Target group reduction: what changes are lined up in 2022?

A target group reduction is a discount on the bill for social security contributions that you have to pay to the NSSO every quarter. If, as an employer, you qualify for such a target group reduction, you can enjoy a hefty discount for a number of quarters, which will significantly reduce your wage costs. In 2022, certain target group reductions will change. We provide you with an overview of exactly what will change.

Federal or Regional?

Some target group reductions are federal matters, such as the target group reduction for first-time recruitment. Other reductions, aimed at helping certain persons to find work, are regional by nature. It is then up to the four regions in our country - Flanders, Wallonia, Brussels Capital Region and East Belgium - to determine the applicable rules.

Both the federal and the Flemish government have announced that they will implement changes to certain target group reductions as of 2022.

Target group reduction for first recruitments (federal)

With the target group reduction for first recruitment, a starting employer benefits from a target group reduction for the first six employees he hires. For the very first employee you hire, since 2016 (due to the tax shift) you even enjoy a discount equivalent to a full exemption from basic contributions. Thus, you save at least 25 percent calculated on the gross salary and that even for an indefinite period of time. However, the measure was criticised.

What will change in 2022?

In the budget agreement it was decided, after lengthy negotiations, that the discount for the very first employee would continue to apply for an indefinite period, but that the discount would be limited to a maximum of 4000 euro gross per quarter. For employees, you pay up to about 5330 euro gross per quarter, this still amounts to a full exemption from the basic contributions. For employees who are payed more than that amount, the discount will be capped, so you will still have to pay some contributions.

In addition, the entire system is under review: some definitions are better worded in the legislation and some provisions will disappear. These interventions all aim to bring the measure closer to its objective - job creation - and to prevent abuses. Below, we provide you with a brief overview of the most notable changes:

• A legally sound definition of a technical operating unit (TOU) will be established. When an employer forms a TOU together with one or more other employers, he can only benefit from the reduction when more employment is created, evaluated at the level of the TOU. The NSSO will refer to a simultaneous TOU and a historical TOU from 2022 onwards.
• Temporary employments, such as casual workers and flexi-job workers in the hospitality industry, will no longer be taken into account in determining whether you were already employing staff or not, nor will they open up entitlement to the reduction. Since you are not allowed to apply the reduction to a flexi-worker anyway, it is not a loss for an employer.

Limited reduction also for first recruitments before 2022

Does this mean that you have to rush to hire your first employee before the end of 2021 in order to continue enjoying the old benefits? No, it will be provided that the maximum reduction of €4,000 per quarter will also apply to rights already opened before 2022.

Target group reduction for older workers (Flanders)

Flanders also conducted a study on the effectiveness of the target group reduction for older employees. It was found that a financial incentive is especially needed for the recruitment of older jobseekers who are unemployed. This measure is therefore unchanged. If you take on someone over the age of 58 who has been registered with the VDAB as a jobseeker for at least one day, you will still be able to enjoy a full exemption from the basic contributions for the next two years.

In addition, a reduction also applies when the employee you employ reaches a certain age. It is currently at 58 years of age. From the quarter of your employee's 58th birthday onwards, you will receive a maximum quarterly discount of EUR 600. When he reaches the age of 60, the reduction increases to 1500 euro per quarter.

What will change in 2022?

The starting age for the reduction for 'incumbent employees' will be raised to 59 years from 2022. The higher reduction will then only apply from the age of 61. The starting age will rise further to 60 from 2023, the higher reduction will then only be possible for 62-year-olds. In 2024, the starting age will then rise one last time to 61. This limits the scope of the target group reduction for older workers.

In return, the scope for the recruitment incentive is expanded. This is a premium that you can apply for from the Flemish government when you have hired someone who has been unemployed for at least two years. The premium is currently only granted when you hire a long-term job seeker who is between 25 and 56 years old. The age range is extended to 58 years.