demystifying dismissals: lessons learned after 1 year of new dismissal rules sophie maes partner...

Demystifying dismissals:lessons learned after 1 year of new dismissal rules

Sophie Maes Partner Claeys & Engels

26 February 2015

1 Why were changes required?

Historical differences between blue-collar workers and white-collar workers (notice periods, unfair dismissal, “carenz”-day ...)

7 July 2011: Judgment of Constitutional Court• Difference in treatment is discriminatory with regard to:

– notice periods– “carenz”-day

• Until 8 July 2013 to clear away differences in treatment

5 July 2013: Final Compromise Proposal

New Act of 26 December 2013, published on 31 December 2013

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2 New dismissal rules as of 1 January 2014

a) Dismissal by employer

For employment contracts which have started as of 1 January 2014

Notice/severance indemnity in lieu by employer: • Fixed • Only depend on length of service

– First 5 years of length of service: gradual increase of notice period– As of the 5th year of length of service: 3 weeks per started year of

seniority– After 20 years of length of service: delayed increase of notice period

• Expressed in weeks

Notice letter/start of the notice period on Monday3

Length of service • = period during which the employee uninterruptedly remained in

the service of the same undertaking

• At the moment the notice period begins

• Period worked as a temporary worker must be taken into account:– if the notice is given by the employer– identical function– period of temporary work may not be interrupted for more than

seven days– recruitment follows a period of temporary work with an interruption

of max. seven days– max. 1 year

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Length of service Notice period< 3 months 2 weeks

between 3 months and < 6 months 4 weeks

between 6 months and < 9 months 6 weeks

between 9 months and < 12 months 7 weeks

between 12 months and < 15 months 8 weeks

between 15 months and < 18 months 9 weeks

between 18 months and < 21 months 10 weeks

between 21 months and < 24 months 11 weeks

between 2 years and < 3 years 12 weeks

between 3 years and < 4 years 13 weeks

between 4 years and < 5 years 15 weeks

as of 5 years 3 weeks per commenced year of LoS

between 20 years and < 21 years 2 weeks per commenced year of LoS

as of 21 years 1 week per commenced year of LoS

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Length of service

Notice Length of service

Notice Length of service

Notice Length of service

Notice

0-3 mth 2w 5y 18w 16y 51w 27y 69w

3-6 mth 4w 6y 21w 17y 54w 28y 70w

6-9 mth 6w 7y 24w 18y 57w 29y 71w

9-12 mth 7w 8y 27w 19y 60w 30y 72w

12-15 mth 8w 9y 30w 20y 62w 31y 73w

15-18 mth 9w 10y 33w 21y(+ 1w/y)

63w 32y 74w

18-21 mth 10w 11y 36w 22y 64w 33y 75w

21-24 mth 11w 12y 39w 23y 65w 34y 76w

As of 2y 12w 13y 42w 24y 66w 35y 77w

3y 13w 14y 45w 25y 67w 36y 78 w

4y (+3w/y) 15w 15y 48w 26y 68w ... ...

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0 5 10 15 20 25 300

10

20

30

40

50

60

70

80

90

100

110

120

130Global

Compromisvoorstel

CAO 75 +15%

Lagere bedienden

Hogere bedienden (Formule Claeys)

Length of service

Num

ber o

f wee

ks (n

otice

)

CBA 75 + 15%

Compromise proposal/ne

Lower employees

Highest employees (Claeys formula)

b) Resignation by employee

½ notice period of notice period for employer

• To be rounded down to the lowest• Maximum 13 weeks

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Length of service Notice period< 3 months 1 week

between 3 months and < 6 months 2 weeks

between 6 months and < 12 months 3 weeks

between 12 months and < 18 months 4 weeks

between 18 months and < 24 months 5 weeks

between 2 years and < 4 years 6 weeks

between 4 years and < 5 years 7 weeks

between 5 years and < 6 years 9 weeks

between 6 years and < 7 years 10 weeks

between 7 years and < 8 years 12 weeks

as of 8 years 13 weeks

Same notice period as for employee, but limited to 4 weeks

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Length of service Notice period

< 3 months 1 week

between 3 months and < 6 months 2 weeks

between 6 months en < 1 year 3 weeks

As of 1 year 4 weeks

c) Counter-notice by employee

d) Fixed Term Contracts

Retain ability terminate with immediate effect

• Remuneration up to end term• But max 2x severance in case indefinite duration

Notice/Severance during first half of agreed upon period• Max 6 months• Only 1st contract Watch out for periods of suspension!

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Example 1 : employment contract 8 months

4 months 4 months

• Rule 1: normal notice first half of duration= 4 months• Rule 2: normal notice first 3 months= 2 weeks and 4th

month= 4 weeks• Rule 3: dismissal after 4 months → sanction = remuneration

end 8th month with max double normal notice– 5th + 6th month= 4 weeks * 2= 8 weeks < 3 / 2 months– 7th + 8th month: 6 weeks * 2= 12 weeks > up to end

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d) Fixed Term Contracts

(1) Incapacity following notice by employer

• Can terminate• Pay rest term minus period covered guaranteed pay since start

incapacity (during which terminated)• ‘Valid reason’?

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e) Dismissal during incapacity

(2) Deviating rules for fixed-term contracts:

• Less than 3 months and work incapacity of at least 7 days: termination without notice/indemnity

• More than 3 months and work incapacity of at least 6 months: max. 3 months , minus guaranteed salary

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e) Dismissal during incapacity

f) Exceptions

Deviations by industry CBA?

• Not permitted (even when more favourable for employee)

Deviations at company/individual level?

• Not explicitly forbidden remain possible, but may not be less favourable for employee

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f) Exceptions

Pension age?• If the employer terminates the employment contract for an

indefinite period as of the first day of the month following the month in which the employee reaches the legal pension age

• Notice period for employer: normal notice period but with a maximum of 26 weeks

Unemployment with company allowance scheme• No reduction, except in case of restructuring (min. 26 weeks)

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f) Exceptions

In some specific blue-collar industries• Lower notice periods (2-16 weeks) will apply at least until 31

December 2017• Permanent exception for blue-collars executing certain activities

on so-called temporary and mobile work places (digging, groundwork, renovation, ...)

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g) Severance payment in lieu of notice

Maintaining of concept “current remuneration”

Variable pay: average of last 12 months

Rule of conversion of monthly pay into weekly pay:Monthly pay x 3 = weekly pay

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Yearly pay 39,675.96 EUR

Monthly pay 39,675.96 EUR / 12 3,306.33 EUR

Weekly pay 3,306.33 EUR x 3 / 13 763.00 EUR

Severance pay of 9 weeks 763.00 EUR x 9 6,867.00 EUR

g) No trial periods anymore!!!

New employment contracts starting as of 1 January 2014: no longer possible to include trial period!

Exceptions• Students• Temporary work and temporary agency work

– 3 first working days: automatic trial period– Each party can terminate employment without notice or indemnity

Effect on ‘non-compete clause’ and ‘schooling clause’ but what about others (protection prevention counsellor, dismissal procedures, etc.)

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h) Solicitation leave

½ day a week

During last 26 weeks of notice period: 1 or 2 x per week, maximum 1 full working day

In case employee benefits from outplacement: during full notice period 1 or 2 x per week, maximum 1 full working day

Part-time employees: pro-rated leave to working regime

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3 Regulation for “old” contracts: dismissal by the employer

Notice for seniority on

31.12.2013

Notice for

seniority as from 1.1.2014

Total

notice

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Salary Notice

32.254 EUR gross 3 months per started period of 5 years of seniority

> 32.254 EUR gross

1 month per started year of seniority (minimum 3 months)

Notice

New dismissal rules, see table at slide 5

Notice for seniority on

31.12.2013

Notice for

seniority as from 1.1.2014

Total noticeMaximum

13 weeks

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Salary Notice

32.254 EUR gross

1.5 months if < 5 years of seniority3 months if 5 years of seniority or more

> 32.254 EUR 64.508 EUR gross

1.5 month per started period of 5 years of service (max: 4.5 months)

> 64.508 EUR gross

1.5 month per started period of 5 years of service (max: 6 months)

Notice

New dismissal rules, see table at slide 8

Exception: no additional notice if maximum notice of 4.5 or 6 months is already reached in part 1.

3 Regulation for “old” contracts: dismissal by the employer

No panic! We help you out!

To calculate the notice periods to be respected in case of termination or resignation, see our website

www.préavis.bewww.opzegging.be www.dismissal.be

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4 Outplacement

Old principle maintains: employees older than 45 are entitled to outplacement if 1 year of serviceGeneral rule becomes: all employees dismissed upon notice or severance indemnity in lieu of minimum 30 weeks are entitled to outplacement (irrespective of their age)Exceptions:

– Employees benefiting from outplacement in the scope of an employment cell (as a result of a restructuring company)

– Employees dismissed for serious cause

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4 Outplacement

Package of 60 hours outplacement supportIn the event of a dismissal with: • A severance payment:

– Value = 1/12 of annual salary of calendar year preceding dismissal (min. 1,800 EUR – max. 5,500 EUR) – prorated for part-time workers

– 4 weeks’ salary deducted from severance payment (unless employee waives outplacement, which is possible until 31/12/2015)

– Offer (registered post!) within 15 calendar days after dismissal• A notice period:

– Outplacement during solicitation leave – Offer (registered post!) within 4 weeks after start notice period

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5 Motivation of dismissal (CBA n° 109)

Every blue and white collar employee

With at least six months service

=> Are taken into account:• previous consecutive fixed-term employment contracts;• temporary agency employment contracts;for an equal position with the same employer

As from 1 April 2014

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5 Motivation of dismissal (CBA n° 109)

Exceptions

• Termination of temporary agency employment contracts• Termination of employment contracts for students• Dismissal in view of (early) retirement• Dismissal in the framework of collective dismissal, closure or

termination of the activity, multiple dismissals as defined on industry branch level

• When a specific dismissal procedure, prescribed by law or CBA, has to be followed (ex. employees protected within the framework of social elections, special dismissal procedure provided by CBA, ...)

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5 Motivation of dismissal (CBA n° 109)

After request of the employee • within 2 months following the end of the employment contract

(indemnity)• within 6 months following the notification of the notice period, but

without exceeding 2 months following the effective termination of the employment contract (notice period)

• by registered mail

Possibility, but no obligation for the employer to communicate the reasons of dismissal at his own initiative (without request)

(!) Obligation for the employer to declare the reason for dismissal on the so-called “unemployment form” (“C4”)

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Answer of employer within two months following 3rd day after the request has been sent by

registered mail by registered mail must cite the specific reasons use of correct language not required if employer already communicated the reasons for dismissal at

his own initiative

Penalty = 2 weeks of salary if employer does not respond (+ no communication at own initiative)

– Basis of calculation? – No social security contributions ( art. 19, §2, 2° KB 28/11/1969 according to the advice no.

1.891 of the NLC)

– Can be cumulated with the indemnity for a manifestly unfair dismissal

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5 Motivation of dismissal (CBA n° 109)

5 Motivation of dismissal (CBA n° 109)

Dismissal is manifestly unreasonable

• if based on reasons which are not connected to the suitability or behavior of the employee

and• if not based on the necessities of the organization of the

company, institution or service and

• would never have been approved by a normal and reasonable employer

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5 Motivation of dismissal (CBA n° 109)

Penalty?

Þ 2 options for employee

(1) Indemnity of 3 to 17 weeks’ salary (<6 months of Art. 63 ECA)• depending on the degree of the manifest unreasonableness

(2) Indemnity based on actual losses • Employee must prove:

- fault made by the employer- losses- causality between fault and losses

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6 Extra to do’s as a result of the new legislation

Overview of your personnel salary on 31 December 2013Modification of your template of employment contract: delete the trial period and modify the non-compete clause and/or the schooling clauseNew clauses on termination: OK, if periods are not lower than the new legal periodsModification of your company work rules (reference to dismissal rules)Modification of the dismissal letters and settlement agreements (‘weeks’, ‘months’, ‘calendar days’)Reasons for dismissal case building + settlement agreement

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Contact

Sophie Maes Partner

Sophie.maes@claeysengels.be T: +32 2 761 46 07

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www.claeysengels.be