The first hurdle in the run-up towards the unified status has been taken. The political agreement that the social partners have reached based on the compromise proposal of the Minister of Labour, was made into a bill which was finally approved by Parliament on 19 December 2013.
A uniform redundancy scheme for blue collar workers and white collar workers was hereby implemented and the so called carenz day (the first unpaid day of sick leave for a blue collar worker) was eliminated.
In this e-zine we will explain the most important new features of the long expected Act of 26 December 2013 on the implementation of the unified status for blue collar workers and white collar workers regarding notice period and the carenz day and accompanying measures.
The new redundancy scheme
For all employees whose employment contracts are terminated from 1 January 2014, a new redundancy scheme with uniform notice periods shall apply. This redundancy scheme shall apply to new employment agreements as well as existing agreements. For the existing employment agreements there shall be a transition scheme.
1. Statutory "inter-professional" notice periods
For the new notice period there is just one relevant criterion: the number of years of seniority (per started calendar year). The traditional criteria age and salary are no longer relevant.
The new notice periods for employers evolve in accordance with the different phases of the employment relationship:
During the first five years, the term evolves progressively: first every three 3 months during the first two years and then annually. At the beginning of the employment relationship the terms are very short, in order to eliminate the slowdown of recruitment.
From the fifth until the nineteenth year, the accrual is regular but significant with 3 weeks per year of seniority per started calendar year, with the objective to offer job security to the employee.
The twentieth year is a pivotal year where the progressivity slows down. The notice period amounts to a total of 62 weeks.
From the twenty-first year, the accrual is slow at 1 week per year. The legislator does this in order not to penalize the employer for retaining employees with many years of seniority.
Schematically, the new redundancy scheme is as follows:
First 5 years After 5 year After 20 year
Month 1 – 3 2 weeks Year 5 – 6 18 weken Year 20 – 21 62 weeks
Month 4 – 6 4 weeks Year 6 – 7 21 weken Year 21 – 22 63 weeks
Month 7 – 9 6 weeks Year 7 – 8 24 weken Year 22 – 23 64 weeks
Month 10 – 12 7 weeks Year 8 – 9 27 weken Year 23 – 24 65 weeks
Month 13 – 15 8 weeks Year 9 – 10 30 weken … + 1 week
Month 16 – 18 9 weeks Year 10 – 11 33 weeks
Month 18 – 21 10 weeks Year 11 – 12 36 weeks
Month 21 – 24 11 weeks Year 12 – 13 39 weeks
Year 2 – 3 12 weeks Year 13 – 14 42 weeks
Year 3 – 4 13 weeks … + 3 weeks
Year 4 – 5 15 weeks Year 19 – 20 60 weeks
We have established that:
There is a significant increase of the notice periods of workers;
Until the employee has three 3 years of seniority, the notice periods for white collar workers white collar workers are shorter than 3 months;
Especially the notice periods for the higher-ranked white collar workers are significantly limited. Under the old scheme, a higher- ranked white collar worker with 20 years of seniority would be entitled to a notice period of at least 20 months, while under the new scheme he or she only has about 14 months.
If the employee resigns, notice periods apply that are half as long as the periods that apply in case of dismissal by the employer, with a maximum notice period of 13 weeks.
These notice periods cannot be deviated from in the sectoral CBA. However, it is possible to include a scheme in CBAs at company level or in the individual employment agreement that is more favourable for the employees.
There is an exception scheme for the sectors where the notice periods currently are shorter than those of CBA no. 75. This exception scheme consists of two parts:
Temporary: for the sectors where the notice periods are currently shorter than those of CBA no. 75, the periods of CBA no. 75 must be respected only up until 1 January 2017 as a minimum requirement; after this date the unified notice periods must be applied; or
Structural: for the employees who work in temporary or mobile workplaces and who perform certain activities in the construction sector, the periods of CBA no. 75 may also be applied after 1 January 2017.
Because the new periods are determined in weeks, the notice period from now on shall also apply for the white collar workers as of the Monday following the week in which the notice period commencedstarted. The law also provides for a specific formula for the conversion of severance pay into weeks.
2. The transition scheme
From 1 January 2014, the new redundancy scheme applies to all employment agreements. For the existing employment agreements there is a transition scheme which secures the rights one has accrued under the old scheme.
The notice period for employees that were employed before 1 January 2014 must be calculated in two separate steps, the results of which must be added up.
(1) The first step concerns the accrued years of seniority until 31 December 2013. The length of the notice period associated with this seniority is determined pursuant to the rules that apply to the relevant employee on 31 December 2013 - and thus depends on his or her status as a blue collar worker or a white collar worker.
(a) The white collar workers
The white collar workers accrue their notice period until 31 December 2013 pursuant to the following scheme:
The lower-ranked white collar workers (annual salary ≤ €32,254): 3 months per started level of 5 years of seniority;
The higher-ranked white collar workers (annual salary > €32,254): 1 month per started year of seniority, with a minimum of 3 months.
This specifically means that the well-known Claeys formula becomes irrelevant.
Confusion remains about what happens to valid provisions with regard to the notice periods included in the employment agreements of the highest-ranked white collar workers. This especially concerns the application of the notice periods and probation provisions of Article 82, §5 of the Employment Agreement Act. According to a literal reading of the act, these provisions have been cancelled. However, the memorandum of explanation states that these provisions must remain valid based on legitimate expectations of the parties. The Labour Courts will be invited to rule on this matter.
(b) The blue collar workers
For the blue collar workers too, their termination rights until 31 December 2013 must be calculated according to the rules applicable to blue collar workers on 31 December 2013.
(2) The second step concerns the employment seniority acquired from 1 January 2014. The length of the part of the notice period associated with employment seniority shall be calculated according to the new rules. Hereby it is assumed that the new seniority starts on 1 January 2014, therefore the count starts at 0 for every employee.
(3) The results of both calculations shall then be added up to form in the notice period to be complied with.
As the redundancy rules for the blue collar workers until 31 December 2013 are a lot less favourable than those of white collar workers, a so-called redundancy compensation shall be provided for. This is a net benefit paid by the RVA, equal to the difference between the notice period the worker would be entitled to if the new rules would be applied to his entire seniority, and the notice period that was assigned by the employer in accordance with the phased transitional scheme.
However, this redundancy compensation is only gradually implemented, depending on the seniority of the relevant blue collar worker. Blue collar workers who cannot yet claim the redundancy compensation are entitled to a severance already in place, also to be paid by the RVA.
3. Other new features
The new unified status includes a number of other changes in the area of the law on termination of employment; please find below a brief explanation of the most important ones.
(a) Generalisation right to outplacement
From 1 January 2014, all employees who are entitled to a notice period of at least 30 weeks (or a corresponding notice compensation), are also entitled to 60 hours of outplacement.
For those aged 45 years and upwards who do not meet this condition, the existing scheme remains, however, in effect.
If the employee works during the notice period, then the outplacement guidance is allocated to the employee’s job search leave. Incidentally, the job search leave in that case is extended to 1 day per week during the entire notice period. However, if severance is paid, the outplacement guidance is deducted from the severance in the amount of 4 weeks of salary.
Until the end of 2015, however, the employee can also opt to not take outplacement in exchange for severance without deduction.
(b) Elimination of the trial period
From 1 January 2014, it is no longer possible to provide a trial period. However, existing clauses in employment contracts dated before this date shall remain in effect. An exception to this is that a trial period is still possible for student work, temporary work and temporary agency work.
(c) Termination of employment agreements for a definite period or for defined work
To compensate for the elimination of the trial clause, from now on it shall be possible to terminate an employment agreement for a definite period or for defined work by serving a notice period or payment of a corresponding notice compensation in accordance with the new rules.
The unilateral termination of the employment agreement for a definite period or for defined work can however only take place during the first half of the agreed duration and without the period in which termination is possible being exceeded by six months. The notice period for the employer shall thus be 2 to 4 weeks. If an employee is employed with successive temporary employment agreements, the termination with notice period shall only be possible during the first temporary employment agreement.
(d) Disability during the notice period
If an employee who is working during the notice period becomes disabled, the employer can terminate the employment agreement with immediate effect with payment of severance corresponding to the balance of the notice period. Provided there is a valid reason for the immediate termination of employment (e.g. organisational problems within the company), the employer may reduce the severance with the guaranteed wages that were paid since the beginning of the disability during the notice period.
If the employee was disabled multiple times during the notice period, the employer may only deduct from the severance the guaranteed salary paid during the last disability period.
(e) Motivation for dismissals
A last significant change to termination rules concerns the obligation to motivate dismissals. This obligation was supposed to be given concrete form in a CBA of the National Labour Council by 1 January 2014.
However, this CBA is currently being negotiated and not much is known yet about the "how" or "what". This obligation to give grounds for termination shall in time result in the abolition of the so-called "arbitrary termination" (Article 63, Employment Agreement Act).
In any case, in anticipation of the obligation to motivate dismissals, employers should be more accurate in substantiating a dismissal case
Elimination of the carenz day
The so- called carenz day - being the first day of disability which is unpaid for the blue collar workers if the total duration of the disability does not exceed 14 days - will be eliminated. From now on, for all employees, the guaranteed wages are owed from the first day of their disability.
The legislator has used this opportunity to lay down the obligations of the employees in the context of their disability. This concerns rules that were already widely applied, e.g. concerning the timely notification of disability, the submission of statements of illness and the obligation to have oneself examined by a company medical officer. If the employee does not meet his or her obligations in this respect, the employer does not have to pay the guaranteed wages until the employee is in compliance.
What is new is that the act explicitly provides for the possibility to determine via a CBA at sectoral level or at company level or via the employment regulations a number of hours during which the employee must make himself or herself available for a visit by the company medical officer in his or her place of residence or the place where he or she is staying. This period may be a maximum of 4 successive hours and these hours must be between 7am and 8pm.
As of 1 January 2014, there will still be blue collar workers and white collar workers. However, a first step has been taken to eliminate the differences between the two categories.
Now the legislators and the social partners must bend (and perhaps break) their heads over the significant differences that still exist between the blue collar workers and white collar workers with regard to holiday allowance, economic unemployment, supplementary pensions, the rules with regard to joint industrial committees, social elections, etc.
To be continued, no doubt...