09. Transfer of Undertakings

Employees’ Rights in Case of a Transfer of Undertaking

Under Belgian law, the transfer of an undertaking (or of a division thereof) is governed by Collective Bargaining Agreement n° 32bis of 7 June 1985. If a business or a division of a business, forming an economic entity, is transferred to a new employer, so that there is a ‘going concern’ of the activity of the business (division) after the transfer, there is a transfer of undertaking as referred to in CBA 32bis. In the event of a transfer:

• all employees working in the transferred business division are automatically transferred to the transferee. In principle, the employees may not oppose the transfer, unless the transfer would entail serious modifications to an essential element of the employment contract (e.g. salary, place of work, duties). In the absence of such modifications, a refusal on the part of the employee could be considered as an implicit resignation. Alternatively, the employer (the transferee) could also dismiss the employee concerned for serious cause.
• the rights and obligations of the transferor arising from the employment contracts existing on the date of transfer are automatically transferred to the transferee.
• it is prohibited for both the transferor and the transferee to dismiss employees on the grounds of the transfer of undertaking, besides dismissals for just cause and dismissals based on technical, economic or organisational reasons. Any employee illegally dismissed by the transferor will have the possibility to introduce a court procedure against both the transferor and the transferee in order to obtain the payment of a termination indemnity and/or damages (the illegality of the dismissal does not have, as a consequence, that the dismissal would be considered null and void). Case law generally sets the amount of the damages between 500€ and 5.000€.
• a joint and several liability of transferor and transferee vis-à-vis the transferred employees and the National Social Security Office, is in place for the debts existing on the date of the transfer.

Requirements for Predecessor and Successor Parties

Under Belgian law, the transferor and the transferee have an obligation to inform their respective employee representative bodies (i.e. the Works Council, or in the absence thereof, the Trade Union Delegation, or in the absence thereof the CPPW) about a proposed transfer (which includes a merger, concentration, take-over, closure or other important structural change negotiated by the company). The employees must be informed individually about the proposed transfer in case (i) there is only a Committee for Prevention and Protection at Work, or (ii) there are no employee representative bodies within the undertaking.

The transferor and the transferee must also consult the employee representative bodies in particular with regard to the repercussions on the employment prospects for the personnel, the work organisation and the employment policy in general. The information and consultation process should take place before a decision on the planned transfer is made. Failure to comply with this obligation would render the employer liable to criminal sanctions (a fine of 300€ to 3.000€, multiplied by the number of employees involved, up to a maximum of 300.000€).