1. Demystifying dismissals: lessons learned after 1 year of new dismissal rules Sophie Maes Partner Claeys & Engels 26 February 2015

2. 1Why 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 2

3. 2New 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 Monday 3

4. 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 4

5. 5 Length of serviceNotice period < 3 months2 weeks between 3 months and < 6 months4 weeks between 6 months and < 9 months6 weeks between 9 months and < 12 months7 weeks between 12 months and < 15 months8 weeks between 15 months and < 18 months9 weeks between 18 months and < 21 months10 weeks between 21 months and < 24 months11 weeks between 2 years and < 3 years12 weeks between 3 years and < 4 years13 weeks between 4 years and < 5 years15 weeks as of 5 years3 weeks per commenced year of LoS between 20 years and < 21 years2 weeks per commenced year of LoS as of 21 years1 week per commenced year of LoS

6. 6 Length of service Notice Length of service Notice Length of service Notice Length of service Notice 0-3 mth 2w5y18w16y51w27y69w 3-6 mth 4w6y21w17y54w28y70w 6-9 mth 6w7y24w18y57w29y71w 9-12 mth 7w8y27w19y60w30y72w 12-15 mth 8w9y30w20y62w31y73w 15-18 mth 9w10y33w 21y (+ 1w/y) 63w32y74w 18-21 mth 10w11y36w22y64w33y75w 21-24 mth 11w12y39w23y65w34y76w As of 2y 12w13y42w24y66w 35y77w 3y13w14y45w 25y 67w 36y 78 w 4y (+3w/y) 15w15y 48w 26y68w...

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8. b)Resignation by employee ½ notice period of notice period for employer To be rounded down to the lowest Maximum 13 weeks 8

9. 9 Length of serviceNotice period < 3 months1 week between 3 months and < 6 months2 weeks between 6 months and < 12 months3 weeks between 12 months and < 18 months4 weeks between 18 months and < 24 months5 weeks between 2 years and < 4 years6 weeks between 4 years and < 5 years7 weeks between 5 years and < 6 years9 weeks between 6 years and < 7 years10 weeks between 7 years and < 8 years12 weeks as of 8 years13 weeks

10. Same notice period as for employee, but limited to 4 weeks 10 Length of serviceNotice period < 3 months1 week between 3 months and < 6 months2 weeks between 6 months en < 1 year3 weeks As of 1 year4 weeks c)Counter-notice by employee

11. 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! 11

12. 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 12 d)Fixed Term Contracts

13. (1) Incapacity following notice by employer Can terminate Pay rest term minus period covered guaranteed pay since start incapacity (during which terminated) ‘Valid reason’? 13 e)Dismissal during incapacity

14. (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 14 e)Dismissal during incapacity

15. 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 15

16. 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) 16

17. 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,...) 17

18. 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 13 18 Yearly pay39,675.96 EUR Monthly pay39,675.96 EUR / 123,306.33 EUR Weekly pay3,306.33 EUR x 3 / 13763.00 EUR Severance pay of 9 weeks763.00 EUR x 96,867.00 EUR

19. 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.) 19

20. 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 20

21. 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 21 SalaryNotice  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

22. Notice for seniority on 31.12.2013 Notice for seniority as from 1.1.2014 Total notice Maximum 13 weeks 22 SalaryNotice  32.254 EUR gross 1.5 months if < 5 years of seniority 3 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

23. 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.be www.opzegging.be www.dismissal.be 23

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25. 4Outplacement Old principle maintains: employees older than 45 are entitled to outplacement if 1 year of service General 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 25

26. 4Outplacement Package of 60 hours outplacement support In 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 26

27. 5Motivation 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 27

28. 5Motivation 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,...) 28

29. 5Motivation 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”) 29

30. Answer of employer  within two months following 3 rd 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 30 5Motivation of dismissal (CBA n° 109)

31. 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 31

32. 5Motivation of dismissal (CBA n° 109) Penalty? 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 32

33. 6Extra to do’s as a result of the new legislation Overview of your personnel salary on 31 December 2013 Modification of your template of employment contract: delete the trial period and modify the non-compete clause and/or the schooling clause New clauses on termination: OK, if periods are not lower than the new legal periods Modification 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 33

34. Contact Sophie Maes Partner Sophie.maes@claeysengels.be T: +32 2 761 46 07 34 www.claeysengels.be