LEGALINK CROSS-BORDER LAYOFFS QUESTIONNAIRE

A. Statute of 3 July 1978 on employment contracts requires any employer to give an employee an advance notice of his layoff (art. 37). A notice period, depending on the type of the contract (white-collar or blue-collar, a distinction still made in Belgium) and the seniority of the employee has to be respected before the employment contract can be terminated.

In practice, however, the notice period for white-collar employees will be determined by a formula developed taking into account established case law. This "Formula Claeys" takes into account salary, age and seniority and will, in general, allow for a notice period longer than the legal one, which is often considered as "the bare minimum" by the courts.

1. Compensatory severance pay
   
   The employer who does not respect the notice period or who lays off an employee without advance notice must pay the laid off employee a compensatory severance pay equivalent to the salary corresponding to the missing notice period (art. 39 §1 et 29 bis).
   
2. Serious fault
   
   The Statute of 3 July 1978 allows laying off an employee without advance notice and without severance pay in case of a serious fault committed by the employee during the working relationship (art. 35).
   
3. Illness
   
   The Statute of 3 July 1978 also allows putting an end to the employment contract after a suspension of more than 6 months due to illness. The employer should provide the severance pay equivalent to the remaining notice period (art 58 and 78).
   
4. Random lay-offs of blue-collar employees
   
   Furthermore, the Statute of 3 July 1978 protects blue-collar employees against “random” lay-offs (unrelated to their capacity/behavior or to the economic situation of the company). If it is proven that a layoff was “random” in the sense of the statute, the employer must pay the blue-collar employee a special severance pay equivalent to the 6 months salary which may be combined with an eventual compensatory severance pay (see 2 here below).
   

B. Layoff of protected employees

1. Employees’ representatives
   
   The Statute of 19 March 1991 on specific layoff treatment of employees’ representatives forbids employers to lay off employees’ representatives, unless they have committed a serious fault (recognized as such by established case-law) or unless they are laid off for an economic or technical reason, recognized by a joint committee, composed of employers’ and employees’ representatives.
   
2. Other protected employees
   
   Pregnant women, employees who have interrupted their career, employees who have filed complaints for harassment, discrimination or violence at work and employees exercising a political function are protected for certain periods/aspects.  Protected employees may not be laid off during the protected period for any reason linked to the reason for their protection.
   

C. Layoff in case of closing of place of business / Collective redundancy

1. Closing of place of business

Applicable legislation:

- Statute of 26 June 2002 on closing of place of business and its implementing Royal Decree of 23 March 2007
- Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States safeguarding employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses
- Collective Labor Agreement N° 32bis of 7 June 1985 safeguarding employees’ rights in case of change of employer due to the contractual transfer of a business and regulating the rights of employees transferred with the transfer of assets after bankruptcy or scheme of arrangement.

Closing of place of business means (i) a final closing of the main activity of a business or a department thereof, (ii) causing the number of workers to decrease to less than one quarter of the number of workers employed the calendar year before the closing. The change of location of the business, a merger, sale or restructuring can be considered as a closing of place of business for the application of the law. In case employees are transferred along with assets and change employers as a consequence, the Collective Labor Agreement N° 32bis of 7 June 1985 will safeguard the rights of these employees (e.g. no loss of seniority, severance pay to be paid by company acquiring the assets, etc.).  A “closing of place of business compensation” is attributed to certain workers laid off because of the closing (in general, employees with a seniority exceeding one year and not yet entitled to their pension). This “closing of place of business compensation” amounts, as per 1 September 2008 (amounts are subject to an annual index update), to:

- EUR 142 per year seniority (with a maximum of EUR 2.841), plus, if applicable
- EUR 142 per life year above age 45 of the employee (with a maximum of EUR 2.699).

The Closing of place of business Fund, established by the 26 June 2002 Statute, will guarantee the payment of some compensation to employees when the employer is no longer able to do so (in case of bankruptcy, etc.). In case the closing of place of business entails a collective redundancy, the legal provisions with regard to the legally proscribed information/consultation procedures will apply (see below).

2. Collective redundancy

Applicable legislation:
- Council Directive 98/59 EEC relating to collective redundancies;
- Collective Labor Agreement N° 24 of 2 October 1975 on the information and consulting procedure of the employees’ representatives in case of collective redundancy;
- Statute of 13 February 1998 including certain provisions to promote employment (Chapter VII, Collective redundancy) and its implementing Royal Decree of 30 March 1998
- Royal Decree of 24 May 1976 on collective redundancy
- Collective Labor Agreement N° 10 of 8 May 1973 on collective redundancy.

For the application of the law, a collective redundancy is any layoff unrelated to the employee himself, affecting in a period of 60 days at least 10 employees (if the company employs between 20-100 employees), 10% of the employees (if 100-300 employees) or 30 employees (if over 300 employees). The total number of employees taken into consideration is the average number in the calendar year before the layoff. Layoffs related to the employee (mistakes, incompetence, etc.) are not taken into consideration.

If an employer wishes to proceed to a collective redundancy he must follow certain stringent procedures, where he informs and consults the employees’ representatives prior to the layoff and where he informs the director of the regional employment administration of his intention to proceed to a collective redundancy. A breach of these procedures may have as a consequence that the employer must continue the employment and in any case continue to pay the salary for a period of 60 days.

The employer must furthermore pay a special compensation to the affected employees. Such special compensation and its payment are subject to several parameters, but in general it can be said to be equal to 50% of the difference between the affected employees’ salary after taxes and his unemployment benefits, to be paid for a period of 4 months.

A. Individual layoff: The employer has to give advance notice of termination of the contract (see above under 1.A.1).

B. Collective redundancy: Applicable legislation requires the employer to respect a very specific procedure, where he informs and consults the employees’ representatives prior to the layoff and where he informs the director of the regional employment administration of his intention to proceed to a collective redundancy (see above under 1.C.2).

A. Civil sanctions:

1. Individual layoff
   
   The employer who does not (fully) respect the notice period or who infringes upon the anti-discrimination legislation will most likely be challenged before the court by the laid off employee and may be ordered by the court to pay a compensatory severance pay equivalent to the salary corresponding to the missing notice period, damages (no punitive damages), as well as costs of the procedure, attorney’s costs, etc.
   
2. Collective redundancy
   
   If an employer has failed to respect the regulations regarding the information and consultation procedures, he may be challenged by each individual employee affected by the collective redundancy and forced either to continue the employment during a limited period of time or to pay additional compensation to employees.

B. Criminal sanctions:

1. Collective redundancy
   
   If an employer has failed to respect the regulations regarding the information and consultation procedures, he may be subject to imprisonment and/or a fine in application of several laws (Statute of 5 December 1968 on Labor Collective Agreements (art. 56 – 60), Statute of 20 September 1948 on reorganization of economy (art. 32, 34 and 36), Statute of 28 June 1966 on compensation of laid off employees (art. 27, 29 and 30)).
   
2. Discrimination
   
   If an employer is found to have infringed the anti-discrimination legislation, he is subject to imprisonment and/or a fine.

C. Administrative fines

In addition to civil and criminal sanctions, administrative fines may also be imposed on the employer who does not conform to the mass redundancy / closing of business legislation. The Statute of 13 February 1998 on rules in favor of employment (art. 70) establishes a possibility to force the employer to pay back all State / Regional assistance received during the 5 last years before the lay off.

This provision should be implemented by a Decree (which is not issued yet at the Federal level, but well at the level of Flemish Region).