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Termination of Employment Contracts in Belgium

1. 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.

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) and 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 recognized by the competent joint committee).

2. Collective Dismissals

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 undertaking if:

  1. there is a definite stoppage of the principal activity of the undertaking (or a division thereof); and
  2. 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.
    1. 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 case of 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 5.998,2 € (figure in 2015).

      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).

      3. Individual Dismissals

      (i) 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 authorization to dismiss an employee (except for the dismissal of an employee representative or a prevention advisor).

      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.

      If the employment contract is terminated with the payment of an indemnity in lieu of notice, no specific formalities need to be complied with.

      (ii) 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 the 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 observe the following formalities: he must dismiss the employee within three working days as of the day he became 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-day-period.

      (iii) 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, 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 recognized beforehand by the competent joint committee. In each of the aforementioned cases, the law prescribes a specific and complex procedure.

      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).

      (iv) 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.

      4. Separation Agreements

      (i) Is a Separation Agreement required or considered best practice?

      It is common practice (especially for higher employees) that the parties to an employment contract would conclude a separation agreement stipulating, a.o. the amount of the indemnity in lieu and that the employee waives any other claim he may have.

      (ii) What are the standard provisions of a Separation Agreement?

      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, a non-compete clause, etc.

      (iii) Does the age of the employee make a difference

      No

      (iv) Are there any additional provisions to consider?

      No

      5. 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 favor 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.

      6. Void Dismissal

      (i) 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.

      (ii) 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.

      For more information on these articles or any other issues involving labour and employment matters in Belgium, please contact Chris Van Olmen, Partner at Van Olmen & Wynant (www.vow.be) at chris.van.olmen@vow.be
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