Frequently Asked Questions
For products that require a longer or shorter lead time or that are delivered over a longer period, the development of the manufacturing cost between the moment of fixing the contract price and delivery is unknown. The same applies to service contracts concluded for a longer period, during which labour costs may change. The price adjustment clause ensures that the customer, as well as the supplier and the service provider, can be sure that the agreed starting price will follow the unfolding of economic conditions, both upwards and downwards, and will avoid any speculation on their part.
A price adjustment clause cannot be presumed. In order to be valid, it must be agreed by and between the parties in the contract or specifications, or included in the general or particular terms and conditions, and it must comply with the legal requirements below.
It is important that the price adjustment clauses and especially the formula are drafted as precisely and completely as possible, while addressing the overall cost analysis. This will help to avoid disputes later on in the invoicing process. The parties should be able to determine easily the developments in the components of the formula.
Each company should establish the formula according to its specific situation, e.g. with regard to the costs and references to be taken into account, as well as the date and periodicity of the adjustment. Unless otherwise agreed by and between the parties, the price adjustment refers to the total base price, including advance payments. Public contracts are subject to other rules which are not covered in this note.
Price adjustment clauses in contracts for the Belgian market must meet the following conditions ² (Article 57 of the Act of 30 March 1976):
- a price or parameter may not be linked to the consumer price index or any other general index (a parameter linked to labour costs such as Agoria's naturally includes, in addition to wage increases, wage adjustments to the index as a calculation of developments in labour costs);
- the application of the clauses is limited to 80% of the final price and a fixed term of at least 20% is mandatory;
- references must be to parameters that represent real costs and each parameter is only applicable to the part of the cost it represents.
Only contracts with a foreign element are not affected. This exception may not however be invoked if the services are provided in Belgium and the contracts are concluded by persons residing in Belgium. It will not be sufficient to therefore make a foreign law applicable in order to escape the requirement of Article 57, which is of a mandatory nature.
For the rest, the parties are free to formulate the price adjustment clause as they wish, for example by providing that the price adjustment applies only if the price difference exceeds x%. Similarly, the periodicity of the price adjustment can be freely determined by the parties: in the case of long-term contracts, it can be (semi-)annual, quarterly or even monthly, especially in times of high inflation. Likewise, in the case of long production lead times, a price adjustment can be carried out, for example, on the actual date of the order for raw materials.
1: To the extent that no special legislation applies.
2: These conditions do not apply to rents, salaries, wages, social security contributions or benefits and to emoluments and fees related to services rendered by holders of liberal professions (Article 57§3 of the Act of 30 March 1976).
3: For the following sectors, a derogation to this 80% limit of the final price is provided under certain conditions: Contracting & Maintenance and Assembly & Cranes (only for rates relating to hourly wages) (Decision of 19 May 2010), the Technical Management and Facility Management (Decision of 27May 2003) and the Security sector (Decision of 23/01/1980).
For contracts and deliveries, the formula should be as follows:
where:p = Invoice price
Po = Initial base price at the date of .........
Mo = Price of ......... (raw material to be defined) at the date of ......... (as published), i.e. €..........
M = Value of the same material on the date of ......... (that corresponding to the supply or invoicing)
So = the reference labour cost index for companies in the metal industry, recognized by the Federal Public Service Economy, SMEs, Self-employed and Energy and published by Agoria on ......... (date)
Or
So = the reference labour cost index for companies in the digital sector, recognized by the Federal Public Service Economy, SMEs, Self-employed and Energy and published by Agoria on ......... (date)
S = same salary at ......... (such date) (period of execution of the order or invoice date)
a - b - c = are replaced by the values of the coefficients
The value of coefficients a and b relating to the share of materials and wages must be determined in proportion to the importance of materials and wages in the price of the product in accordance with the aforementioned Article 57. Consequently, the sum of coefficients a and b must be less than or equal to 0.80, at least for the Belgian market.
It should be noted in passing that:
- Coefficient a can be divided into a1, a2 or a3 if several raw materials are used in the manufacture of the product.
- In a service contract (and therefore for contracts in the digital sector), b is equal to 0.80 and the reference to materials is omitted.
- The coefficient c must be equal to at least 0.20 in accordance with the above-mentioned Article 57, so that the sum of the coefficients is equal to 1 for the Belgian market.
In general, reference is made to raw materials whose prices are official, i.e. the prices recorded by the Commission de la Mercuriale des Matériaux (Materials Market Commission) sitting at the Federal Public Service Economy, SMEs, Self-employed and Energy and published by Agoria. This commission collects the prices of steel, non-ferrous metals, plastics and other construction materials on a monthly basis.
The following parameters can also be used:
- specific indices, such as the producer price index for a certain NACE code, published by Statbel or Eurostat;
- an index published by an organization or federation;
- international prices as quoted by the London Metal Exchange. In this case, however, the exchange rate must be taken into account.
It is conceivable to use the prices actually paid as reference prices for materials, but reference to official prices precludes any subsequent dispute.
The wages to be taken into consideration are the reference labour costs for the technology industry approved by the Federal Public Service Economy, SMEs, Self-employed and Energy and published by Agoria.
From August 2022 onwards, the Agoria reference labour costs will be broken down and simplified and the following series of figures will be published:
- New Agoria Manufacturing reference labour cost index for the manufacturing industry;
- New Agoria Digital reference labour cost index for the digital sector;
- The old reference wages and the old reference labour costs. These will follow the same evolution as the new reference wage index for the manufacturing industry.
In the price adjustment clause it is possible to refer instead of these indices to the average of the actual wages paid in the metal fabrication industry or in the supplier's company, but this can easily lead to many disputes.
There are currently 160 Agoria indices, almost all of which have evolved in the same direction over the last ten years:
- Subdivision into 19 Belgian regions and 1 national figure;
- Subdivision into contracts before and after 11 July 1981 (Operation Maribel);
- Subdivision between companies with more than 10 employees and those with less than 10 employees;
- A reference wage and a reference labour cost (the former does not take into account the evolution of social security contributions, the latter does).
As it is not relevant to keep all these figures up to date, Agoria has decided to stop making these different subdivisions when calculating the Agoria indices from August 2022.
From now on, Agoria's reference labour costs will also be published as an index with the base January 2010 = 100. The Eur/h rating has been removed. It was often a source of confusion and was in fact irrelevant, as only the development in labour costs was important for price adjustments and not the absolute level of the hourly labour cost.
Until now, no sectoral breakdown was available for the manufacturing industry on the one hand and the digital sector on the other. The Agoria index was created at a time when all Agoria members automatically belonged to CP 111. Gradually, Agoria also became the federation of other sectors (non-ferrous, IT services, telecommunications, etc.). When inflation was stable (and low), there was little need to break down the Agoria indices for the different sectors. Many companies therefore systematically chose to use the Agoria index for all its sub-sectors.
Inflation has risen sharply since the end of 2021 however, and CP 200 companies had to index 3.58% in January 2022. This indexation has not been taken into account in the Agoria index, which is calculated on the basis of the CP 111 indexation that took place in July 2022. Digital companies that referred to the Agoria index in their price adjustment clause could not adapt their existing contracts to these increases in labour costs.
Agoria has therefore decided to calculate and publish two different reference labour costs from August 2022. One will be based on the developments in CP 200 (which we publish as "Agoria Digital") and the other on the developments in CP 111 (which we publish as "Agoria Manufacturing").
The old reference labour cost for existing contracts from before August 2022, in which the price adjustment clause refers to the Agoria Index (insofar as it is not adapted to these new indices), will continue to be published.
Agoria's reference labour costs are calculated on the basis of three elements. Only in the event of permanent changes are the reference labour cost indices adjusted.
a. Annual adjustments of gross salaries to the health index:
- For Agoria DIGITAL: on the basis of the CP 200 in January ;
- For Agoria MANUFACTURING: on the basis of the CP 111 in July.
b. Permanent changes in the salary conditions agreed in the collective labour agreements (contractual increases in gross salaries, permanent increases in eco-cheques and meal vouchers, changes in the union bonus, etc.). One-off increases such as bonuses or bonuses are not included in Agoria's benchmark salary cost indices;
- For Agoria DIGITAL: the CLAs of the CP 200;
- For Agoria MANUFACTURING: the CLAs of the CP 111.
c. The development in social security contributions paid by the companies:
- For Agoria DIGITAL we take, in the table published quarterly by the VBO-FEB, the evolution in the employer's contribution for white-collar workers in companies with more than 20 employees.
- For Agoria MANUFACTURING we take, in the table published quarterly by the VBO-FEB, the evolution in the employer's contribution for manual workers in companies with more than 20 employees.
Whenever reference is made to one of the Agoria indices in the price adjustment clause of new contracts from August 2022 onwards, a clear and explicit choice will have to be made as to the index on which the price adjustment clause will be based.
Article 57 of the Act of 30 March 1976 clearly states that the parameters used in a price adjustment clause must reflect as closely as possible the real development in the costs of carrying out a contract. Companies will therefore have to determine which Agoria index best reflects their labour costs: the Agoria Manufacturing index or the Agoria Digital index.
Article 57 of the Act of 30 March 1976 clearly states that the parameters used in a price adjustment clause must reflect as closely as possible the actual development in the costs of performing a contract. For companies in the digital sector, the new Agoria Digital index will better reflect the development in the costs than the old Agoria index. This is therefore an important argument in favour of adapting the price adjustment clauses in existing contracts and using the new Agoria Digital index from August 2022, as required by law.
In this case, the contracting parties should agree that the Agoria index in the price adjustment clause of the existing contract will be replaced by the new Agoria Digital reference labour cost index.
Existing contracts in the manufacturing industry with a price adjustment clause referring to the Agoria index can remain unchanged. The old reference wages and the old reference labour costs will continue to be published.
The reference wage costs are published on the 15th of every month at the latest. Until recently, this was always in the last week of the month. Once we know the 4 components of the reference wage cost, we can proceed with the calculation and publication on our website. The Health Index is usually known in the last week preceding the relevant indexation month. Changes in the social security contributions of companies are published by the Federation of Belgian Enterprises at the beginning of the relevant month.
Agoria member companies can ask the Agoria Study Service at any time for an estimate of what the value of the reference wage cost will be. This can help them budget their costs and estimate their contract values and wage costs more accurately.