employer social security contribution.

The “global employer contribution” is defined broadly and includes the statutory employer social security contribution and the existing wage moderation contribution.

In practice, this means the special contribution is economically linked to the employer charges that would have been due on the foregone indexation-driven wage increase, but it is legally framed as 50% of the total statutory “proceeds” (wage + employer charges) rather than as a standalone percentage of the wage difference.

Employer organisations have expressed strong reservations regarding this aspect of the proposal.

What should employers do?

• Identify impacted populations: map employees with a monthly fixed base salary (full-time equivalent) at or above the threshold.
• Model cost impact: (i) reduced indexation effect under the two-step mechanism and (ii) the special wage moderation contribution (budgeting should follow the statutory definition and formula).
• Check payroll configuration: ensure correct handling of part-time fractions and hourly/daily conversions in line with the “reference salary” approach.
• Monitor the legislative process: especially the confirmation of timing, Royal Decree implementation details, and the final scope (including any sector-specific practicalities due to differing indexation systems).

Source: text legislative proposal