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Labor and employment law challenges in business transformations

Belgium

Workforce restructuring

The key practical issues in workforce restructuring include:

  • Legal justification
  • Works council and employee representatives’ process
  • Labor administration process
  • Costs and timing
  • Litigation risk

Applicable legislation

Workforce restructuring, also referred to as collective redundancies, is governed by Collective Bargaining Agreement (CBA) n° 10 of 8 May 1973 (payment of a special indemnity), CBA n° 24 of 2 October 1975, the Royal Decree of 24 May 1976, the Law of 13 February 1998 and the Royal Decree of 30 March 1998 that deal with the information and consultation obligations of the employer in Belgium. The legal definition of a collective redundancy is not harmonized and each set of rules will also be triggered by a different definition.

There are also rules dealing with the obligation to set up a redeployment unit (for more information, see “Actions required to limit the negative impact and social plan”).

The rules governing the collective redundancy process vary based on the number of employees impacted, the total number of employees of the company and also the existence of employee representatives.

Collective redundancy provisions in respect of information and consultation are triggered when a certain number of employees are made redundant within a period of 60 days as follows:

  • At least 10 employees in companies with 21-99 employees
  • At least 10% of the employees in companies with 100-299 employees
  • At least 30 employees in companies with 300 or more employees

The number of redundancies is assessed at the technical unit or division level (which often will be a lower level compared to the legal entity).

Further, it is important to verify whether other rules apply at the level of the company (CBA or other legal sources) or at the level of the sector or industry to which the employer belongs on the basis of his or her activity (Commission Paritaire or JC).

Required legal justification

Grounds for a large-scale redundancy are not specifically limited or provided by the Belgian law but must be linked to “technical or economic reasons.” For example, economic difficulties, technological changes, closure of a business and safeguard of the competitiveness. However, the reason(s) invoked must be unrelated to the employees’ performance and/or behavior for personal reasons.

Works council/unions or other employee consultation requirements

Consultation requirements with works council/unions

If the conditions of Collective Bargaining Agreement (CBA) n° 24 are met, in order to determine if an information and consultation phase is needed, the following rules apply:

The employer must provide an initial written and verbal information to works council (or Union Delegation or Health and Safety Committee (HSC) or employees directly or their representatives, designated or elected for this purpose) of the intention to implement a collective redundancy.

Subsequently, the employer must hold several consultation meetings in order to address any questions and comments on the contemplated measure, and discuss the options to avoid or limit HR impact and mitigate its consequences. It is crucial to keep a written record of all meetings being held.

The information and consultation is required on:

  • Business rationale
  • Number and categories of employees normally employed
  • HR impacts (number and categories of employees to be made redundant)
  • Contemplated selection criteria
  • Timing (period during which redundancies are to be carried out)
  • Methods of calculation of additional redundancy payments on top of mandatory payment (optional)

It is important that the employee representatives collectively acknowledge (sign off) that they have been duly informed and consulted on completion of the consultation phase. This sign-off effectively prevents individual employees from challenging their dismissal on grounds linked to noncompliance with mandatory consultation procedures.

Often the external unions will be involved as well because only a secretary of an external union can sign a CBA at the company level that will be needed to have a social plan and to be registered with the Federal Ministry of Employment.

Consultation requirements with other employee representatives

In the absence of works council or union delegation, the employer must inform and consult with the Health and Safety Committee (if any) or with the employees’ elected representatives. For more information, see “Consultation requirements with works council/unions.”

There is no obligation to simultaneously inform and consult all employee representative bodies if several are set up at the employer.

Consultation requirements with employees

Information and consultation directly with the employees is only needed if none of the more formal employee representatives bodies exist at the level of the company (for more information, see “Consultation requirements with works council/unions”). However, the employer can always decide to communicate certain information directly to the employees, as long as the normal timing and forum of information and consultation is complied with.

Approval/notification of the labor authorities or other government authorities

First notification: A copy of the initial written information provided internally is also to be sent to the local unemployment office and the Federal Ministry of Employment.

In some sectors, a notification to the Chairman of the Joint Committee is needed as well.

Second notification: At the end of the information and consultation process, the employer must inform in writing the local unemployment office about the actual or formal decision to implement a collective redundancy. The employer must also provide a copy of the “second notification” to the employees' representatives (also to be made public in the company), the Federal Ministry of Employment as well as the employees who have already been dismissed (before the employer communicated the intention to start a collective dismissal). Further, the employer must confirm and prove that it has fulfilled the obligation to inform and consult.

With this notification, to both the impacted employees of collective redundancy process and authorities, a cooling-off period of 30 days (which can be limited or extended to 60 days maximum by the local unemployment office) starts where the employer cannot dismiss any impacted employees. After this “cooling-off” period, the employer can implement the necessary measures and no formal approval from the authorities is required.

During this 30 days’ period, the employee representatives may challenge the information and consultation process before the employer unless they had already formally agreed (by way of collective sign-off) that the procedure was fully met by the employer. If not done during this period, the process itself can no longer be challenged by the employee representatives or the impacted employees.

Employee selection criteria

Employers are, in principle, free to determine selection criteria as there is still no legally driven selection process; however, it is subject to discrimination law. Moreover, works council can also determine, in agreement with the employer, the criteria of the general selection in advance.

Actions required to limit the negative impact and social plan

During the information and consultation period, discussions and negotiations should be held in order to avoid or limit the HR impact and mitigate the consequences (such as implementation of part-time regimes, training for new skills and salary reductions).

Internal alternative employment/redeployment
Without this legally being imposed as such, employers often take the initiative or are requested by the employee representatives to find alternative employment within the company or the group in Belgium or abroad.

Employers must mandatorily set up or participate in a “redeployment cell or unit offering outplacement through an outplacement agency” set up by the local unemployment office. In such cases, additional complex formalities and rules apply.

The period during which the employees participate in the redeployment cell is covered through part of the severance and they are not allowed to continue to work for the employer as the purpose is to receive outplacement assistance.

Other measures
The employee representatives can ask for a social plan in which some additional measures can be implemented. If the employee representatives claim additional financial incentives, this should normally only be negotiated and formally agreed upon in a collective bargaining agreement after the consultation period is closed.

Estimated timeline

The overall duration for collective redundancy is approximately between three and six months including cooling-off period and excluding any notice period or payment of severance or specific unemployment scheme (outplacement) post cooling-off period.

Timeline for the information and consultation process often depends on whether there is a works council or not. It may take two to three months on average, including negotiation on social plan with measures to limit the number of dismissals (first phase).

The negotiation process of social plan with financial incentives (second phase) usually takes between one and three months’ time. This can be done in parallel or after the first phase is closed; however, immediately starting negotiations, to grant additional indemnities in case of dismissal, should be avoided because the purpose of the first phase is to try to avoid or limit the number of dismissals.

Estimated costs

Mandatory costs

The key components of mandatory HR legal costs are as follows:

  • Notice period or gross lump-sum severance
  • Payment in lieu of unused paid leaves in addition to 13th month salary (if the notice period expires before the usual date of payment of 13th month salary or if the terms of any sectorial Collective Bargaining Agreement provide so)
  • Monthly allowance in addition to the State unemployment allowance till pension age
  • Cost related to outplacement of an employee made redundant or related to redeployment cell (reinsertion compensation) in case of a collective redundancy
  • Special indemnity paid to employees dismissed (under certain conditions)

Customary additional costs

Customary additional costs depend on the social plan agreed between the parties during the information and consultation process, which may include additional incentives or premiums.

Specifically, a social plan containing measures for compensation and post-redundancy assistance over and above the legal requirements, usually includes:

  • Improved pre-pension at a lower age
  • Supplements to unemployment benefits other than special pre-pension scheme
  • Seniority premiums
  • Continued medical coverage and use of company car
  • Retention bonuses
  • High-quality extra outplacement services

Further, additional costs for the employer may include payment toward:

  • Experts hired to assist works council(s) or unions
  • Salaries of the employees’ representatives paid during information and consultation process

Hiring restrictions post-redundancy

There are no legal barriers to hire new employees post-redundancy; however, any restrictions in the collective bargaining agreements at company or sector level must be complied with. Usually, the social plan includes restrictions (such as priority to hire must be given to the employees terminated in a collective redundancy) or general criteria of rehiring can be agreed upon with the works council.

Litigation risk

Interested parties

The following interested parties can bring lawsuits related to the redundancy process:

  • Impacted employees: If the employer is not willing to adapt or restart the process when no collective sign-off was given, then the impacted employee may challenge the information and consultation process and will have to formally object with the employer through a registered letter within 30 days after his or her termination.

    The employer will either restart the process (in which case any notice periods which are already running will be suspended) or not; in the latter case, the impacted employee will have to go to the court to challenge the compliance of the process (statute of limitation being the normal period of one year after the end of the employment contract).
  • Works council/union/other employees’ representatives: Similarly, the court may grant an injunction order to start or restart the process, due to any collective protest (within 30 days after sending the second notification to the Labor authorities and the employees’ representatives) by the employee representatives for failure to comply with the information and consultation process.

Potential claims can be avoided by entering into a social plan with the works council/unions and get a collective sign-off that the information and consultation process was properly followed. Under such circumstances, the impacted employees (individually) can no longer legally challenge the noncompliance by the employer of this process in case of a collective dismissal. This may still not stop the impacted employees to claim additional (moral and/or material) remedies.

In general, any dismissal can lead to a potential litigation in court, for instance, in respect of the categories of employees who are specially protected against dismissal.

Litigation can stop or slow down the collective redundancy process notably in case of injunction of the court to restart the process.

Damages and other remedies

The potential remedies include court injunctions, damages and criminal sanctions.

Sanctions
The legally imposed consequences or sanctions for improper information and consultation have almost never been applied in Belgium. However, the courts in Belgium may grant an additional (moral) indemnity in case of litigation in this regard.

Reinstatement
An actual reintegration/reinstatement after dismissal cannot be imposed/forced upon the employer against its will; however, the employer may be required to pay additional financial indemnities to the impacted employees.

Criminal sanctions
Criminal sanctions or an administrative fine may apply in some cases, notably in case of violation of the information and consultation obligations.

Country-specific issues

There are no other issues specific to Belgium.

Contact

Primary Contact for Belgium Labor and Employment Law

Malissa Begtas
HVG advocaten-avocats
+32 2 774 9376

Global Labor and Employment Law Guide
Workforce restructuring
2016-07-01
Belgium
BE

Contacts