There has been a lot of news in the Belgian media recently about companies risking closure. Without going into those specific cases, it seems useful to recall the rules to be followed in case of closure or collective lay-off. After all, if the day ever comes when a collective lay-off or closure proves necessary, it is better to know what the potential pitfalls are!
What’s in a name?
Before we explain the specific rules to be followed in case of a collective lay-off and/or closure, we need to know which situations are considered as such under Belgian employment law.
First of all, only employers with more than 20 employees are considered.
There is a collective lay-off where, during a continued period of 60 days, a minimum number of employees are terminated in (a division of) the undertaking for reasons which do not relate to the person of the employees.
The minimum number of dismissals depends on the number of employees in the company. It is:
10 in undertakings employing more than 20 but less than 100 employees.
10% of the employees if there are at least 100 but less than 300 employees
30 employees in companies with at least 300 employees
There is a closure of an undertaking (or of a division of an undertaking) if:
there is a definite stoppage of the principal activity of the undertaking (or of a division hereof), and
the number of employees is reduced beneath 1/4th of the average number of employees who were employed in the undertaking (or in the division hereof) during the four trimesters preceding the definite stoppage of the principal activity of the undertaking
It is possible that a collective lay-off is also a closure. In that case, the rules for collective lay-offs and closures must be combined.
Information and consultation procedure
Whenever an employer contemplates a collective lay-off and/or closure, a procedure of preliminary information and consultation must be complied with. The idea is that employees should be “the first to know”, and that they do not have to hear any news about a contemplated collective lay-off or closure through the media.
As soon as the employer intends to proceed with a possible collective lay-off/ closure, he must inform the employee representatives (or all employees if there are no representatives). The employer must provide them with all useful information. The employee representatives can ask questions, make comments, come with alternatives,...
The information and consultation must be done before the employer takes any decision in respect of the lay-off. The consultation should be effective, meaning that the employee representatives should be able to still have an impact on the decision. During the information and consultation phase, no changes can be implemented. This implies that no machinery can be shipped or jobs can be removed or changed before the information and consultation process is finished.
At this moment, there is no legal limit to the duration of the information and consultation phase. A major pitfall in this type of process is loss of control over the timing. Assistance by experienced lawyers helps to prevent this.
Information to the authorities
At the moment the employer informs the employee representatives for the first time, the employer must inform the authorities. Also at other moments, mandatory information is to be provided to the authorities. It is important to make sure that these information obligations are complied with correctly, as they can have an impact on the timing of the first dismissals.
Negotiation of a social plan
There is an “unwritten rule” to negotiate a social plan offering extra benefits to employees who are to be dismissed. These benefits are negotiated on top of the ‘normal’ indemnities. These include the indemnities in lieu of notice, and the legal closure indemnity (in case of closure) or indemnity for collective lay-off (if there is a collective lay-off without closure).
The potential extra benefits can include seniority premiums, benefits to encourage voluntary leave, extra training or outplacement (on top of the assistance to be provided in the re-employment unit),... As a result, dismissals in a collective lay-off/closure will in general have a higher dismissal cost than an individual dismissal.
Foreign employers are sometimes unfamiliar with the concept of a social plan and its negotiation process. Here again, the assistance of specialised lawyers helps to overcome this aspect of collective lay-off and/or closure.
Watch out for protected employees
The dismissal of a protected employee (in this case we mean the members and candidates for the committee for prevention or protection or the works council) requires the specific agreement of the competent Joint Committee, or alternatively of the labour court, on the reasons for dismissal. If the “economic and technical reasons” for the dismissal are accepted, the protection will be lifted.
If a protected employee would be dismissed without the prior lifting of the protection, the employee will be entitled to high protection indemnities.
A social plan will usually include, as a counterpart for the benefits granted, the commitment from the trade unions to help lift the protection.
Duration - timing
The duration of the information and consultation procedure, and the (mostly simultaneous) negotiation of a social plan, can take 2 up to 6 months. The duration varies on whether the company has active trade unions, the number of questions raised, ...
Once the information and consultation period has ended and the authorities have been notified thereof, a ‘freezing’ period of 30 days has to be observed before the first employees can be dismissed. This period can be extended to 60 days, but this rarely happens if there is a social plan.
How does Liedekerke assist?
Our experienced lawyers can assist you from A to Z. First, we analyse if the employer has an obligation to start a collective lay-off and/or closure proceeding. If not, there might still be a situation of multiple dismissals imposing some obligations (but less stringent than the obligations mentioned above).
If there is an obligation to start a collective lay-off and/or closure proceeding, we can draft memoranda with the required information for the employee representatives (and ensure an aligned communication strategy), complete all necessary notifications to the authorities, assist in the information and consultation meetings, propose a social plan considering the budgetary restraints of the company, ...
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