The future of labour contracts and wages in the Arizona coalition agreement

In an economy that operates around the clock and where digitalisation is reshaping traditional work models, rethinking labour organisation with greater flexibility and efficiency has become essential. The coalition agreement aims to tackle current economic challenges while maintaining a balance between business needs and workers' rights.

In terms of employment relations, the agreement is built on two main pillars: greater flexibility in employment contracts and simplification of existing administrative and regulatory frameworks. 

Revision of employment contracts

The coalition agreement introduces measures aimed at simplifying both the initiation and termination of employment relationships by implementing more adaptable mechanisms.

Reintroduction of probation periods

First, the probation period, which was abolished on 1 January 2014, for most workers except temporary and student employees, will be reinstated by 31 December 2025 at the latest. Under this new system, new employment contracts may include a probation clause allowing termination with only one week's notice—a significant reduction from the current six-week notice required for employees with six months' tenure.

New rules on severance pay 

A similar mechanism will be introduced for employers in case of dismissal, following the 13-week cap on severance payments in case of dismissal by the employee. Thus, for all contracts signed after the reform's implementation, severance payments will be capped at 52 weeks, preventing any increase beyond 16 to 17 years of service. However, existing contracts will continue to follow the current system, where severance pay is calculated based on tenure without any cap. Nonetheless, employers may still provide for exceptions at the company level.

Additionally, the reduction of special severance benefits is being considered, particularly protection-related indemnities. In this vein, the dismissal protection period for non-elected candidates in social elections will be reduced to six months after election results are published, compared to the current system, which offers nearly four years of protection, or two years for candidates who are unsuccessful in two consecutive elections. Elected employees will retain their current dismissal protection, namely until the installation of new representatives following the next election.

Gradual abolition of the unemployment with company allowance (RCC / SWT) scheme

The coalition agreement also aims to enhance worker activation and reintegration into the labour market. As part of this strategy, early retirement schemes, particularly the RCC / SWT (formerly "pre-pension"), will be gradually abolished. From 31 January 2025, no new entrants will be allowed to access this system. Only workers dismissed before 31 January 2025, including those still serving their notice period, as well as workers of companies that signed a restructuring or collective dismissal declaration, will retain access to unemployment with company allowance benefits.

Promoting work flexibility

To encourage labour activation, the coalition agreement introduces several initiatives aimed at providing workers with greater flexibility in their way of working:

• Creation of a "family credit", merging all parental leave, available to both parents and grandparents;
• Relaxing restrictions on leave combinations, including maternity leave and local political mandates;
• Facilitating temporary worker mobility between multiple employers;
• Implementing flexible working hours in consultation with employers, particularly by aligning work schedules with school timetables;
• Recognition of work made during commuting time ("tele-train-work"), subject to infrastructure improvements supported by the government; and
• Expanding training opportunities, with a collective approach to individual training rights.

Reduction of administrative burdens for employers

By 30 June 2025, several measures will be proposed to modernise administrative management and reduce employer constraints:

• Abolition of first-job obligations, making it easier to hire young workers;
• Simplification of payroll data and working hour declarations;
• Reducing administrative requirements for part-time work, without weakening worker protections;
• Cutting down reporting obligations, particularly for SMEs, to reduce administrative burden;
• Limiting the retention period for certain documents to streamline record-keeping;
• Abolishing the semi-annual renewal requirement for certain agreements, including the four-day workweek, replacing it with an open-ended agreement with a six-month withdrawal right; and
• Easing obligations for workplace risk assessments, which will no longer be mandatory annually, unless the working conditions change.

Restructuring wage policies

The agreement also demonstrates a commitment to modernising wage policies, making compensation more transparent and attractive, with a shift toward direct wages rather than indirect benefits.

Maintaining wage indexation and the salary norm

The coalition has confirmed its intention to maintain the automatic wage indexation and the salary norm, ensuring workers' purchasing power while maintaining Belgian companies' competitiveness in international markets.

Social partners have until 31 December 2026 to submit a comprehensive wage policy reform, considering both labour costs and market competitiveness.

Regulating and simplifying fringe benefits

In this context, the coalition prioritises direct salary compensation over fringe benefits, with key reforms including:

• Simplification and harmonisation of collective bonus schemes (CCT 90, profit-sharing bonuses) without increasing employer or worker contributions;
• Expanding the use of meal vouchers for greater flexibility;
• Phasing out certain existing vouchers, such as eco-vouchers and cultural vouchers, to streamline compensation systems;
• Exempting stock options and warrants from social security contributions;
• Capping employer social security contributions for salaries exceeding €250,000 gross per year; and
• Introducing a clear legal framework for flexible remuneration models. The granting of warrants remains possible, but subject to a limit of 20% of the yearly gross salary. Also, flexible benefits may not exceed 20% of the fixed salary.

Conclusion

The coalition agreement sets out a clear objective: to establish a more flexible and efficient labour market without undermining worker protections or hampering business competitiveness. However, the key question remains—will these adjustments be sufficient and well-adapted to strike a balance between economic performance and working conditions?

If these measures help align the labour market with economic realities, they must also ensure adequate protection for both employers and workers.

The main challenge now lies in the effective implementation of these reforms and their reception by businesses and employees. The true impact of these measures will depend heavily on their practical application and the adjustments made over time.

For further guidance on these new measures, feel free to contact the Employment & Benefits team, we’ll be happy to assist you!