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07. Termination of Employment Contracts

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07. Termination of Employment Contracts

Grounds for Termination

From 1 April 2014, all employees with more than six months of seniority have the right to be informed of the reason for their dismissal. If the employer fails to inform the employee of the reason for dismissal, the employee can require the employer to give an explanation. If no (timely) explanation is provided, the employer owes a lump-sum civil fine of two weeks of salary. The employee is entitled to dispute the reason for dismissal before the labour court.

Employees engaged under an open-ended employment contract may claim damages, ranging between 3 and 17 weeks of salary, in the labour court if their dismissal is ‘unjustified’. An ‘unjustified dismissal’ would be considered as a dismissal (i) for reasons unrelated to the employee’s capability or conduct, or to the operational requirements of the undertaking, and (2) which would never have been decided upon by a normal and reasonable employer. This is also called a ‘manifestly unreasonable’ dismissal.

If a party has committed a serious fault, the employment contract can be terminated for serious cause without the serving of a notice period or the payment of an indemnity. Examples of a serious fault are theft, violence, …

Some employees enjoy special protection against dismissal, meaning that they may not be dismissed on some grounds (e.g. pregnant women may not be dismissed because of their pregnancy) or cannot be dismissed unless for specific reasons provided by law (e.g. employee representatives in the Works Council and Committee for Prevention and Protection at Work (CPPW). Also, non-elected candidates may only be dismissed for serious cause with prior approval of the labour court, or for economic or technical reasons that have been recognised by the competent joint committee.

Collective Dismissals

Where multiple redundancies qualify as a collective dismissal, the legislation on collective dismissals applies, and possibly the legislation regarding the closure of undertakings. There is a collective dismissal where, during a continued period of 60 days, a minimum number of employees are terminated for reasons, which do not relate to the person of the employees. This minimum number is:

  • 10 in undertakings (or a division thereof) employing more than 20 but less than 100 employees;
  • 10% of the total number of employees in undertakings employing at least 100 but less than 300 employees;
  • 30 in undertakings employing at least 300 employees.

There is a closure of an undertaking if:

  • there is a definite stoppage of the principal activity of the undertaking (or a division thereof); and
  • the number of employees is reduced beneath one fourth of the average number of employees who were employed in the undertaking during the four quarters preceding the definite stoppage of the activity.

A collective dismissal or a closure triggers the prior information and consultation obligations towards the employees (either through the Works Council or, if there is none, the Trade Union Delegation, or, failing this, the employees in person). The intention to proceed with a collective dismissal or closure must also be communicated to the competent administration (the director of the sub-regional unemployment office).

In principle, a collective dismissal gives rise to the payment of a special monthly compensation during a period of 4 months, in addition to any indemnity in lieu of notice. Only employees entitled to a notice period of less than 7 months are entitled to this compensation for collective dismissal. For the purpose of the payment of a special monthly compensation, a slightly different definition of collective dismissal has been adopted. Collective dismissal in this context means any dismissal for economic or technical reasons affecting, over an uninterrupted period of 60 days, at least 6 employees if the undertaking employs at least 20 and less than 60 employees, and 10% of the average number of employees employed during the previous calendar year if the undertaking employs at least 60 employees.

In case of a closure of an undertaking and if the conditions are met, the employees will be entitled to a closure indemnity equal to a fixed amount per year of seniority within the undertaking and per year exceeding the age of 45, with a maximum total of 7.458,36 € (figure in 2022). In the majority of cases, employers and trade union organisations establish a social plan granting additional compensation to the employees’ concerned and other measures with a view towards reducing the consequences of the collective dismissal (e.g. early retirement schemes). If the employer employs more than 20 employees, a re-employment unit (‘cellule pour l’emploi’ / ‘tewerkstellingscel’) aimed at the activation of the dismissed employees has to be installed in case of a collective dismissal (in this context, yet another definition of collective dismissal is applied). An employer employing 20 employees or less is only obliged to install such re-employment unit if he wishes to dismiss employees within the framework of an early retirement (system of unemployment benefits with employer top-up) at an age lower than the age that is normally applicable for early retirement within the company. The re-employment unit has to make an outplacement offer to the employees who are dismissed and who participate in the re-employment unit.

Lastly, it is important to note that sectors can have additional procedures (laid down in CBA’s) that could provide for certain information and consultation rules, etc., which, even in the case of multiple dismissals, do not fall under the European and national collective dismissal rules.

Individual Dismissals

Termination of an open-ended employment contract through serving a period of notice or payment of an indemnity

Employment contracts are generally terminated through serving a notice period or the payment of an indemnity in lieu of notice. A combination of both, where the serving of a notice period is followed by the payment of an indemnity for the remainder of the notice period is also possible. An employer does not require any authorisation to dismiss an employee (except for the dismissal of an employee representative or a prevention advisor, see below).  As part of the recent Belgian labour law reform, notice periods for blue- and white-collar employees are now aligned for employment contracts taking effect from 1 January 2014. These notice periods are fixed by law and only depend on the employee’s seniority. They are expressed in weeks.

For open-ended contracts that took effect before 1 January 2014, the notice period to be observed in case of dismissal comprises two parts which must be added up. The first part is based on the employee’s seniority acquired before 1 January 2014 and will be calculated according to transitory rules; the second part is based on the employee’s seniority as of 1 January 2014 and is calculated on the basis of the new regime. A legislative modification took place in 2018 and changed (mostly reduced) the notice period for the termination of the employment contract in the first 6 months, applying to all terminations occurring after 1 May 2018.

The table below summarises the rules with regard to the notice periods to be respected for open-ended contracts that took effect on or after 1 January 2014 (only step 2), on the one hand, and contracts that took effect before 1 January 2014 (step 1 + step 2 = step 3), on the other hand.

Step 1

 

Notice period based on seniority before 01/01/2014

 

Blue collar employees
Employment agreement < 01/01/2012 Employment agreement ≥ 01/01/2012

(‘IPA-law’)

Notice by employer Notice by employee Notice by employer Notice by employee
<6m : 28d <6m : 28d
≥6m and <5y : 35d ≥6m and <5y : 40d
≥5y and <10y : 42d ≥5y and <10y : 48d
≥10y and <15y : 56d ≥10y and<15y : 64d
≥15y and <20y : 84d <20y : 14d ≥15y and<20y : 97d <20y : 14d
≥20y : 112d ≥20y : 28d ≥20y : 129d ≥20y : 28d
Or deviating notice periods included in CBA’s applicable on 31/12/2013.Or Or
Lower white-collar employees (salary on 31/12/2013 ≤ 32.254€)
Notice by employer Notice by employee
3 months per started period of 5 years seniority 1,5 months per started period of 5 years seniority, with a max. of 3 months
Higher white-collar employees (salary on 31/12/2013 > 32.254€)
Notice by employer Notice by employee
1 month for each started year of seniority, with a minimum of 3 months 1,5 months per started period of 5 years seniority, with a max. of:

Ø  4,5m if wage < 64.508€

Ø  6m if wage ≥ 64.508€

Step 2

 

 

Notice period based on seniority after 01/01/2014

 

Seniority Notice by employer Notice by employee
0–3 months 1 week 1 week
< 4 months 3 weeks 2 weeks
< 5 months 4 weeks 2 weeks
< 6 months 5 weeks 2 weeks
6-9 months 6 weeks 3 weeks
9-12 months 7 weeks 3 weeks
12-15 months 8 weeks 4 weeks
15-18 months 9 weeks 4 weeks
18-21 months 10 weeks 5 weeks
21-24 months 11 weeks 5 weeks
As from 2 years 12 weeks 6 weeks
3 years 13 weeks 6 weeks
4 years 15 weeks 7 weeks
5 years 18 weeks 9 weeks
6 years 21 weeks 10 weeks
7 years 24 weeks 12 weeks
8 years 27 weeks 13 weeks
9 years 30 weeks 13 weeks
10 years 33 weeks 13 weeks
11 years 36 weeks 13 weeks
12 years 39 weeks 13 weeks
13 years 42 weeks 13 weeks
14 years 45 weeks 13 weeks
15 years 48 weeks 13 weeks
16 years 51 weeks 13 weeks
17 years 54 weeks 13 weeks
18 years 57 weeks 13 weeks
19 years 60 weeks 13 weeks
20 years 62 weeks 13 weeks
21 years 63 weeks 13 weeks
22 years 64 weeks 13 weeks
23 years 65 weeks 13 weeks
24 years 66 weeks 13 weeks
As of 25 years + 1 week/started year

 

13 weeks
Step 3

 

Total

The total notice period (NP) = NP step 1 + NP step 2

But in case of notice by employee :

·       If step 1 resulted in the max. of 3, 4 ½ or 6 months  −> no step 2

·       step 1 + step 2 are limited to 13 weeks

 

The Unified Employment Status Act also provides for transitory measures for blue-collar employees of certain labour-intensive and competitive industries (e.g., construction, clothing, diamonds industry, etc. …) and temporary and mobile workplaces. To be valid, notice must be given in writing and specify the starting date and the length of the notice period. If the contract is terminated by the employer, notice must be served by registered mail or by bailiff. Moreover, notice must be given in the correct language. If the employment contract is terminated with the payment of an indemnity in lieu of notice, no specific formalities need to be complied with.

Termination for serious cause

Either of the parties may terminate the employment contract for serious cause, irrespective of whether this employment contract had been entered into for a fixed term or for an indefinite term. ‘Serious cause’ is defined as a fault so serious that it renders any continuation of the working relationship immediately and definitively impossible. Where an employment contract is terminated for serious cause, no notice period needs to be observed nor does any compensation in lieu of notice have to be paid. In case of a termination for serious cause, the employer needs to strictly observe the following formalities: he must dismiss the employee within three working days as of the day he became sufficiently aware of the serious facts and he must inform the employee, by registered mail, of the grounds of his/her dismissal at the same time or within another 3-working-day-period.

Protected Persons Status

Some employees enjoy special protection against dismissal based on a specific circumstance, which they find themselves in. Therefore, it is explicitly forbidden for employers to dismiss someone because of this specific circumstance (e.g., pregnant employee, employees who have filed a complaint for harassment, whistleblowers, employees on maternity leave, …) during the protection period. In case of violation, special protection indemnities (equal to 3 or 6 months of salary) will be due in addition to the notice period or indemnity in lieu of notice.

Employee representatives in the Works Council and the CPPW and also non-elected candidates may only be dismissed for serious cause with the prior approval of a labour court, or for economic or technical reasons that have been recognised beforehand by the competent joint committee. In each of the aforementioned cases, the law prescribes a specific and complex procedure. Violation of these rules of protection will oblige the employer to pay compensation to the dismissed employee, in a fixed and variable amount depending on the employee’s seniority within the company (from 2 up to 8 years of wages).

Also, for the dismissal of a member of the Trade Union Delegation or the dismissal of the prevention advisor, a specific procedure needs to be complied with. In case of violation, additional compensation will be due on top of the indemnity in lieu of notice (1 year of salary for the trade union delegate and 2 or 3 years of salary for the prevention advisor). Moreover, CBA’s entered into on industry level may include specific procedures to be complied with in case of dismissal and additional compensation in case of violation (e.g. banking sector).

Is Severance Pay Required?

Severance payment (indemnity in lieu of notice): an employer can choose to either terminate an employment contract with the granting of a notice period or to terminate the employment contract immediately with the payment of an indemnity in lieu of notice. A combination of both, where the serving of a notice period is followed by the payment of an indemnity for the remainder of the notice period is also possible. The indemnity in lieu of notice is calculated on the basis of the annual salary of the employee at the time of termination, including statutory and contractual fringe benefits. If the employment contract is terminated with the payment of an indemnity in lieu of notice, no formalities need to be complied with; this is contrary to a termination through serving a notice period.

Separation Agreements

Is a Separation Agreement required or considered best practice?

This is not mandatory, but it is common practice (especially for higher-up employees) that the parties to an employment contract would conclude a separation agreement stipulating, i.e., the amount of the indemnity in lieu and that the employee waives any other claim he may have.

What are the standard provisions of a Separation Agreement?

It is customary to include: the indemnities that will be paid by the employer to the employee, upon signing the agreement; a confidentiality clause; a clause in which the employee waives the right to make any claim he may have; and a non-compete clause, among others.

Does the age of the employee make a difference?

No.

Are there additional provisions to consider?

No.

Remedies for Employee Seeking to Challenge Wrongful Termination

The employee can dispute:

  • the length of the notice period served (although these kinds of claims have become exceptional as the new Unified Employment Status Act includes fixed notice periods now, contrary to what was the case before).
  • the salary package used as a calculation base for the indemnity in lieu of notice.
  • the fact that no (timely) motivation of the dismissal was given by the employer, although the employee asked for the reasons for his/her dismissal (indemnity of 2 weeks of salary).
  • the reason for dismissal. If the dismissal is deemed unjustified, meaning that it was “manifestly unreasonable”, the employer owes damages for an amount ranging from 3 to 17 weeks of remuneration.
  • the dismissal for serious cause. The employee can invoke that the 3 day-term to dismiss or to inform the employee on the grounds of the dismissal has been violated, or that the grounds for dismissal do not constitute a serious cause. If the claim is successful, the employee will be entitled to an indemnity in lieu of notice equal to the salary for the notice period that should have been served.
  • the fact that the employer terminated the employment contract of an employee who enjoys special protection against dismissal, in violation of any rule with regard to the employee’s protected person’s status. If the court rules in favour of the employee, a special protection indemnity ranging from 3 or 6 months (in general) up to even 8 years of salary (maximum amount in case of a dismissal of a member of the Works Council or CPPW) will be due by the employer.
  • that his/her dismissal was discriminatory. In that case, the employer risks to be sentenced to a supplementary indemnity of 6 months of salary.

The employee should bring any claim before the labour court within a maximum of one year as of the termination of his/her employment contract. If not, the claim will be deemed barred by the statute of limitation.

Void dismissal

Termination with a notice period: As indicated, any notice must be given in writing and in the correct language, stating when the notice period starts and its duration. Moreover, the employer must serve notice by means of a registered letter or via a bailiff. Failing this, the notice may be deemed null and void. In that case, the employment contract will have been terminated without serving notice so that the employer will be obliged to pay an indemnity in lieu of notice.

Termination for serious cause: In case of a termination for serious cause, the employment agreement should be terminated within three working days after the party who terminates the contract acquired enough knowledge with respect to the serious cause. The notification of the grounds for dismissal should also be presented to the other party no later than 3 working days after the termination and by registered letter or via a bailiff. If these strict deadlines and formalities are not complied with, the dismissal for serious cause will be null and void, and an indemnity in lieu of notice will be due to the employee.

Whistleblower Laws

The former Belgian Commission for the Protection of Privacy (‘Privacy Commission’) (now replaced by the Supervisory Authority) describes ‘whistleblowing’ as follows: ‘whistleblowing systems are mechanisms that enable individuals to report conduct of a member of their organisation, which in their opinion is contrary to a law or a regulation or to the basic rules established by their organisation’. The implementation of such a system implies to take into account the legitimate interests of all the parties involved (the organisation, its staff, the whistleblower, the person(s) incriminated, third parties, etc.).

The Act of 28 November 2022 transposed the EU Whistleblowing Directive for the private sector. The regulation is applicable to all legal entities, including companies, with 50 or more employees and provides protection to a wide scope of persons, including self-employed persons or freelancers, who have acquired information on breaches in a work-related context.

From 15 February 2023, companies should have set up internal reporting channels. Companies consisting of 50 to 149 employees have to do this by 17 December 2023. In addition, Belgium provides external reporting channels allowing employees to report breaches outside their company.

Further, the alleged violations must be related to, i.a., public health, tax or social fraud (almost all breaches of social law), protection of privacy, environmental protection, transport safety, product safety, animal welfare and health. In principle, employees could opt to report anonymously, but companies with less than 250 employees are not required to provide anonymous reporting within their internal reporting system.

Under certain circumstances, it is possible to disclose the acquired information and still benefit from protection against retaliation from the employer (e.g. dismissal or adverse treatment). This is particularly the case when an external report has been made, but no appropriate action was taken in response, or when the employee has reasonable grounds to believe that:

  • the breach may be an imminent or real danger to the public interest, or;
  • that he/she is risking retaliation in the event of external reporting, or;
  • the breach is unlikely to be effectively remedied due to specific circumstances (e.g. evidence that may be withheld or destroyed).

As said, Companies should draft a clear and accessible policy that outlines the procedure. This procedure must include a deadline of 7 days to confirm the receipt of the report and a second deadline of 3 months to give feedback to the reporter on the adequate follow-up given to the report. The identity of the report should remain confidential, and reports should be handled by an independent reporting manager (or team). Whistleblowers are protected against retaliation.

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