Expanding into Belgium is a strategic move, but navigating its strict labor laws is not optional. Many companies rush in using an Employer of Record (EOR), believing it’s a shortcut. In reality, EOR is one of the riskiest hiring models in Belgium, exposing businesses to fines, compliance violations, and legal uncertainty.
This guide explains why companies must transition from EOR to direct hiring quickly, and how doing so unlocks stability, legal compliance, and long-term growth.
Why EOR Is a Major Liability in Belgium
Belgium is one of the toughest regulatory environments in Europe. Its labor laws do not recognize the typical EOR model used in other countries. Instead, Belgium prohibits “loan of personnel” unless the provider is a licensed temporary work agency.
And here’s the reality:
Most international EOR providers do not hold the licenses Belgium requires. This alone makes many EOR arrangements illegal by default, leaving the client company responsible for the consequences.
The Legal Risks Are Significant
Unlicensed EOR arrangements can trigger:
- Administrative fines up to €10,000 per violation
- Full joint liability for unpaid social security and taxes
- Potential criminal charges in severe cases
- Employment claims from workers
- Serious reputational damage in the Belgian market
The Flemish government has already tightened enforcement, and more regions are expected to follow. Relying on an unlicensed EOR is no longer “a convenience”, it’s a legal gamble.
Why Companies Are Abandoning EOR for Direct Hiring
1. Direct Hiring Eliminates Compliance Uncertainty
Belgian authorities prefer companies that register directly. The transparency and predictability of a direct structure remove the guesswork and legal exposure inherent in EOR setups.
2. EOR Fees Are a Long-Term Financial Drain
EOR providers charge:
- Monthly service fees
- Salary markups
- Administrative add-ons
These fees compound over time, making EOR one of the most expensive hiring models for long-term Belgian operations. Direct hiring cuts these recurring costs entirely.
3. Direct Hiring Unlocks Belgian Tax Incentives
EOR clients do not qualify for valuable incentives like:
- Up to €12,400 per year reduction for the first employee
- R&D tax exemptions
- Sector-specific subsidies
Only registered employers receive these benefits.
4. EOR Blocks Culture, Control, and Team Cohesion
With EOR:
- You cannot fully control employment terms
- You lack flexibility in benefits
- Employees feel detached from your brand
- Long-term talent retention becomes harder
Direct hiring restores full HR control, strengthens loyalty, and builds a real local presence.
A Practical, Low-Risk Path to Leave EOR Behind
Transitioning away from an EOR in Belgium is not just smart, it’s necessary. Here’s how to do it safely and efficiently.
Step-by-Step Transition Guide
Step 1: Assess Your Current EOR Arrangement
Determine whether your EOR is licensed as a temporary work agency. If not, transitioning is urgent.
Step 2: Register as a Non-Resident Employer (2–3 Weeks)
This quick and cost-efficient approach allows foreign companies to hire directly in Belgium without forming a local entity.
You will obtain:
- A company number via the Crossroads Bank for Enterprises
- ONSS social security registration
- Payroll tax registration
Step 3: Draft Direct Employment Contracts
Create contracts that reflect your culture, compensation strategy, and employee growth plans, something impossible with EOR restrictions.
Step 4: Communicate Transparently With Employees
Clear communication ensures trust and reduces turnover during the transition.
Step 5: Set Up Payroll and Compliance Systems
Partner with local experts for payroll, reporting, and contributions to ensure full compliance.
Step 6: Phase the Transition
Begin with key roles, refine processes, and scale smoothly.
EOR vs. Direct Hiring in Belgium: There Is No Contest
EOR – The High-Risk, High-Cost Option
Advantages:
- Quick initial setup
- Low upfront cost
Critical Disadvantages:
- Often illegal without proper licensing
- Extremely expensive long term
- No access to tax incentives
- Weak employer-employee relationship
- Limited control over contracts and benefits
- High compliance risk
Direct Hiring – The Only Sustainable Model
Advantages:
- Full control over HR, payroll, and policies
- Eligibility for major tax reductions
- Stronger culture and employee retention
- Predictable, stable costs
- Full transparency with Belgian authorities
- Long-term scalability
Disadvantages:
- Slightly higher initial setup effort (but minimal with expert support)
Bottom Line:
Direct hiring is the only model that supports long-term growth, legal certainty, and real market presence in Belgium.
Navigating Belgian Compliance: Why EOR Makes It Harder
Belgium’s “loan of personnel” restrictions make EOR operations complicated and dangerous. Long-term placements, common in EOR models, are not allowed unless the EOR operates under temporary agency law with a €75,000 financial guarantee.
Most EOR providers simply do not qualify. This places the client company at risk of:
- Retroactive social security assessments
- Employee reclassification
- License investigations
- Contract nullification
Direct hiring removes every layer of this risk.
The Smart Alternative: Direct Hiring Without a Local Entity
Belgium allows foreign employers to hire staff directly by registering with ONSS via the Wide portal. This is a fully compliant model that avoids:
- EOR restrictions
- Licensing issues
- Excessive fees
You gain:
- Direct employee ownership
- Access to incentives
- Full control over contracts
- Legal clarity
Processing times are extremely fast, ONSS identification often arrives within 2–5 days.
When to Transition Away From EOR
You should transition immediately if:
- You plan to stay in Belgium long term
- EOR fees exceed your financial comfort
- You want to offer stock options or tailored benefits
- You need to protect IP, culture, and employer brand
- Your EOR lacks a temporary agency license
- You are growing beyond 2–3 employees
Delaying increases financial waste and exposure to Belgian enforcement.
How to Execute the Transition Seamlessly
1. Choose Your Legal Structure
- Foreign Employer Without Establishment (FEWE) — fastest and simplest
- Local Entity (SRL/BV) — ideal for larger teams or physical presence
2. Notify Your EOR and Employees
Follow notice periods as per contract and Belgian labor law.
3. Terminate and Re-Hire Compliantly
Preserve seniority, rights, and benefits during transfer.
4. Complete Administrative Transfer
Register with ONSS, tax authorities, and payroll systems.
Legal support ensures accuracy and prevents penalties.
Managing Direct Hires: What You Must Know
Belgium requires employers to handle:
- Social contributions (approx. 25% for private sector)
- Withholding taxes
- Accurate payroll reporting
- Compliance with regional labor laws
Key labor rules include:
- 38-hour standard workweek
- +50% overtime weekdays, +100% weekends
- Mandatory 20 vacation days + 10 public holidays
- Strict termination notice structures
These obligations are straightforward with the right local payroll partner.
Why Expert Guidance Is Essential
Belgian labor law is detailed, regionalized, and consistently updated. Partnering with local specialists ensures:
- Flawless payroll
- Zero compliance risks
- Smooth audits
- Sector-specific adaptation
This allows your HR and leadership teams to focus on growth, not bureaucracy.
Final Verdict: EOR Might Be a Shortcut, But It’s a Dangerous One in Belgium
| EOR seems convenient, but in Belgium it’s: | Direct hiring, on the other hand, is: |
|---|---|
| ❌ Legally risky | ✔ Compliant |
| ❌ Financially inefficient | ✔ Cost-effective |
| ❌ Structurally limiting | ✔ Scalable |
| ❌ Culturally disconnected | ✔ Trust-building |
| ✔ Future-proof |
Transitioning from EOR to direct employment is not just recommended, it is the only responsible strategy for companies serious about long-term success in Belgium.
Frequently Asked Questions (FAQ)
What exactly is an Employer of Record (EOR) in Belgium?
An EOR is a third-party that employs workers on your behalf. While this may seem convenient, in Belgium the model operates in a legal gray zone because staffing arrangements require a temporary agency license, something most EORs do not hold.
Is it legal to use an EOR in Belgium?
Only if the EOR is a licensed temporary work agency with a €75,000 financial guarantee.
Most are not, making many EOR setups technically non-compliant.
What alternatives exist for hiring without an EOR?
The best alternative is becoming a Foreign Employer Without Establishment (FEWE), which allows you to hire directly without opening a Belgian office. This method is fully legal and unlocks tax benefits unavailable through EORs.
How does the 13th-month salary work?
It is a mandatory annual bonus, 1/12 of an employee’s yearly salary, usually paid in December. Proper payroll setup ensures compliance.
What steps are needed to transition from EOR to direct hiring?
- Choose between FEWE or a local entity
- Notify your EOR and employees
- Terminate and rehire directly
- Register with ONSS and tax authorities
- Implement payroll and compliance systems
