New rules on indexation? The “index in money” explained

The “index in money”: What is it?

The index in money would mean that in 2026 and 2028 the full indexation of wages will be capped once a gross salary of 4.000 EUR is reached. Wages above 4.000 EUR gross will no longer be fully indexed, but only for a maximum equal to the difference between the actual index figure (above 2%) and that 2% (index threshold amount).

Employers must still apply salary indexation for salaries above 4.000 EUR gross, but only for half of the normal additional amount. This half does not go to employees; instead, it is transferred to the government. The remaining half does not need to be paid out by employers and serves as a cost-saving measure on salary expenses for employers.

We illustrate this with an example where the indexation is 3%, based on a salary of 5.000 EUR (gross amounts):

In an earlier version of the proposal, it was stated that for gross salaries above 4.000 EUR, no indexation would take place at all. Because this could lead to unequal treatment between f.e. part-time and full-time employees, the government would now abandon this scenario and opt for applying a capped indexation percentage instead.

Capping indexation: not uncommon at sector level

In some joint committees (JC), such as in JC 306, it was determined that – unlike in JC 200 where actual salaries are indexed – only the salary scales would be indexed. These salary scales were sometimes lower in reality than the salaries agreed at company level or the actual salaries paid. This also meant that there was already a real index percentage that could be lower than the applicable index percentage.

Implementation and implications

What is the date of implementation?

For budgetary reasons, the government aims to have the measure take effect as early as 2026, although there is still uncertainty about the exact date of entry into force. Knowing that in the largest JC in the country, JC 200, indexation takes place in January 2026, this means time is ticking for the government to implement this.

If, by the time indexation occurs in JC 200 in January 2026, there is still no legislative initiative, employers in JC 200 will still be obliged, based on the sectoral collective labor agreement (CLA), to apply indexation to the real, non-capped wages at the full indexation percentage instead of a limited percentage. Once employees have received these indexations at the full percentage, employers will not be able to reclaim the amounts already paid. This falls under employees’ property rights.

What if the index in money is implemented after January 2026?

A difference in treatment threatens to arise between employees who may still receive a full indexation in January 2026 if the new legislation is not implemented in time, and employees whose salary is indexed in a later month of 2026, when the legislation has already been implemented. In addition, there is also a risk of a difference in treatment between sectors where indexation occurs only once a year and sectors where indexation occur several times a year, such as JC 124 (construction sector).  

Is it allowed to withhold the salary difference if the new rules are not implemented on time?

Employers will have to apply the full indexation rate if the index in money has not yet been implemented. Employers will not be allowed to withhold the difference between the wage after indexation at the real indexation percentage and the capped indexation percentage, as this would violate the Wage Protection ActSuch withholding is therefore legally prohibited, making it impossible for employers to do so.

Which calculation basis is used to determine the amount of 4.000 EUR gross?

There is mention of an amount of 4.000 EUR gross, but it is unclear whether this will be based on the gross basic monthly salary, or whether all other salary components will also be taken into account to determine the threshold amount of 4.000 EUR gross.

What will be the final amount that employers must transfer to the government?

At this moment, it is unclear whether the employer will have to pay social security contributions on the 30 EUR from our example that must be transferred to the government. To be considered salary according to the social security authority (RSZ/ONSS), two conditions must be met:

• It is granted to the employee as compensation for work; and
• The employee is entitled to it under the employment relationship at the expense of the employer.

On the one hand, the half of the amount (10 EUR in our example) that the employer must transfer to the government does not meet these conditions, so reasonably no social security contributions should be paid on it. On the other hand, the employer does not have to pay out the other part (10 EUR) that would normally belong to the employee, which also results in savings for employers: on salary that is not owed, no social security contributions need to be paid either. This brings the total saving for the employer to 12,8 EUR.

In any case, the government will lose revenue at the level of social security contributions.

What if the indexation scheme at sector level appears to be more favorable?

According to the hierarchy of legal norms, a law that includes the rules on the index in money takes precedence over sectoral indexation-CLA’s. This would mean that the sectoral CLAs would no longer apply because the law intervenes in this matter.

The method of indexation can also be regarded as an acquired right, which cannot simply be altered. The question is how the legislator will handle this.

Will this have an impact on other salary benefits?

Yes, this will affect holiday pay and, among other things, the year-end bonus for employees with a gross salary above 4.000 EUR, as these are calculated based on the base salary. These amounts will be lower because the base salary will increase less than under a regular indexation.

In supplementary pension plans that use the statutory salary ceiling for calculating contributions (DC/CB) or benefits (DB), the reduced indexation will have an even greater impact. The underlying idea of such plans is that employees earning above the statutory pension ceiling do not accrue statutory pension on the excess portion, and the supplementary pension compensates for this. The lower indexation means that contributions or benefits will rise more slowly than under regular wage indexation. This applies to every pension plan, but the effect is accelerated in plans that use a step-rate formula. Employers could mitigate this by notionally aligning the pensionable salary with the amount under regular indexation, but they are certainly not obliged to do so.

How will the payment of the employer’s share to the legislator be arranged?

At this moment, there are no details available on this. It is likely that this will be done through the special contribution to social security.

Conclusion

On the one hand, the index in money will have a positive effect on the high salary costs faced by Belgian employers. On the other hand, there are still many uncertainties about the practical implementation of the index and how employers will have to deal with it in 2026 and 2028 onwards. The exact details of this measure still depend on the publication of the legal framework. We will update this article as soon as the texts are available.

Do not hesitate to contact someone from the Employment & Benefits team—we are happy to assist you!