The indexation cap: what does it mean for employees?
In 2026, the Belgian federal government introduced a new measure known as the indexation cap (governed by the Programme Act of 30 May 2026). It temporarily limits automatic wage indexation for employees with higher salaries.
What is the indexation cap?
Belgium has a system of automatic wage indexation: salaries are automatically adjusted to the rising cost of living (inflation). The indexation cap temporarily and partially limits this automatic indexation for employees with a higher salary. The measure was introduced to curb the rise in labour costs and strengthen the competitiveness of Belgian companies.
Important: the €4,000 threshold does not apply to the full gross salary, but to the reference wage. This is the indexed fixed scale-based or contractual monthly base salary on a full-time basis. Variable and additional pay components are therefore not included, such as overtime, meal vouchers, performance and year-end bonuses, eco-vouchers, profit premiums, and night- or weekend-work allowances.
Who is affected by the measure?
- Employees with a reference wage up to €4,000 keep their full indexation.
- Employees with a reference wage above €4,000 receive a limited indexation: the portion above that threshold is temporarily not indexed.
For part-time employees, the threshold remains €4,000. Their reference wage is first converted to a full-time equivalent and then compared to the threshold; the moderation is then applied proportionally according to their working regime.
How does the indexation cap work?
The mechanism functions as follows. If the indexation amounts to no more than 2%, only the part of the salary below the threshold of €4,000 will be subject to the indexation. The salary above the threshold will not change.
If the indexation rate is more than 2%, the part of the salary above the threshold will be indexed, but only to the extent that the indexation rate exceeds the 2% limit. The below examples will clarify this mechanism.
Example 1 – indexation of 2%
| Reference wage | Normal indexation (2%) | With indexation cap |
| € 4,000 | + € 80 | + € 80 |
| € 5,000 | + € 100 | + € 80 |
An employee with a reference wage of €5,000 thus receives €20 less index increase than under classic indexation (€ 80 instead of € 100).
Example 2 – indexation above 2%
If the indexation exceeds 2%, the portion above €4,000 is only indexed by the difference between the index and 2%.
| Reference wage | Index | Normal index increase | Percentage of indexation cap | With indexation cap |
| € 4,000 | 2.81% | + € 112.40 | 2,81% | + € 112.40 |
| € 5,000 | 2.81% | + € 140.50 | Limited indexation* | + € 120.50 |
*The limited increase of €120.50 consists of two parts: 2% on the part of the salary up to the €4,000 threshold (€80) plus the difference between the total index rate and the 2% limit (2.81% – 2% = 0.81%), applied to the full reference wage of €5,000 (€40.50).
When does the indexation cap take effect?
The measure runs in two periods:
- Period 1: from 1 June 2026. From that moment, the indexation of reference wages above €4,000 is partially limited. This mechanism will stay in force until the indexation, without application of the limitation, will have reached a total of 2%. Because of the different indexation systems in Belgium (monthly, quarterly or annual indexation), not all employees reach this moderation effect at the same time.
- Period 2: in principle from 1 January 2028. The government may postpone this start date for as long as not all employees have undergone the planned 2% moderation. At the start of period 2, the €4,000 threshold is indexed once.
Important: the limitation is capped at 2%. As soon as the cumulative effect of subsequent indexations would have reached 2% – without the new limitation applying – the full reference wage will again be indexed as normal. The indexation cap mechanism only imposes a temporary cap, not a permanent limitation.
Conclusion
The indexation cap is a temporary measure that partially slows down automatic wage indexation for higher salaries. Employees with a reference wage up to €4,000 are not affected and keep their full indexation. For higher salaries, the indexation above that threshold is temporarily limited – until the cumulative 2% moderation is reached – so that the pay increase is temporarily lower than under classic indexation.
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Email: international@vanhavermaet.be