New method of settlement of the departure holiday pay as from 2024

As of 1 January 2024, the settling of the difference of the so-called departure holiday pay (vertrekvakantiegeld/pécule de vacances de départ) will no longer be done in one phase but in two phases. The Royal Decree of 28 September 2023 (Belgian Official Gazette 18 October 2023) changes the method of settling the difference of the departure holiday pay of white-collar employees when they start working for a new employer.

In addition, the settlement of the difference of the departure holiday pay paid by the holiday fund when transferring from the status of blue-collar employee to the status of white-collar employee is changed in the same way.

1. Background

To fully understand the legislative changes, it should be recalled that the holiday entitlement of an employee in one calendar year, also known as the holiday year, is based on the performance of that employee in the previous calendar year, also known as the holiday service year.

White-collar employees receive holiday pay from their employer. Holiday pay consists of the continued payment of the salary during holidays (single holiday pay), paid when the white-collar employees take their holiday, and an additional allowance (double holiday pay), paid when the white-collar employees take their main holiday but in practice generally paid in the month of May or June.

Upon termination of employment, employers are required to pay departure holiday pay. This departure holiday pay consists of:

• holiday pay for the holidays that have not yet been taken that calendar year; and

• holiday pay for holidays accrued with the employer for the following calendar year.

Furthermore, the employer must also provide two holiday certificates to the white-collar employee upon termination of employment:

• a holiday certificate for the remaining holiday pay: this certificate contains the holiday entitlements accrued in the holiday service year; and

• a holiday certificate for the anticipated holiday pay: this certificate contains the holiday entitlements accrued in the calendar year in which the white-collar employee is no longer employed.

As this results in an upfront payment of holiday pay for accrued but yet to be taken holidays, a new employer has to settle the difference of the departure holiday pay paid by their new employee’s former employer with the holiday pay the new employer would have to pay for the holidays the white-collar employee will take. This is to avoid that the same days of leave are paid twice.

Unlike white-collar employees, blue-collar employees receive holiday pay from the National Annual Leave Service (Rijksdienst voor Jaarlijkse Vakantie/Office National des Vacances Annuelles) or by a special holiday fund to which the employer is affiliated for the holiday service year in question.

2. Current legislation

The current method of settling the difference of the departure holiday pay involves white-collar employees issuing their holiday certificates to the new employer. Based on these holiday certificates white-collar employees are entitled to statutory holidays with their new employer.

As these statutory holidays have already been paid by their former employer upon payment of the departure holiday pay, the new employer has no obligation to pay any (single or double) holiday pay when the white-collar employees take their holidays. Under the existing legislation, the new employer deducts the departure holiday pay in one go from the total amount owed by the employer in the month in which white-collar employees take their main holiday.

This can result in white-collar employees receiving no or a very low salary when taking holidays with their new employer but also in wage deductions that go beyond what is permitted by the Wage Protection Act of 12 April 1965.

Consequently, a new method was needed to settle the difference of the departure holiday pay by the new employer.

3. New legislation as of 2024

As from 1 January 2024, legislative changes are introduced on the settlement of departure holiday pay as well as on information obligations by both the former and the new employer towards their white-collar employees.

The new legislation does not impact the rules on holiday pay entitlements of blue-collar employees.

From 1 January 2024 onwards, the settling of the difference of the departure holiday pay will occur in 2 phases:

Each time white-collar employees take up statutory holiday with their new employer, the latter will be entitled to deduct 90% of the departure holiday pay corresponding to the single holiday pay from the owed single holiday pay.

The white-collar employee will hence receive 10% of the fixed salary for these holidays from the new employer (i.e. 10% of the single holiday pay).

The settlement of the departure holiday pay corresponding to the white-collar employee’s single holiday pay will hence occur in proportion to the number of holidays taken and therefore no longer in one go when the white-collar employee takes his main holiday.

Nothing will change for the settlement of the departure holiday pay corresponding to the white-collar employees’ double holiday pay entitlements. When white-collar employees take their main holiday with their new employer, the latter will have to pay the double holiday pay after deducting the double departure holiday pay already paid by the former employer. This deduction therefore continues to be made in one go as was the case under the current regime.

A final settlement is made in December of the first year of employment with the new employer or at the end of the employment contract during the first year of employment with the new employer.

This involves calculating a correction resulting from the difference between the 10% single holiday pay paid during that year with the new employer for the holidays accrued with the former employer and the single holiday pay effectively owed by the new employer, from which the single departure holiday pay, already paid by the former employer, was deducted.

If an excessive amount was deducted during the year, the new employer will be required to pay an additional single holiday pay in the month of December of the first year of employment of the new white-collar employee (or the month of the end of the employment contract during the first year of employment with the new employer).

If an insufficient amount was deducted, the excess single holiday pay will be deducted from the salary of the month of December of the first year of employment with the new employer (or the month of the end of the employment contract during the first year of employment with the new employer). Pursuant to the provisions of the Wage Protection Act of 12 April 1965, the total deduction from the salary cannot exceed 1/5^th of the salary. If the 1/5^th limit is exceeded, the deduction must be spread over two months.

Under the new regime, situations whereby new white-collar employees take their holidays and receive no or a very low salary as they have already received their departure holiday pay by the former employer, will no longer occur.

If white-collar employees take their holidays over several months, the new employer will have to settle the difference of the single holiday pay over several months rather than in one single go.

This method of settling the difference of the single holiday pay would no longer violate the Wage Protection Act of 12 April 1965.

From 1 January 2024 onwards, an information obligation from both the former and the new employer to white-collar employees is introduced.

This information obligation will apply at 3 levels:

4. Take-away points

As of holiday year 2024, companies must ensure that the new rules for the settling of the difference of the departure holiday pay are correctly applied to white-collar employees starting employment, and that white-collar employees (or job applicants) who would raise queries in this regard are given the correct information.

Our Employment & Benefits team would be delighted to address any queries you may have in relation to the new method of settling the difference of the departure holiday pay.