Employer of Record in Belgium: the Flemish Government clarifies its position

In our September 2022 newsletter[1], we discussed the rise of Employers of Record (EoR) in Belgium. Despite the grey legal area in which EoRs operate, their number has continued to grow in recent years. As there is no clear legal framework governing EoR activities in Belgium, the question arose how an EoR should position itself on the Belgian labour market: as a (heavily regulated) temporary work agency, or as a service provider offering HR solutions? Until recently, both federal and regional governments remained silent on the matter. The Flemish Government, however, has now clarified its stance: only entities holding a valid licence as a temporary work agency may provide EoR services in Flanders.

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1. A short recap: what is this about?

Under the Belgian Employee Lending Act, “employee lending” is defined as a situation in which an employer allows a third-party user to benefit from the services of one or more of its employees, while the authority normally vested in the employer is (partly) exercised by the third-party user.

With limited exceptions, the Employee Lending Act prohibits the user from giving instructions that qualify as an exercise of the employer’s authority.

The question, therefore, is how the EoR model can be reconciled with this principle. In practice, an EoR in Belgium has two main options:

• Either it presents itself as a licensed temporary work agency, or
• It operates as a provider of HR-related services.

Both options have pros and cons, while none of these options fully fits with an EoR’s business model.

If you want to know more about this, click here.

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2. The Flemish Government’s position: recognition as a temporary work agency is required

The Flemish Government is the first regional authority to explicitly set out its position on EoRs. On its website[2], it states that only entities holding a valid licence as a temporary work agency may provide EoR services in Flanders.

This means that EoRs can only operate in Flanders once they have obtained a formal licence. To obtain such a licence, an EoR must demonstrate that it meets certain conditions (including the payment of a substantial financial guarantee to the Security Fund[3]), through a formal application procedure.

Even more importantly, the Flemish Government requires that EoRs restrict their activities to what falls strictly within the legal framework of temporary agency work. Temporary agency work is only permitted in a limited number of legally defined cases, such as the replacement of an employee, a temporary increase in workload, the performance of exceptional work, or the “in-flow” of an employee. For each of these grounds, specific requirements apply – not only to the temporary work agency but also to the user (i.e. the EoR’s client).

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3. Practical impact

Although the position of the Flemish administration must be regarded as an “instruction”, as it is not confirmed in any regulation, it does provide EoRs with greater certainty as to what they can expect during an inspection by the Flemish Social Inspectorate. The risk of inspection is not negligible, and the number of audits targeting EoRs has increased in recent years.

That said, the question arises whether the Flemish administration’s position is not overly strict. Depending on how an EoR structures its services, the alternative of positioning itself as a provider of HR-related services may still be defensible. It remains to be seen whether the Flemish Social Inspectorate will allow for nuance when assessing an EoR that does not, in practice, transfer any element of employer authority to the user.

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4. What about Brussels and Wallonia?

So far, the competent administrations in Brussels and Wallonia have not issued an explicit similar guidance. However, it can reasonably be expected that they will apply the same standard.

This creates additional formalities for EoRs operating across Belgium. Each region requires a separate recognition in order to provide temporary agency work services. Once an entity is recognised in one region, obtaining recognition in another region is typically easier. It may therefore be useful for EoRs to consider in advance in which region they wish to submit their initial application.

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How ALTIUS can assist
ALTIUS can review your business model and contracts to ensure compliance with Belgian legal requirements. We can also support you throughout the recognition process as a temporary work agency – from strategic advice to complete application management.

If you would like further information or assistance regarding this topic, then please contact Philippe De Wulf (Philippe.DeWulf@altius.com) or Emma Van Caenegem (Emma.VanCaenegem@altius.com).

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[1] The rise of Employers of Record (EOR) on the Belgian labour market

[2] Erkenning als uitzendbureau: wie, wat, waar | Vlaanderen.be

[3] A financial guarantee of EUR 75,000 has to be paid to the Security Fund. A first instalment (EUR 25,000) must be paid when applying for the license. The 2^nd instalment (EUR 50,000) must be paid  when the recognition is obtained.

Written by

• Emma Van Caenegem

  Partner