You are busy planning your holiday. And then you can use every extra. Fortunately, almost all white-collar workers and workers in Belgium can enjoy holiday pay. It amounts to 92 percent of your last monthly salary. It is a kind of compensation for the extra costs that the holiday entails. For white-collar workers, it should normally be paid when they take their long holiday. But in practice, in most sectors it is paid out at the same time every year, usually together with the monthly salary in May or June.
But this is only one side of the story. “A distinction must be made between single and double holiday pay,” explains labor economist Stijn Baert (UGent). “Vacation pay is the only compensation for days off during the year. For white-collar workers, this means that their monthly wages will continue as normal, even if they take vacation days. It works differently for workers. If they take time off, those days will not be paid. They will receive the full amount as compensation in one go, together with double holiday pay.”
That double holiday pay is the extra amount that you will see on your account in May or June. Baert: “Workers receive a larger amount in May or June, but they also received less pay in the previous months if they took time off. That difference between blue-collar and white-collar workers is still a remnant of the past. It would make more sense if that disappeared. But hey, changes often happen quite slowly.”
Pay in full
Anyone who is already looking forward to an extra net monthly salary will be disappointed. You will notice that the net amount of double holiday pay is much less than your monthly salary. “That is quite a shock for many. The net monthly salary takes into account all kinds of discounts, such as the tax-free amount, which is higher if there are more dependent children. But you simply pay the full amount on your holiday allowance.” Given the rapid progressivity of our taxes, this quickly tends to 50 percent, even with relatively modest wages.
This has the side effect that the difference between the monthly wage and the holiday pay for lower wages is much larger. “People who earn a lot already pay a high percentage of taxes on their monthly wages. With lower wages, not much is deducted in withholding tax due to the many discounts. But that is the case with holiday pay.”
An example: someone with a gross salary of 2,000 euros has a net monthly salary of 1,750 euros. Of his holiday premium of 1,840 euros gross, 1,023 euros remains, only 58 percent of the monthly salary. For someone with a gross salary of 6,000 euros, this increases to 61 percent (3,409 euros in wages and 2,076 euros in holiday pay).
When paying out the thirteenth month – an extra bonus in various sectors at the end of the year – such a high tax burden is avoided by giving the employee the choice of opting for fringe benefits, such as a fuel card, company bicycle or laptop. Baert: “But that is not possible for holiday pay, because it is laid down by law: it simply has to be paid out.”
If you have just graduated and started working at the beginning of this year, you are out of luck. The double holiday pay is calculated based on your performance from the previous year. So you won’t get anything this year.
Belgium is one of the few countries where double holiday pay is mandatory. Only in the Scandinavian countries and the Netherlands do they have similar systems.
