A parliamentary Act of 12 April 2011 is fundamentally altering Belgian dismissal law. It brings the treatment of blue and white-collar workers closer together without simultaneously abolishing the difference in treatment. Furthermore, it takes away the insecurity that a lot of employers are currently facing when dismissing white-collar employees.
New rules on notice periods as from 2012
To whom do the new rules apply?
The new rules for notice periods will apply to employment contracts of which the execution commences on 1 January 2012 or later. The date of execution of the contract as agreed by both parties will determine whether the new rules are applicable. The date on which the contract was concluded is not decisive.
It is striking that the new law has no provisions on any transitional period and therefore makes a clear distinction between the current and the new rules. For the ‘higher’ white-collar workers that already entered into service and ‘higher’ white-collar workers who are going to be employed before 1 January 2012 under the current regulation, the Claeys Formula (claeysformula.be) will retain its value as a guide for the determination of the notice periods (see also: whoswholegal.com/news/features/article/12395/firing-white-collar-employees-belgium/).
It is possible that an employment contract starting after 1 January 2012 was preceded by another contract between the same parties. If there is a break of more than seven days between both contracts, the new rules will apply. If the second contract immediately follows the first contract, or if the break between contracts is at most seven days, the date of the first contract will determine if the current or new rules are applicable. If the first contract entered into force before 1 January 2012, then the current rules remain relevant.
Calculation of seniority
The notice period will be calculated according to the seniority (years of service) acquired at the time the notice takes effect.
Temporary work for the same employer will be taken into account to determine the seniority relevant for the notice period. However, this additional seniority is only included in the event of termination of the employment contract by the employer and under specific conditions:
• the employee was recruited by the employer immediately after the temporary work or after a break of at most seven days, and
• the employee is recruited for the same function he/she previously executed as a temporary worker, and
• the previous period of temporary work was continuous. A period of inactivity for a week or less is nonetheless regarded as a period of employment.
Periods of time between temporary contracts are also included when these breaks lasted no longer than seven days. Thus, a temporary worker employed over a period of five months with consecutive employment contracts from Monday to Friday, will acquire an additional seniority of five months.
Multiple periods of temporary work are added to the total period of seniority if the same function is concerned. This additional seniority may not exceed one year.
The new rules for blue-collar workers
The new law provides for the current notice periods for blue-collar workers increased by a factor of 1.15. If the employment contract is terminated by the employer, the following notice periods will apply:
Seniority of blue-collar worker
< 6 months 28 days
≥ 6 months and < 5 years 40 days
≥ 5 years and < 10 years 48 days
≥ 10 years and < 15 years 64 days
≥ 15 years and < 20 years 97 days
≥ 20 years and more 129 days
If the employment contract is terminated by the blue-collar worker, the notice period is 14 days. This period is doubled when the employee has been continuously employed for 20 years or more by the same employer.
Alternative notice periods that were adopted before 1 January 2012 by Royal Decree on the proposal of a joint committee, continue to apply for the present. The existing sector-wide derogations that among other things, guarantee financial advantages to soften the consequences of dismissal also continue to apply. Nevertheless, the social partners in the joint committees should examine if these derogations should not be adjusted. The social partners may thus propose to maintain or adjust the sector-wide derogations. Only if these negotiations fail will the 1.15 increase be applied to dismissals served as from 1 January 2013.
The new rules for white-collar workers
The difference between ‘lower’ and ‘higher’ white-collar workers will remain in place under the new rules. Also the possibility to mutually agree on a different notice for the ‘highest’ white-collar workers remains.
• For ‘lower’ white-collar workers (gross annual remuneration less than E30, 535, as of 2011. This amount is subject to indexation annually) nothing changes at all. For them, the so-called ‘legal minimum’ continues to apply (three months notice for every started period of five years seniority).
• For the ‘higher’ white-collar workers (gross annual remuneration in excess of E30, 535 the new rules will have a significant effect). A convergence coefficient of 97 per cent is applied leading to a conversion of the notice period in days.
The starting point is a notice period of 30 days per started year of seniority. The period may, however, not be shorter than that of the ‘lower’ workers (three months notice for every started period of five years seniority). This means that a notice of three months (or 91 days) must be respected as long as the employee has not acquired three years of seniority. Likewise, a notice period of six months (or 182 days) must be respected if the ‘higher’ white-collar worker has acquired five years or more but less than six years of seniority.
In the event of termination of the employment contract by the employer, the following notice periods thus apply:
Seniority of white-collar worker
< 3 years 91 days
≥ 3 years and < 4 years 120 days
≥ 4 years and < 5 years 150 days
≥ 5 years and < 6 years 182 days
For employees with at least six years of seniority, the notice period that must be observed by the employer is fixed at 30 days per started year of seniority.
The ability to determine the notice period between parties in common agreement or by the court in accordance with its power to decide on an appropriate notice period, no longer exists under the new rules governing notice periods.
In the event of termination of the employment contract by the white-collar worker, the notice periods have been adjusted starting from the current principle that an employee has to respect a notice that amounts to half of the notice that the employer must respect (albeit with a ceiling). Consequently, the following notice periods will apply in case of termination by the employee:
Seniority of white-collar worker
< 5 years 45 days
≥ 5 years and < 10 years 90 days
≥ 10 years 135 days
≥ 15 years and a gross annual remuneration of > E61, 071 180 days
• As provided by the government’s mediation proposal, as from 1 January 2014, a convergence coefficient of 94 per cent will be applied to notice periods for ‘higher’ white-collar workers in case of termination by the employer. This coefficient will result in the following notice periods:
Seniority of white-collar worker
< 3 years 91 days
≥ 3 years and < 4 years 116 days
≥ 4 years and < 5 years 145 days
≥ 5 years and < 6 years 182 days
For white-collar workers who are at least six years in service, the notice period to be respected by the employer will be fixed at 29 days per started year of seniority.
• With regard to the ‘highest’ white-collar workers (with a gross annual remuneration of more than E61, 071 (as of 2011. This amount is subject to indexation annually) at the time of entry into service), the possibility to fix the notice period in mutual agreement (with a minimum of three months per started period of five years seniority) is maintained. If this agreement is not concluded at the latest at the moment the employee enters into service, the notice periods of the ‘higher’ white-collar workers will apply.
• The new rules prohibit sector-wide CBA’s to ‘level-up’ the notice periods of white-collar workers. Therefore, the possibility for notice periods to be extended by the joint committees at the level of the industry sector is excluded.
• When the employment contract is terminated without regard to the relevant notice period, an indemnity in lieu of notice is due (as provided for in article 39 of the Law on Employment Contracts).
Because remuneration of white-collar workers is usually expressed as a monthly amount, a new formula allows to calculate the daily salary. The formula involves the calculation of the salary per quarter, divided by the number of days in a quarter:
Daily salary white-collar employee = monthly salary × 3/91
(The monthly salary also includes “benefits acquired by virtue of the employment contract”).
The explanatory memorandum to the new law states that the new rules would not affect the principles with regard to the determination of the yearly salary to calculate a notice indemnity. The “current remuneration” thus still means the remuneration that the employee is entitled to at the time of termination of the employment contract, including benefits acquired by virtue of the employment contract.
Otherwise the new law explicitly states that, in the event the current monthly salary also includes variable pay, the average variable salary of the previous 12 months is taken into account. This gives some clarification on the way variable pay is to be included in the calculation of a notice indemnity. While this provision only applies to dismissals under the new rules, we presume that this method of calculation will probably influence the current rules on the termination of employment contracts. Hence, as of 2012 only the variable salary of the previous 12 months will be included in the notice indemnity, while some courts to date take into account an average over several years. The new law does not provide an answer to the question which variable salary must be included in the notice indemnity: variable salary earned or paid out in the previous 12 months.
Special new contribution
Finally, we point out that the new law provides for a specific contribution to be paid to the Compensation Fund for Redundant Employees of Closed Businesses when an employer decides to dismiss an employee with a gross annual remuneration of more than E61, 071. The contribution is equal to 3 per cent of “the cost of the dismissal”. To date, it is not clear what is meant by ‘the cost of the dismissal’. The term will, however, be defined by royal decree. The same goes for procedures and terms of payment of the contribution and the entry into force of the provisions (at the earliest on 1 January 2012).
The new rules clearly preserve the distinction between blue-collar and white-collar workers. The new law should therefore only be considered as a first step towards harmonisation of statuses of blue-collar and white-collar worker.
There is a clear distinction between the current and new rules as is illustrated by the lack of transitional rules. This means that, for the dismissal of a ‘higher’ white-collar worker under the current rules, the Claeys Formula will still maintain its value as a guidance tool for the years to come. Nevertheless, it is possible that the labour courts will be inspired by the new notice periods when assessing the appropriate notice period for ‘higher’ white-collar workers under the current rules.