Reward update

In today's war for talent, offering an attractive and flexible pay package is crucial. In addition to the announced increase in the bicycle allowance to 0.35 cents per kilometer (with a maximum of EUR 2,500 annually), there are two recent important reward updates: the new formulas for calculating the increasingly popular mobility budget and some recent sector agreements that are going to make flexible pay even more popular.

In the Fall of this year, new sector agreements have been reached within Joint Committees 209 and 111 for white-collar and blue-collar workers in the metal manufacturing industry as well as within Joint Committee 226 regarding international trade, transport and logistics sector.

This agreement allows employees to convert part of their end-of-year bonus into a bicycle and/or additional leave days. A collective bargaining agreement (CBA) on company level should be signed.

Previously, employees in these sectors were unable to convert their end-of-year bonus into other benefits, such as within a cafeteria plan. However, with these new sector agreements, conditions are now in place to allow employees to convert up to half of the end-of-year bonus into other benefits.

For the metal manufacturing industry, the conversion is/was already possible for the end-of year premium of 2023.

For the international trade, transport and logistics sector the new possibilities are available as of 2024.

The Belgian government has published a Royal Decree in September 2023 aimed at providing clarification and simplification for the Federal Mobility Budget. This decree introduces a formula for calculating the Total Cost of Ownership (TCO) value, which is crucial in determining the amount of the mobility budget provided to employees who give up their cars.

Previously, there was often confusion regarding the TCO calculation, as the concept was not specifically defined by the legislator.

However, the new decree stills allows organizations to continue using reference cars to calculate the TCO value, simplifying the process, but also provides two calculation formulas to choose from.

The decree provides two choices for calculating the TCO:

• based on actual costs or
• based on a lump-sum basis.

Both methods determine the total mobility budget and the budget allocated to eco-friendly cars (pillar 1 spending).

The actual costs calculation, which was the initial method, now foresees a comprehensive list of costs published in the decree.

Costs that are not included in the list (or not applicable in the organization), cannot be taken into account for the calculation.

The budget is averaged over a reference period of four years to account for fluctuations.

The lump-sum formula consists of a fixed component and a variable one.

The fixed component calculation differs depending on whether the car was purchased or leased.

The variable component determines the consumption cost (fuel/charging) based on a fixed calculation method:

6000 private kilometers

+ Commuting distance round trip during 200 working days

Multiplied by the consumption cost per kilometer set at 30% of the flat-rate kilometer allowance applicable at the time of calculating

At KPMG we have a dedicated Reward team with extensive experience on this matter, both from a social security, tax – and a labor law perspective. Feel free to contact us for information about a legal compliance check of your current policies or the implementation of a mobility budget or Flexible Reward Plan at your organization.