Remuneration ceilings: what are they and
what purpose do they serve?
May 2021 – The application of certain labour law provisions depends on the pay of the employee concerned. These earnings ceilings are adjusted annually. The amounts referred to in this article are the amounts for 2021.
In which situations are pay ceilings applied?
Remuneration ceilings are important for the application of a wide range of labour law provisions.
Non-competition clauses: an employer can impose a non-competition clause on his employee in case he leaves the company. This clause is only valid if the employee's gross annual pay exceeds a certain minimum amount. Gross remuneration means gross monthly remuneration times twelve, double holiday pay, end-of-year bonus and all benefits.
Arbitration clauses: the employer and the employee can agree that any disputes between them will not be settled before a judge, but must be settled by arbitration. In addition to being subject to a remuneration ceiling, such an arbitration clause is only valid if the employee in question is responsible for the day-to-day management of the company or if the employee is responsible for the management of a business unit of the company which can be considered as an independent entity.
Training clauses: these are clauses under which the employer can literally punish the employee if he or she leaves the company shortly after having completed a training course at the employer's expense. A training clause does not apply to trades in short supply. Moreover, a training clause is only valid if the employee's pay exceeds a certain amount.
How high are the salary ceilings?
A non-competition clause is only valid if the employee's gross annual remuneration exceeds 36,201 euros. If the gross annual remuneration is between 36,201 euros and 72,402 euros, it is only valid for functions determined by a CLA. Above 72,420 euros, the system is reversed: the non-competition clause is valid except for functions excluded by a CLA.
The above distinction does not apply in the case of a non-competition clause for a sales representative which is valid as soon as the gross annual remuneration exceeds 36,201 euros.
An arbitration clause is only valid if the employee's gross annual remuneration exceeds 72,402 euros.
Finally, a schooling clause is only valid if the employee's gross annual remuneration exceeds 36,201 euros.
Notice periods
The pay caps were also important for the calculation of notice periods for employees. The calculation of notice periods has meanwhile become more complex since the single status came into force on 1 January 2014. For employees who were already in the service of their current employer before 1 January 2014, for the calculation of the length of service until 31 December 2013, the salary ceilings that were applicable on 31 December 2013 (i.e. 32,254 euros and 64,508 euros respectively) are taken into account.
Since 1 January 2014, the notice period is therefore calculated on the basis of two elements:
(if applicable) the first part is based on the seniority acquired until 31 December 2013 ;
the second part is based on the seniority acquired from 1 January 2014 until the date of notification of the notice period.
Calculation of the notice period: notice given by the employer
For seniority up to 31 December 2013
If the annual compensation as of December 31, 2013 was greater than 32,254 euros: the notice period is equal to one and a half months per commenced period of five years of seniority, with a maximum of four and a half or six months, depending on whether the gross annual compensation exceeded 64,508 euros on December 31, 2013;
otherwise, the notice period is equal to one and a half months for every five years of seniority, with a maximum of three months.
For seniority from 31 December 2013
The notice period is determined according to the table below. There is therefore no longer a salary ceiling in the calculation of the notice period after 31 December 2013!
Seniority: Notice period (in weeks)
From 0 to less than 3 months: 1
From 3 months to less than 4 months: 3
From 4 months to less than 5 months: 4
From 5 months to less than 6 months: 5
From 6 months to less than 9 months: 6
From 9 months to 24 months: + 1 week per 3 months
From 2 years to less than 3 years: 12
From 3 years to less than 4 years: 13
From 4 years to under 19 years: + 3 weeks per year
From 19 years to under 20 years: 60
From 20 years old to under 21 years old: 62
From 21 to under 22: 1 week per year
Calculation of the notice period: notice given by the employee
For seniority up to 31 December 2013
if the annual remuneration on 31 December 2013 was higher than 32,254 euros: the notice period is equal to one and a half months for every five years of seniority, with a maximum of four and a half months or six months, depending on whether the gross annual remuneration exceeded 64,508 euros on 31 December 2013;
otherwise, the notice period is equal to one and a half months per five years of seniority, with a maximum of three months.
For seniority after 31 December 2013
The notice period is set out in the table below. The notice period is a maximum of thirteen weeks. If, based on the seniority as of 31 December 2013, the calculated notice period already exceeds thirteen weeks, no further action is required. There is therefore no longer a pay cap in the calculation of the notice period after 31 December 2013!
Seniority: Notice period (in weeks)
From 0 to less than 3 months: 1
From 3 months to less than 6 months: 2
From 6 months to less than 12 months: 3
From 12 months to less than 18 months: 4
From 18 months to less than 24 months: 5
From 2 years to less than 4 years: 6
From 4 years to less than 5 years: 7
From 5 years to under 6 years: 9
From 6 years to under 7 years: 10
From 7 years to under 8 years: 12
From 8 years old: 13
