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Should the salary of employees recruited in the future also be indexed?
Most joint industrial committees cater for the automatic indexation of wages at a fixed time during the year. This will have a significant impact on your wage costs, particularly in view of the current price rises. What happens in respect of salaries stipulated in a signed employment agreement that starts at a later date? Should such salaries, which have never actually been paid out, also be indexed?
Indexation of pay scale salary
First you need to check whether the indexation relates to the pay scale salary or the effective higher salary.
If it relates solely to the pay scale salary not all effective salaries need to be adjusted, unless your new employee’s salary is equal to the pay scale salary. This minimum salary must always be taken into account.
Indexation of effective salary
A discussion arises primarily when the indexation relates to effective salaries. We make a distinction between 2 different situations.
Commencement of employment before or on the indexation date: indexation
If the employment agreement actually takes effect before or on day one of the indexation, your new employee’s salary has to be indexed. A white-collar employee employed in PC 200 who starts on 1 January or, for example, 15 December, will immediately benefit from the annual indexation within this joint industrial committee with effect from 1 January.
Commencement of employment after the indexation date: indexation also required
What happens if the employment agreement does not take effect until after the indexation? For example, a white-collar employee in PC 200 who signed their employment agreement on 16 November but their employment effectively commences on 1 February. Although we believe that you are not obliged to index a salary if an employee does not effectively commence their employment until after the indexation, the social inspectorate takes a different view.
The Supervision of Social Legislation service, i.e. the social inspectorate, takes the view that it is incorrect to assume that the actual salary to be indexed should already effectively exist. This is due to the fact that the CLAs (collective bargaining agreements) do not stipulate that a previous salary should already have been paid in order to be able to apply indexation.
The reasoning that indexation should not be applied simply because no services were rendered in the period preceding the indexation, would have the effect that a person who is absent for long periods of time due to time credit or for other reasons is also not entitled to indexation, which is consequently not correct.
In short, the social inspectorate takes the view that the indexation provisions apply to the salary stipulated in the employment agreement, even if the salary is not effectively paid out until after the indexation date.
How to avoid discussion with respect to indexation?
In order to prevent discussion and unforeseen salary indexations of this nature, it is advisable to clarify this matter in the employment agreement. You can add a clause specifically stating that the agreed salary includes indexation.
If you would like us to take a look at your employment agreements, please feel free to contact our HR Legal team.
