A new program law introducing changes to automatic wage indexation from 1 June 2026 was published in the Belgian official state journal. This newsflash explains the wage moderation mechanism and its implications, and outlines a couple of attention points for HR.
Background
Parliament definitively approved the Programme Law, which introduces the widely debated "cents index." The social partners within the Group of Ten unanimously proposed a technically simpler alternative — smoothing out energy prices — but the federal government rejected this proposal outright. For the De Wever government, the cents index is a budgetary necessity: the measure generates immediate additional revenue for the Treasury, helping to address the acute federal budget deficit.
Core principle: partial capping of indexation
Automatic wage indexation is not abolished, but will be partially capped twice during this legislature:
- First moderation period: commencing 1 June 2026
- Second moderation period: commencing in principle on 1 January 2028
In the private sector, the measure applies exclusively to employees whose reference salary exceeds EUR 4,000 gross at the time the standard index adjustment would normally take effect.
What is the reference salary?
The reference salary is the indexed fixed scale-based or contractual monthly base salary, expressed on a full-time basis. Bonuses, overtime supplements, year-end bonuses and holiday pay are not taken into account. For blue-collar workers, the hourly wage is converted into an equivalent monthly salary; for part-time workers, the salary is recalculated to a full-time equivalent based on their employment fraction.
How does the measure work in practice?
Up to EUR 4,000 gross : The full index adjustment applies, whether agreed at sector or company level
More than EUR 4,000 gross : Fixed increase of EUR 80/month (= 2% of EUR 4,000), supplemented by indexation on the full salary insofar as the actual index adjustment exceeds 2%
The threshold of EUR 4,000 will itself be indexed at the start of the second moderation period.
Worked example — An employee with a reference salary of EUR 5,000.00 gross receives an index adjustment of 2.50%:
- Without wage moderation: EUR 5,000 × 2.50% = EUR 125
- With wage moderation: EUR 80 (fixed increase) + EUR 5,000 × 0.50% (only the portion exceeding 2%) = EUR 80 + EUR 25 = EUR 105
End of the moderation period
Once the cumulative index adjustment during a moderation period reaches 2% and wage moderation has been applied, the moderation effect is deemed to have been achieved, and the moderation period comes to an end. All subsequent index adjustments may then be applied in full, until the start of the second moderation period, if applicable.
Employees hired during a moderation period
Employees who join after the start date of a moderation period are deemed to have undergone all index adjustments from that start date. This has two practical consequences:
- Moderation effect already achieved: they benefit from standard index adjustments without restriction.
- Moderation effect not yet achieved: they may still be subject to wage moderation at the next index adjustment.
A particularly notable point: employers may be required to pay a provisional wage moderation contribution in respect of these employees, even where wage moderation was not in fact applied to them and the employer therefore realised no savings whatsoever.
Conflicting agreements
The Programme Law provides that any agreement that conflicts with the wage moderation rules shall be deemed not to exist. Whether this will have significant practical impact — bearing in mind the limited consequences typically associated with non-compliance with the wage norm — remains an open question.
Wage moderation contribution: financial impact for employers
The government intends to recoup part of the savings employers realise through wage moderation. Employers are therefore required to transfer half of the savings achieved (including social security contributions) to the National Social Security Office (NSSO) via a new NSSO contribution code.
In the example above, the employer's saving amounts to EUR 20 (= EUR 125 − EUR 105). The wage moderation contribution therefore stands at EUR 10, to be increased by the standard social security contributions.
Consolidated wage moderation contribution
From the first day of the quarter following the quarter in which the moderation effect is achieved during the second moderation period, a definitive consolidated wage moderation contribution becomes due in respect of all wages subject to an indexation mechanism. The NSSO collects this contribution on a quarterly basis.
Attention points for HR
The introduction of the cents index brings additional payroll administration obligations. HR teams will need to carry out, or commission, adjusted payroll calculations and, where applicable, accurately compute the wage moderation contribution.
Specific attention point for cafeteria plans — Companies operating a flexible benefit plan (cafeteria plan) under which a choice budget is created through a salary sacrifice arrangement should integrate the principles of wage moderation and the wage moderation contribution into their policy. In practice, the reference wage prior to the salary sacrifice is often linked to the sectoral indexation mechanism, with the resulting salary increase added back to the reduced monthly salary. Strictly speaking, this constitutes a breach of the Programme Law (and the wage norm) and may further give rise to additional cost through the wage moderation contribution becoming due — particularly where the reduced monthly salary also exceeds EUR 4,000. A range of approaches is available, each of which warrants careful examination.
Author: Stijn Demeestere (Deloitte Legal)
