Belgian businesses struggle with complex new wage indexation system

Belgian businesses are grappling with the intricate 'centenindex' wage adjustment system, which they deem too complex for rapid implementation. Pieter Timmermans of the Belgian Employers' Federation (VBO) described it as the "most complex legislation I have ever seen," highlighting the impossibility of applying it so quickly.

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It is the most complex legislation that I have ever seen. It is impossible to apply it so quickly.

The law was passed on Friday, May 29, and took effect on June 1, leaving companies with little time to adapt. The VBO estimates that wage indexation for June is impossible for 52,000 employees, creating significant legal uncertainty.

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Friday morning, May 29, that law was voted on, and on Monday, June 1, the law was in the official gazette with immediate effect.

The 'centenindex' system allows wages to rise with the cost of living but imposes a cap. For gross monthly wages, the ceiling is 4,000 euros, and for part-time wages and benefits like pensions, it's 2,000 euros gross. Any indexation above these amounts is subject to a deduction. For example, with a 2% indexation on a 5,000 euro gross salary, the increase applies only to the first 4,000 euros. If the indexation is 6%, the full 6% applies to 4,000 euros, but only 4% applies to the remaining 1,000 euros.

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For 52,000 employees, wages for June would be indexed, but that is not possible. This brings great legal uncertainty.

Businesses are urging the National Social Security Office and government agencies to swiftly address their pressing questions. They hope for clear guidance to ensure the indexation is applied correctly starting in July.

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We call on the National Social Security Office and the government agencies to quickly answer all pressing questions from the business world, so that indexing can be applied correctly from July onwards.