How to Hire Employees in Belgium Using an Employer of Record
When hiring remote workers abroad, you have a few choices on how to approach it, and that choice will affect everything from recruitment and compensation to legal compliance. You may be considering hiring independent contractors, but you might also want to learn about a cost-effective alternative to hire regular employees.
This article will discuss the basics of hiring employees in Belgium, and how to engage an employer of record to take over all employment administration and compliance. If you want to secure a worker’s loyalty and offer them the local benefits they need, then an employment solution would be preferable to hiring contractors.
Hiring employees in any country places you in a new employment and labor scheme, that is likely very different from your home country. Unless your company is prepared to hire local HR and legal professionals to assist you, you are going to need some type of partner who specializes in foreign employment.
What you need to know about hiring employees in Belgium
Employment in Belgium
The first area to examine is the specific employment regulations in Belgium so that you can be sure to meet the rules around contracts, employee benefits, and labor rights. The employment laws in your home country will not apply to Belgian employees.
White Collar vs Blue Collar Workers: Belgium distinguishes between blue-collar and white-collar workers when it comes to probation periods, termination, and entitlements, with white-collar workers generally receiving more generous entitlements. There is a trend toward reducing the distinction and is an evolving area of Belgian law.
Contracts: Written employment contracts have to conform to Belgian law to be enforceable, such as probationary periods, non-compete limits, and notice periods. Depending on the work location in Belgium, contracts must be drafted in either French, Dutch, or German.
Entitlements: Mandatory entitlements include 30 days annual paid vacation leave (which includes 10 holidays), 30 days employer-paid sick leave, and 15 weeks maternity leave. Additional leave may be allowed, either unpaid or supported through social security.
Termination: Notice periods for termination depend on the length of service, and ranges from one week to 15 weeks after four years of service. Notice periods can be paid in lieu, and there is no statutory severance.
LIMOSA Declaration: Companies that hire expat employees or contractors who are in Belgium temporarily, need to file a LIMOSA declaration which lists the details of the employment, such as start and end date, location, and position.
Payroll and Taxes in Belgium
Next, is the crucial area of running payroll and calculating taxes or social contributions, for both the employer and employee. All taxes and contributions are withheld from monthly payroll by the employer
Tax rates: Personal income tax rates range from 0-50%, depending on compensation level.
Social security and statutory payroll contributions: There are mandatory social security contributions for both employer and employee, calculated on the salary amount. The combined contribution amount is over 40%, which is high when compared to the US total of just over 15%.
Employee contributions are deductible from income when calculating income tax. These are the tax rates:
- Employer Contributions: 27%
- Employee Contribution: 13.07%
Immigration and Work Permits in Belgium
One of the attributes of modern work life is that many professionals are ‘digital nomads’, and may be working from a country other than their own. This means that those employees will need a valid work permit with a local corporate sponsor.
There are three types of work permit in Belgium, and type B is the most likely for a new expat employee:
- Work permit type A: For multiple positions and employers, and is valid indefinitely. Must have worked for four years with a type B work permit, within a 10-year uninterrupted stay in Belgium.
- Work permit type B: For a specific job for one employer, and valid for one year (renewable). Must be applied for outside of Belgium.
- Work permit type C: For temporary stays of up to one year, most often used by students or for part-time work.
Using an employer of record to hire your employees in Belgium
After reviewing the array of Belgian employment regulations, it may seem overwhelming to undertake this on your own just to hire a few remote employees. But, before you decide to hire contractors for simplicity’s sake, you should consider using an employer of record as your local partner for compliant employment.
What is an employer of record?
An employer of record (EOR) is a Belgian entity that is set up solely to administer employment and run payroll. This is especially useful for foreign companies that don’t want to incorporate, but still need to hire local employees. This is a completely legal method to hire international employees from your home country, using a trusted partner.
How does employment work with an employer of record?
The EOR will assist you with drafting the Belgian employment contract, help onboard your employee, and handle every aspect of payroll and withholding. They are in essence, the legal Belgian ‘employer’, while your company still manages the employee’s work and schedule remotely. Your company remits monthly compensation to the EOR, and they take care of the rest so that you remain in compliance.
Is there an alternative to using an employer of record in Belgium?
The alternative to using an EOR is to set up your own entity, but the time and expense of this option is impractical for just hiring a few employees. You can also hire the worker as a contractor, but you give up some control with contractors, and they may not be as committed as employees if you intend to retain them. Expat contractors have extra compliance obligations in Belgium as well.
How does Contractor Taxation help you with hiring employees in Belgium?
In addition to our expertise in international contracting, Contractor Taxation also has access to a global network of employers of record, including in Belgium. Our partner can show you how simple it is to hire local employees with an EOR, and then offer ongoing account management for the duration of the engagement.
What this means is that you are never on your own when employing abroad, as your employment relationship is secure, compliant, and flexible if your needs change. Please contact us if you want to learn more about this foreign employment solution.