Draft Law on Salary Indexation Cap: Key takeaways from this week's proposal

Earlier this week, the Belgian federal government submitted a long‑anticipated draft law that formalises the planned limitation of automatic salary indexation in Belgium. The proposal confirms that a temporary cap would be applied over the course of 2 “mitigation periods”, the first period starting on 1 June 2026 and the second period starting on 1 January 2028. The draft also provides several important clarifications compared to the plans communicated by the government at the end of last year, as well a few new complexities. 

What does the draft law provide?

A limitation of automatic indexation for employees whose fixed gross monthly base salary exceeds EUR 4,000. For those employees, indexation of salary above that threshold is capped at a maximum of 2% calculated on EUR 4,000. But any part of indexation above 2% applies again to the full reference salary once the cap is reached. 

How the mechanism works in practice

• The EUR 4,000 threshold is assessed solely on fixed gross base salary, and variable pay and benefits in kind are thus excluded. 
• For part time employees, the threshold applies on pro rata temporis basis. 
• Voluntary full wage indexation remains possible. But any such voluntary indexation beyond the capped indexation would count against the wage norm limit, plus the new employer wage moderation contribution would also remain fully payable. 
• Entry into force is currently set for 1 June 2026. Index increases before that date (including the January 2026 indexation in joint committee n°200) remain unaffected. 

A new employer wage‑moderation contribution

Another important component of these plans is the introduction of a special employer wage‑moderation contribution, that is intended to be roughly equal to 50% of the employer’s wage‑cost saving resulting from the capped indexation. A more precise calculation method will be determined through further implementing measures. 

Points still requiring clarification

Several aspects remain uncertain, including detailed rules for calculating the wage‑moderation contribution, and how indexation mechanisms will look like after the 2028 mitigation period. The legislative process is ongoing, and changes may still occur before final adoption.