Belgium has many peculiarities like the important difference between blue collar workers and white collar workers. This is not only visible in a number of differences in the reciprocal rights and obligations of the employer and the employee. You will also notice this in the structure of separate joint industrial committees for blue collar workers and white collar workers employed within the same industry. Blue collar workers and white collar workers have their own separate unions. But beyond this there are many other types of employees active in Belgium.
Blue collar Workers
A blue collar worker refers to the manual labour the worker performs. The name comes from the early 20th century when these blue-workers wore resistant fabrics of darker colors (e.g. blue denim or blue uniforms). Examples of blue collar employees include a mechanic, a construction worker, a machine operator, a truck driver and a plumber.
Characteristic of a blue collar worker is that in principle, they are hourly paid, The salary is paid twice per month. And the holiday allowance comes from a social security reserve fund called Vacation Fund.
In the past, blue collar workers tended to earn less than their white collar workers counterparts. Today, that is not necessarily the case anymore.
White collar Workers
A white collar worker stereotypical refers to a worker performing administrative work at a desk. It is used for professions that used to work in a costume with a white collar worker shirt. Typical jobs are an accountant, a banker, an executive, an insurance broker, an engineer and a secretary.
The characteristics of a white collar worker is that he has a fixed monthly salary that is paid once per month. The employer pays the holiday allowance.
In 1992, for the first time, there were more white collar workers than blue collar workers, and since then the number has grown steadily in Belgium.
A sales representative is a white collar worker who spends the majority of his time visiting new or existing clients in person in order to negotiate new business. The main distinction with a “regular white collar worker” therefore lies with the specific task of the sales representative, i.e. the visiting (being on the road) of new/existing clients and negotiating new business. This activity does not have to be exclusive, but it should be constant and substantial.
Please note that specific rules apply to sales representatives and specific provisions should therefore be included in the employment contract (regarding working time, non-compete clause etc…). A lawyer or a legal advisor of your payroll provider will assist you with drafting the employment contract.
A local employee is an employee subject to Belgian social security and Belgian withholding tax. The nationality of the person is not important. It can be a Belgian national, or a person with other nationality under condition he is allowed to work in Belgium.
Citizens from the following European countries may go and work in Belgium without a work permit: Bulgaria, Croatia, Cyprus, Denmark, Germany, Estonia, Finland, France, Greece, Hungary, Ireland, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Austria, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Czech Republic, United Kingdom, Sweden and Switzerland.
Foreign nationals who are not nationals of the European Economic Area (EEA) and Switzerland and who want to pursue salaried employment in Belgium, must apply for a work permit or a single permit in advance. Some payroll providers can assist you with single permit applications. Foreign workers who have the intention to exercise a self-employed professional activity, must obtain a professional card. You can contact Enterprise Counter Eunomia to handle the application.
There exist a lot of social security reduction applicable for local employees subject to Belgian social security. Some of them, like the first employee reduction for new employers are quite generous as explained in another article “Reduced employer cost first employee 2022, jovial reduction”.
A student worker has to be at least 16 years old (15 years if he completed the first two years of secondary school) and has to follow a full-time training curriculum. Student worker is exempt from normal social security contributions. It is subject to a much lower solidarity contribution, provided that certain conditions are met.
As a general rule, the same Belgian labour law rules are applicable to students as to a normal employee. For example, students also have to receive a copy of the working regulations when they start their employment. And an employer has to pay at least the minimum salary in the sector, as applicable to other blue collar workers or white collar workers, unless the sector itself provides specific minimum salaries for students.
Posted workers (also called seconded employees) can be blue collar workers or white collar workers. It is defined as a person who, for a limited period of time, performs work in country other than the country in which the worker usually performs the work. He remains subject to the social security system of the home country and is exempt from Belgian social security.
At present, Belgium has concluded bilateral agreements on social security with 25 countries: Albania, Algeria, Argentina, Australia, Bosnia-Herzegovina, Canada (also a separate agreement with Québec), Brazil, Chile, DR Congo, the Philippines, India, Israel, Japan , Kosovo, FYR Macedonia, Moldova, Morocco, San Marino, Montenegro, Serbia, Tunisia, Turkey, Uruguay, the United States and South Korea.
On the other hand employers assigning foreign employees to Belgium must notify the Belgian National Social Security Office (NSSO) about the assignment before the employee arrives in Belgium. This requirement is called a Limosa declaration. A specialized payroll provider like Pro-Pay can take care of the declaration on behalf of the employer.
All taxable remuneration paid by the foreign employer to the employee will need to be taxed through a Belgian payroll as it becomes subject to withholding taxes. Basically in case a posted worker spends more than 183 days in Belgium, then this foreign employee will become a tax resident in Belgium.
The term Frontier Worker is used when a worker who is employed in the frontier zone of an EU Member State but who returns each day or at least once a week to the frontier zone of a neighboring country in which he reside and of which he is national.
Split Payroll Employees
Split payroll is a method of compensation to an employee working in multiple countries. Part of the employee’s salary is made in the home country. At the same time, a second payroll is run for the employee in the host country where work is being performed.
According to European regulations, the employee will be subject to social security in one single country. From tax point of view, the employee will become taxable in both countries. As a result, it is required to run a payroll in the home country and in the host country.
Belgium is a small country with 5 neighboring countries and has a lot of split payroll employees, and has signed a number of double taxation treaties that allow for employees to avoid being taxed twice on their income.
Belgium offers an attractive taxation status for expats (or expatriate workers) by minimizing salary costs for expatriate executives. In most cases, an expat is doing an administrative job, and it is rare that an expat is doing blue collar worker’s job.
The tax regime is applicable to foreign employees working for employers that are part of international groups. In order to be eligible for the special tax status for non-resident executives, the expat and his employer must both meet certain conditions. This status must be requested, as it is not granted automatically.
Only a tax advisor can assist with the application of the special tax status for non-resident executives, and prepare tax computations. Expat payroll calculations will be done by a payroll provider based upon the calculations of the tax advisor.
In Belgium, directors of a company can never be considered as employees. Even if they are performing this function part-time and they are not compensated, they are self-employed persons under an irrefutable presumption.
Directors have to affiliate to a social insurance fund like Avixi, prior to starting their director’s function.