New COVID-19 support measure: advantageous overtime
The government has introduced new support measures in response to the COVID-19 crisis. The government had already introduced inexpensive overtime hours without an overtime supplement in essential sectors, called “recovery hours”. These inexpensive overtime hours are extended to all sectors in 2022. The government has also decided to increase the number of overtime hours with overtime supplement, for which a partial exemption of withholding tax exists. We discuss the conditions and modalities of these overtime hours in this newsletter.
Additional voluntary overtime or recovery hours
“Ordinary voluntary overtime” versus “additional voluntary overtime”
Reminder: overtime rules apply when the limit of 40h/week (or lower if determined as such on sector level) or 9h/day is exceeded.
In order to perform overtime, there must be a legal ground such as: unforeseen necessity, an extraordinary increase of work etc… There are also formalities and information requirements attached to these, which means that formalities have to be complied with in order to perform overtime correctly.
The introduction of voluntary overtime in the framework of the Act of Workable and Flexible Work of 2017, meant a major simplification. Since then, 120 voluntary overtime hours can be performed per calendar year (In some sectors (such as the hospitality industry), the maximum amount of voluntary overtime hours was increased based on a sector cba), purely based on the voluntariness of the employee. This voluntariness has to be confirmed in a written agreement of the employee, which is valid for 6 months (renewable). This is the only formality. For those overtime hours, no compensatory rest is due, but an overtime supplement is (50% or 100% if overtime on Sunday or public holidays).
On top of these existing voluntary overtime hours, which however are limited to 100 hours, an additional 120 voluntary overtime hours are authorised in 2022. These additional voluntary overtime hours or “recovery hours” are also extra advantageous, because contrary to the ordinary voluntary overtime hours, no overtime supplement is due.
These 120 voluntary “recovery hours” can be performed in 2022 on top of the existing credit of 100 voluntary overtime hours.
As it concerns voluntary overtime, there has to be a written agreement. This agreement is valid for 6 months and has to be renewed before that period has expired.
No overtime supplement is due for these overtime hours and the employer does not have to grant compensatory rest.
The ordinary overtime hours do not have to be used up first: employer and employee can choose recovery hours immediately.
Exemption withholding tax and social security reductions
The recovery hours are exempt from withholding tax and social security reductions.
Take action: If you wish to use these advantageous “recovery hours”, please inform you Payroll Business Partner and comply with the conditions mentioned above. Your Payroll Business Partner can provide you with a template agreement for the employee. For additional questions about overtime, do not hesitate to contact our legal department.
Favourable tax treatment for partial exemption of withholding tax for 180 overtime hours
For overtime that does not fall under the aforementioned regimen (such as for example the ordinary voluntary overtime), an overtime supplement has to be paid. For this type of overtime, however, there is a partial exemption from withholding tax for 130 overtime hours per calendar year:
For the employer: exemption paying withholding tax of 41.25 % of the gross salary which is the basis of the calculation of the overtime and on top of which a supplement of 50 or 100 % has to be paid.
For the employee: exemption of withholding tax of 57.75 % of the gross salary which is the basis of the calculation of the overtime and on top of which a supplement of 50 or 100 % has to be paid.
In 2019 and 2020, the number of overtime hours was temporarily increased to 180 overtime hours per calendar year. Thereafter, this number would have been reduced to 130 overtime hours again, but the legislator has now decided that the partial exemption will again be increased to 180 overtime hours per calendar year as from 1 July 2021 until 30 June 2023.
Your Payroll Business Partner will apply this automatically if applicable.