On 29 March 2013, the Council of Ministers adopted a Royal Decree regarding the (previously announced) wage freeze for 2013 and 2014.
The Royal Decree provides that the total salary cost in 2013 and 2014 can, in principle, only rise with indexation and pay scale increases. As the wage freeze is introduced through a Royal Decree, it becomes “binding” and therefore impossible to deviate from, whether at sector or company level.
The Royal Decree will enter into force retroactively as of 1 January 2013.
More changes to come?
The Royal Decree however, is only a small part of the legislation that applies to the wage freeze. The general framework has been laid down in the Salary Moderation Act of 1996, outlining certain exceptions to the general rule and introducing sanction mechanisms if the rules are violated.
As this law is very unclear, incomplete and complex, it is under scrutiny and is expected to be subject to possibly major changes in the very near future.
The government indicated that it intends to make the legislation more clear and transparent by, among other means, clearly defining the legislation’s scope, its exceptions and the term “wage cost”. Furthermore, it is likely that the current sanction mechanism will be replaced by a stricter and more straight-forward alternative which is integrated in the social judicial code.
It should be underlined that these legislative changes may possibly also be implemented with retroactive effect as of 1 January 2013.