Procedures For Terminating the Agreement
As a general rule, employment contracts can be terminated without the involvement of a third party such as a labour court or the joint committee. Only in very specific cases, derogating rules apply.
Some forms of termination require the compliance with legal formalities. That depends on the type of termination and on the employee status.
If the employer decides to terminate the contract with immediate effect, no specific formalities apply. For reasons of proof of the dismissal and of the dismissal date, the employer shall hand over a letter saying that the employment contract comes to an end with immediate effect and he shall ask the employee to sign a copy for receipt. If the employee refuses to sign the copy, it shall be sent to him by registered mail.
This is a common way for an employer to terminate an employment contract. An employee can also choose this option but that never happens because of the financial consequences.
Because no notice is given, the party that ends the contract must pay an indemnity that is equal to the employee’s remuneration during the theoretical notice period (theoretical notice period, see hereafter: “termination on notice”). This indemnity in lieu of notice must be paid at once and not monthly as the remuneration is.
The remuneration to be taken into account for the calculation of the indemnity is not only the actual remuneration paid on a monthly basis. It also includes all advantages and benefits in kind acquired by virtue of the contract (private use of a car, contributions paid by the employer to a group insurance scheme, the double holiday pay, end of year premium, variable remuneration of the last 12 months, etc.). In practice, one must first make a calculation of the annual gross salary. Based on that amount, the indemnity must be calculated and will be expressed as a certain number of months and weeks.
The indemnity has in principle a lump-sum character. It is deemed to cover all damages resulting from the termination of the employment relationship.
A party can terminate the employment contract instantly and without the payment of an indemnity if the other party is guilty of gross misconduct (serious cause). Strict formalities must be observed. The contract must be terminated within 3 working days after having been informed of the serious cause. Further, within 3 working days after the termination, the party that terminates the contract must notify the other party in writing of the reason for dismissal. Such a letter must be detailed and must be served by registered mail, by hand or by a bailiff writ. If these formalities are not complied with, or a if a labour court decides afterwards that there was no serious cause, an indemnity in lieu of notice must be paid.
The agreement can be terminated by the employee’s resignation. The employee has to respect the applicable notice period, otherwise they must pay the indemnity in lieu of notice. Specific rules apply to contracts concluded for a definite period.
Termination On Notice
The parties can terminate the agreement for an indefinite period on notice (special rules apply however to contracts concluded for a definite period).
If the employee resigns, the notice periods to be respected range from 1 week to 13 weeks depending on the employee’s seniority.
For determining the notice period applicable in the event the employer gives notice, two distinct periods will be taken into account. The results of the two calculations must be added up.
- For the seniority acquired until 31 December 2013, the old dismissal rules apply, with small alterations.
For the seniority acquired as from 1 January 2014, new dismissal rules apply. The notice periods are fixed and depend only on the employee’s seniority.
- Gross annual salary < 32,254 EUR in 2013: three months for every started period of five years’ seniority
- Gross annual salary ≥ 32,254 EUR in 2013: one month of notice per started year of seniority, with a minimum of three months, or conventional agreement applicable on 31 December 2013.
Blue-collar workers:notice periods determined by collective bargaining agreement concluded at sector level or Royal Decree applicable on 31 December 2013, or as determined by more favourable conventional agreements applicable on that date.
|Length of service
||Notice period in the event of termination by the employer
|From 0 to less than 3 months
|From 3 to less than 4 months
|From 4 to less than 5 months
|From 5 to less than 6 months
|From 6 to less than 9 months
|From 9 to less than 12 monthse
|From 12 to less than 15 months
|From 12 to less than 15 months
|From 18 to less than 21 months
|From 21 to less than 24 months
|From 2 years to less than 3 years
|From 3 years to less than 4 years
|From 4 years to less than 5 years
|As of 5 years
||+ 3 weeks per started year of seniority
|From 20 years to less than 21 years
||+ 2 weeks per started year of seniority
|As of 21 years
||+ 1 week per started year of seniority
Termination By Reason Of The Employee's Age
If notice is given to terminate the contract when the employee reaches the age for legal retirement, the maximum notice is 26 weeks.
The legal age for retirement is 65 years. It will be 66 years as from February 1, 2025 and 67 years as from February 1, 2030.
Automatic Termination In Cases Of Force Majeure
The contract can be deemed terminated where intervening events make its performance impossible in the long term. The contract will not come automatically to an end but each party can invoke the case of force majeure as reason for the immediate termination of the contract. No indemnity must be paid.
The most frequent case of force majeure is the impossibility in the long term to perform, for medical reasons. In that specific case, a strict procedure must be followed before an employer can conclude that there is a case of force majeure.
Other examples are rare.
The regulations relating to collective redundancies apply when, over a period of 60 days, a minimum number of employees are dismissed for reasons not related to the individuals themselves. The number of employees depends on the total number of employees employed by the company.
Before taking the decision, the employer must inform and consult the works council (in the absence of a works council: the trade union delegation) of his intention to proceed with a collective dismissal. The employees’ representatives must be given the opportunity to make counter-proposals, to which the employer must respond in a serious manner. The employer must also notify the sub-regional employment service of his intention.
The actual decision to proceed with a collective dismissal can only be taken after the information and consultation phase. The employer may not dismiss the employees who will be made collectively redundant before the expiration of a period of 30 days beginning on the date of disclosure of the decision to the director sub-regional employment service.
It is recommendable for the employer to have concluded a social plan with the trade unions before going ahead with the dismissals.
Very strict and derogating rules apply to the dismissal procedure itself. The company must also establish an employment cell to improve the dismissed employees’ opportunities to find another job.
Additional sector regulations may apply. In case of closure of business, both the rules on collective dismissal and closure apply.
Termination By Parties’ Agreement
The parties are entirely free to agree upon the termination of the employment contract on any grounds they choose, without any notice or indemnity. It is however possible to provide for the payment of an indemnity. This kind of termination does not require any formality, but it is preferable to sign an agreement to avoid litigation.
Directors Or Other Senior Officers
There are no special rules which relate to the termination of a director or other senior officers’ employment, but in the case of a statutory director, termination of employment does not automatically bring to an end the directorship, which can only be terminated in accordance with the provisions of corporate law.
Special Rules For Categories Of Employee
Special rules apply to specific categories of employees, such as sales representatives, temporary agency workers or students.
Certain employees benefit from protection against dismissal, such as candidates to the social elections (very specific and strict rules apply to them), members of the trade union delegation, pregnant women, employees who benefit from parental leave or another kind of interruption, employees who put a complaint for harassment or discrimination, employees who have the function of DPO, etc. It is possible to terminate the contract of protected employees, but only for a reason that is not related to the reason of the protection (this is not so for candidates to the social elections who can only be dismissed for serious cause or for economic reasons).
Each situation is different. It is therefore highly recommendable that employers keep for every employee a detailed record with this information that must be consulted if a dismissal is being considered.
There is no general rule. There is one in the banking sector. Employees who give specific information to the Financial Services and Market Authority benefit from a protection against dismissal.
Specific Rules For Companies in Financial Difficulties
Companies in financial difficulties can benefit from derogating rules in case of collective dismissal and closure of business.
In case of an individual dismissal, companies in financial difficulties can be authorized to pay the severance indemnity on a monthly basis while, normally, it must be paid at once.
In order to avoid dismissals, these companies can use the system of temporary unemployment for economic reasons.
Finally, if an employer fails to pay the remuneration or severance indemnity, the employees can receive a capped amount from the Closure Fund.
Special Rules For Garden Leave
Garden leave does not exist under Belgian law. However, the parties can agree that, during the notice period, the employee will be exempted from the obligation to perform and will continue to receive his/her normal salary on a monthly basis, in which case the employee will be obliged to register with the public employment service in order to start looking for a new job. That is only possible with the employee’s consent. If he/she does not agree, there are only two possibilities: either he/she serves notice and he/she actually works, either the employer terminates the agreement with immediate effect and immediate payment of the total severance indemnity.
Restricting Future Activities
It is possible to insert a non compete clause in the contract of an employee where the entry into service with a competitor after termination of the agreement could harm the employer. Such a clause is subject to strict requirements. Specific conditions apply to sales representatives and employees working for an employer that has an international field of activities, has important economic, technical or financial interests in international markets and/or has its own research and development department.
- Indemnity in lieu of notice: see above chapter “instant dismissal (a)”. On top of the indemnity in lieu of notice, an employee might be entitled to one or more of the following indemnities.
- Employers have to provide a reason for dismissal if the employee requests it. If the employer does not provide a reason for dismissal, the employee is entitled to an indemnity equal to two weeks’ salary. Also, employees can claim an indemnity from 3 up to 17 weeks’ salary for manifestly unreasonable dismissal, i.e. dismissal without objective grounds related to the employee’s behaviour or skills or to the company’s needs. Certain categories of workers are excluded from this right.
- A dismissal can also be considered abusive. Then, the employee will have to prove the employer’s fault, the material or moral damages and the relation between the fault and the damages.
- An employee can be entitled to a protection indemnity if the dismissal is based on the reason why he benefits from that specific protection. For most protections, a lump sum indemnity of 3 or 6 months’ salary is provided for. For candidates to the social elections, derogating rules apply.
Special Tax Provisions And Severance Payments
Severance payments are subject to a specific tax regime. The applicable tax rate is the average rate applied to the employee’s income over the previous year of employment. This means the severance payments are not cumulated with the other revenues of the year during which they are paid.
An indemnity in lieu of notice is subject to the regular social security contributions. Indemnities for unreasonable or abusive dismissal and protection indemnities (except those for the candidates to the social elections) are not.
Indemnities for moral damages are not subject to taxation but the tax administration only accepts this if a court decision clearly underlines that the indemnity covers moral damages.
Allowances Payable To Employees After Termination
Unless otherwise agreed, employers are generally not required to contribute to any allowances to employees after termination. One exception is early retirement: then the employer must pay an additional allowance to the unemployment allocations.
Time Limits For Claims Following Termination
Contractual claims must be submitted within one year of termination of the contract. A longer period of five years applies to claims that can give rise to criminal proceedings, such as all claims related to remuneration issues.