Belgium: Labour Deal 2022: The Transition Track

The Labour deal (Act of 3 October 2022 concerning various labour provisions) provides for a number of novelties in dismissal law. A first measure is the introduction of transition tracks (Chapter 5) in Article 37/13 Employment Contracts Act.

A “transition track” is the possibility for an employee with an open-ended employment contract who has been dismissed with a notice period to perform work for another employer during that period. Such a transition track can be offered by the employer or can be done at the employee’s request. It is purely a possibility; the employee may request it but has no right to it and the employer cannot force it on the employee. Both parties therefore have a right of veto. There is also a prohibition on adverse action (including dismissal) against the employee who refuses (though without any specific penalty for the employer) and the explanatory memorandum makes it clear that there is no impact on the employee’s entitlement to unemployment benefits.

The conditions and duration of the transition track should be laid down in a prior written four-party agreement between the employer, the employee, the employer-user and the intermediary. Indeed, a transition track can only take place through the mediation of a temporary employment agency or through a regional public employment service (VDAB/Forem/Actiris). The maximum duration of the transition track is equal to the remaining notice period; the minimum duration will be determined by royal decree.

During the transition track, the (old) employer will pay the employee the salary applicable for the position performed with the employer-user. The salary should, however, at least correspond to the salary the employee would receive if he/she performed the services with the former employer (i.e. his/her normal salary during the notice period). It may therefore be that the employee will receive a higher wage, but he/she will never earn less during the transition period than if he/she simply performed the notice period with the old employer. At first glance, the potential additional pay may not seem like an attractive prospect for the old employer, but the employer-user must compensate part of the pay to the old employer. Just how much that compensation amounts to is not prescribed by the Act and will be the subject of the contract and thus negotiations between the old employer and the employer-user. Nor does the Act stipulate that this compensation must be limited to the additional salary that the old employer has to pay, the agreement may just as well stipulate that the employer-user must also take responsibility for part of the salary that the old employer had to pay anyway during the notice period. This makes sense, as the employee will perform work for the employer-user and in this way the system also becomes attractive for the old employer. After all, otherwise, the old employer will pay its dismissed employee the normal wage to work for someone else. The only reason to agree to the transition process in that case is if the old employer wanted to exempt the employee from executing his work anyway (garden leave).

The transition track is an exception to the ban on hiring-out workers. The old employer remains the employee’s employer during the transition process, but the employee-user is responsible for applying the provisions of the legislation on health & safety applicable at the place of work, in accordance with Article 19 of the Act on temporary employment. Furthermore, the division of powers between the two employers has not been worked out, leaving many questions open for interpretation. The role of the temporary employment agency or the employment service also remains very vague or even completely unspecified (will a royal decree follow?). One could also ask whether the intervention of the temporary employment agency or the employment service is actually necessary to bring about a successful transition track.

The law provides a possibility for the employer-user and the employee to unilaterally stop the transition track early with a notice period. The notice period is calculated according to the normal rules (Art. 37/2, §1 and 2 Employment Contracts Act), taking into account the employee’s seniority since the beginning of the transition track. If the notice emanates from the employer-user, the employee can terminate the transition track immediately with a counter notice. After the notice period, the employee simply returns to the old employee where he/she must resume his/her old position for the remainder of the notice period. Whether this will be practical at that time is another question. Given that the Act refers to the notice periods in Art. 37/2 Employment Contracts Act, it also seems possible to pay a severance payment in accordance with Art. 39 Employment Contracts Act instead. However, this follows purely from the reading of Art. 39 labour contract law referring to art 37/2. Neither the Labour Deal Act nor the new Art. 37/13 Employment Contracts Act explicitly provide this option.

The explanatory memorandum also addresses the consequences of incapacity for work (the employer will pay the guaranteed salary) and lack of work due to force majeure during the transition period.  According to the explanatory memorandum, the employee also retains a right to job search leave (but will not be allowed to abuse it).

If the transition track is completed until the end of the notice period (i.e. the notice period following the termination of the initial employment contract), the employer-user must, in principle, offer the employee an employment contract for an indefinite period. To prevent the employee from losing the protection of a notice period, if the employer-user does not offer an employment contract, it will have to pay compensation equal to the current salary corresponding to half the term of the transition period. Indeed, otherwise, the employee has potentially wasted months of his/her time and falls back on unemployment benefits at the end of the track. Employer-users may well prefer to circumvent this fee by still giving a unilateral notice just before the end, especially if this notice is “more advantageous” than the penalty compensation. It remains to be seen whether case law will accept such manoeuvres; the Act remains silent on the matter, and, in principle, this will therefore be theoretically possible.

If the employee does become employed by the employer-user, he/she will retain the seniority from the start of the transition process as regards the calculation of the notice period at the end of the new employment contract. Moreover, even the seniority with the old employer (i.e. based on the previous employment contract) will be taken into account as regards the right to career break and time credit.

With this system, the legislator wanted to create a new system to end employment contracts in a more attractive way. For the employee, this has the advantage that he/she does not have to perform the notice period with the old employer and, moreover, it gives the employee a quick prospect of a new permanent employment contract and he/she will possibly already receive a higher salary. In this way, the employer-user does not have to wait long for the hiring of a new worker and will also get a hefty discount on the employee’s salary. Moreover, there are also escape options should the cooperation prove unsuccessful after all. Finally, this system may be interesting for the old employer if he/she prefers to get rid of the employee sooner without having to pay the full termination fee, as part of the salary will be compensated. It will probably depend on the practicality of this system (and the costs of the service/agency) whether this system will actually be a success.

No special implementation provisions regarding the entry into force are provided. Moreover, this system will also apply to public sector contractual workers.