Dismissals and Termination of Employment in Belgium

In Belgium, a distinction is made between blue-collar workers and white-collar workers. Blue-collar workers provide manual labour; white collar workers provide intellectual labour.

The main difference between these two statutes was the lengths of the notice periods, which were equalised on 1 January 2014.

Today, the distinction between blue-collar workers and white-collar workers is still made in the method of payment of remuneration, the calculation of the notice period in case of employment before 1 January 2014, and working conditions in some situations.

The Belgian legal system does not differentiate specific reasons for dismissal. The main distinction is between a “regular” dismissal with compensation (period of notice or indemnity in lieu of notice) and a dismissal with serious cause (summary dismissal). A dismissal due to business reasons falls under normal dismissal with compensation.

According to Collective Bargaining Agreement n° 109, the employer is not obliged to state the motives for a regular dismissal on his own initiative, but only if an employee with more than six months seniority makes a written request.

If an employee requests the employer’s motive for the dismissal, the employer needs to prove that the dismissal was “based on reasons which are related to the capabilities or the behaviour of the worker or which are based on the operational necessities of the company… and which would have been decided upon by a normal and reasonable employer”.

If the employer fails to provide this proof, the dismissal will be considered a “clearly unreasonable dismissal” and the employee will then be entitled to a gross indemnity equal to between three and a maximum 17 weeks’ remuneration (at the determination of the labour courts).

Notice must be given in writing and must comply with the mandatory language requirements applicable in Belgium.

The employer gives notice to perform, either by registered mail or through a bailiff ("gerechtsdeurwaarder” / ”huissier de justice”). If the employee gives notice, he can also request the employer to sign a duplicate of the notice letter. The notice letter must specify the length of the notice period and the day on which the notice period begins.

For termination with immediate effect, there is no specific form of notice (except for a dismissal for serious cause). Nevertheless, a registered letter or a letter signed for receipt by the employee is recommended for reasons of proof.

Employment agreement with performances before 1 January 2014

For the determination of the applicable notice period, two distinct periods will be considered:

1. before 1 January 2014, and
2. on or after 1 January 2014.

The notice period includes results before and after 1 January 2014.

Period before 2014

For employers to give notice to white-collar workers, seniority acquired before 1 January 2014 will qualify the employee for a notice period of:

1. either three months per five years of seniority for individuals earning EUR 32,254 gross or less; or
2. one month per one year of service for individuals earning more than EUR 32,254 gross with a minimum of three months.

For blue-collar workers, the following scheme is applicable for the calculation of the first part of the notice period (by calendar days).

In certain industry sectors, different notice periods were applicable for blue-collar workers. These periods need to be applied in the first step of the calculation.

The notice period if the white-collar worker gives notice is:

1. 1.5 months during the first five years of employment and three months in case of a seniority higher than five years for white-collar workers earning EUR 32,254 gross or less; or
2. 5 months per period of five years of service with a maximum of 4.5 months for white-collar workers earning more than EUR 32,254 gross or a maximum of six months for white-collar workers earning more than EUR 64,508 gross.

If the maximum (3, 4.5 or 6 months) referred to above is reached, the notice period corresponds to this maximum and thus it is not necessary to calculate the notice for the period from 1 January 2014 (see below).

Period from 1 January 2014

For the period from 1 January 2014, fixed notice periods based on the seniority of the employee (white and blue-collars) apply.

_{Attention: if an employee gives notice, the sum of the notice period before 1 January 2014 and from 1 January 2014 is limited to 13 weeks.}

Employment agreements for performance from 1 January 2014

For termination of employment agreements from 1 January 2014, the aforementioned notice periods, applicable for the second part of the calculation, will apply. Exceptions were made for some industries (e.g. the construction sector).

Agreements on the notice period

Since 1 January 2014, individual negotiations before the termination of the employment contract have no longer been possible when dealing with the notice period or indemnity in lieu of notice for white-collar workers. However, valid agreements on termination modalities, existing on 31 December 2013 and concluded at an individual level, remain valid and enforceable. Since 1 January 2014, it has only been possible to deviate from legal notice periods by means of a company-level collective labour agreement.

Following termination, parties may negotiate the notice period or the indemnity in lieu of notice.

Different notice periods apply in case of counter-notice by the employee whose employment contract was previously terminated by the employer and who wishes to leave the employer earlier for a new job. These notice periods are limited to four weeks.

If notice is given to an employee in order to terminate the employment agreement from the first day following the month in which the employee attains the statutory pension age, the basic terms apply with a maximum notice period of 26 weeks.

Some categories of employees have special statutory protection against dismissal and are entitled to additional compensation if dismissed (e.g. employees that filed a harassment or discrimination complaint, employees with a political mandate, employees on parental leave).

These categories of protected employees may not be dismissed for reasons related to the grounds on which they are protected. In most cases, the employee can claim damage equal to six months’ remuneration on top of normal notice requirements when the employer is unable to prove that the reasons for the termination are unrelated to the grounds for the protection.

If an employee is absent due to incapacity to work after the notice of termination has been given, the employer may immediately terminate the employment agreement upon payment of indemnity in lieu of notice corresponding to the remaining notice period. In such cases and under certain conditions, the period covered by the guaranteed salary is deducted from the remaining notice period.

Fixed-term contracts expire automatically on the date agreed upon by the parties; consequently, no notice of termination needs to be given nor does indemnity need to be offered in lieu of notice.

If the parties continue performances after the employment contract term has expired, the contract will be subject to the same rules as employment for unlimited duration.

A fixed-term contract can also be terminated unilaterally before the agreed upon term by either party or even during a period of incapacity to work.
 
Since 1 January 2014, each party has been able to terminate the contract by giving notice during the first half of the agreed term of the contract (limited to a maximum of six months); the notice period must end within this first half of the agreed term (or the six months referred to above).

Notice must be given in the same manner for an employment agreement for an unlimited duration and will also start to run from the Monday following the week in which notice is given. The periods of notice to be given are the same as those for termination of an employment agreement for unlimited duration.

For successive contracts for a limited period, this rule can only be used for the first contract.

If the contract ends after this first half of the agreed term, the party terminating will have to pay an indemnity in lieu of notice. This amount will be equal to the amount of remuneration that would have been paid until the end of the contract, although limited to twice the amount of the indemnity in lieu of notice that should have been paid had an employment agreement for unlimited duration been offered.

Three different kinds of employee representatives exist: the works council, the Committee for Prevention and Protection at Work and the trade union delegation (see point 1.5). 

The main role of the works council is to be informed and consulted on a range of economic and employment issues. The works council has limited decision-making powers.

The employer must inform and consult the works council on cases of mergers, closures, business transfers, large-scale redundancies, etc.

Furthermore, the works council has a decisive competence in setting up the general criteria for collective dismissal.

The Committee for Prevention and Protection at work mainly proposes and contributes to the implementation of the means intended to promote the well-being of the workers. The Committee is composed of representatives of the employees and of the employer.

In the absence of a works council, the Committee for Prevention and Protection at work assumes some of the competences of this body, including setting up the general criteria for collective dismissal.

The central role of the trade union delegation is to negotiate new agreements and ensure that existing ones are complied with. The trade union delegation also deals with disputes between the employer and the employees, both on an individual and collective basis.

Approval from state authorities is not necessary in case of collective dismissal and closure.

However, the sub-regional employment service and the federal employment services must be informed about the intention to proceed with a collective dismissal and about the outcome of the information and consultation procedure with the works council.

Employees who are members of the works council or the health and safety committee can only be dismissed for “serious cause” or for economic or technical reasons. In both cases, the employer must seek authorisation in advance, either from the labour court in the case of “serious cause” or from the competent joint committee where the reasons are economic or technical.

Specific rules apply to collective dismissals or closures. The employer must respect the information and consultation procedure prior to the decision to proceed with a collective dismissal or closure.

Employees will be entitled to specific indemnities in case of collective dismissal with or without closure. Although there is no legal obligation to do so, social partners often negotiate and conclude a social plan.

Furthermore, the employer must take measures to re-activate the employees affected by the collective dismissal.

For a dismissal due to serious cause, the contract must be terminated within three working days after the day on which the act constituting the serious cause came to the employer’s knowledge. Dismissal for serious cause should preferably be notified by registered letter.

Additionally, the employee must also be given written notice with the reasons for the termination, ultimately by registered letter within three working days after the dismissal for serious cause.

The termination must be carried out by a person authorised to dismiss the employee.

In general, Belgian employment law favours a complementary indemnity (payment of damages) rather than an obligation to reinstall the employee.

A party that terminates the employment contract without notice must pay compensation equal to the current annual remuneration (including benefits) corresponding to the notice period that should have been respected.

According to Belgian employment law, different non-competition clauses may apply.

Specific restrictive covenants can be included in the employment contract such as:

• Non-solicitation of clients’ clause: This clause must be drafted in clear and precise terms. It can only prohibit the active solicitation of clients and must not impose disproportionate restrictions.
• Non-solicitation of employees’ clause: This clause should limit its scope to specific employees or a defined group. It must remain proportionate to the employer’s legitimate interests.
• Confidentiality clause:  The clause should clearly specify the information covered and the temporal scope of confidentiality (example: trade secrets). It applies only to information legitimately considered confidential and is governed by Article 17, 3°of the Act of 3 July 1978.

The treatment of these clauses differs from that of non-compete clauses (see hereunder), as they are not subject to strict legal conditions (article 65, 86, 103 and following of the Act of 3 July 1978).For non-competition clauses, 3 different types exist:

A non-competition clause in the employment contract of an employee, not a sales representative, is only valid if:

1. the scope is limited to similar activities and to competing companies;
2. the scope is limited to a well-defined geographic area in which competition may exist (limited to the Belgian territory);
3. the duration of the clause does not exceed 12 months after the termination of the employment agreement; and
4. the clause provides for the payment of an indemnity by the employer to the employee equal to at least 50% of the gross remuneration that the latter could have earned during the duration of the non-competition clause.

The non-competition clause is only enforceable if:

1. it is a written agreement compliant with the mandatory language requirements applicable in Belgium;
2. certain remuneration thresholds are met;
3. all the validity conditions are fulfilled (territory, duration, similarity of activities and financial compensation); and
4. the employment agreement is terminated (i) after the first six months of the execution of the employment contract, and (ii) by the employee without serious cause or by the employer for serious cause.

The employer may waive the application of the clause within 15 days of the end of the employment. If the application of the clause is not waived within these 15 days, the employer must pay a non-competition indemnity to the former employee. However, the judge can mitigate the effects of a non-competition clause that is contrary to the public order.

The same conditions as the general non-competition clause apply, except for:

1. the geographical scope is not limited to Belgian territory;
2. the employee who has acquired a special knowledge in industrial or commercial matters;
3. the duration may exceed 12 months;
4. it is also valid in case of termination within the first six months of the execution of the employment contract or in the case of termination by the employer without serious cause. However, such derogations must be expressly provided for in a written agreement.

There is an important point regarding the waiver of a non-competition clause with an international scope. In the event of dismissal subject to a notice period, the employer must inform the employee at the time of notification of any intention to effectively apply the clause at the end of the notice period. As a second step, no later than 15 days after the final termination of the employment contract, the employer will then have to waive the non-competition clause if he/she still wishes to do so. If these two steps are not fulfilled, the employer must pay the non-competition indemnity to the former employee.

The same conditions as the general non-competition clause apply, except:

1. the geographical scope is limited to the area of activities;
2. the employer does not need to pay lump-sum compensation;
3. if it concerns similar sales activities.

After termination of the employment

Unlike non-competition clauses included in the employment contract, post-contractual non-competition covenants are not subject to specific conditions. However, their duration, as well as the penalty in case of a breach, must be reasonable in the circumstances (e.g. seniority, salary, etc.).

Not applicable.

On 28 February 2019, the new Belgian Code of Companies and Associations (BCCA) was adopted by the Belgian Chamber of Representatives. This reform has various implications for the status of directors, which will be examined below.

The BCCA confirms explicitly that company directors operate on a self-employed (independent) basis. In certain company forms, the board of directors can also delegate the powers related to the day-to-day activities of the company to a manager in charge of the daily management. This manager can be a third party or a director of the company. If a director is appointed in charge of daily management, this mandate is called “managing director”.

Daily management can be performed either on a self-employed basis (with or without a separate service agreement) or as an employee. Essential for the daily management as an employee is the relationship of subordination (i.e. the power to decide what an employee must do and how work must be done). We refer to part 1 of this Guide for all aspects of the employment contract.

In this Annex, we examine the situation of a company director as well as a self-employed manager in charge of daily management. Both mandates can either be performed directly by a natural person or through a legal entity. In case of the latter, the legal entity must appoint a natural person as legal representative who exercises the mandate and duties in the name and for the account of the legal entity.

The mandate of director of a public limited liability company (“SA / NV”) can in principle be revoked “ad nutum” (immediately, without indemnity and without providing reasons for the dismissal). Henceforth, the revocability “ad nutum”  is no longer a rule of public order, but a supplementary rule. In other words, this means that the revocability "ad nutum" remains the default rule, unless the bylaws, the terms of appointmentor a management contract with a director state otherwise and provide for a period of notice or an indemnity in case of dismissal.

However, the General Shareholders’ Meeting retains its right to revoke “ad nutum” a director if there are "justified grounds” for doing so. The BCCA does not define this concept. According to the preparatory works, it includes a serious criminal offence in the professional sphere or a tax fraud. Unlike the summary dismissal in the case of employees (see Section 1), strict timing does not apply to dismissal under justified grounds. In any case, it is important to note that the director can always challenge “justified grounds” and launch proceedings before the Enterprise Courts.

The same principles were already applied for a private limited liability company (‘BV / ‘SRL’) and will continue to apply.

For daily management, the procedure for the nomination and dismissal can be stipulated in the company’s bylaws, but in practice it is often regulated in a separate service agreement. If the procedure for dismissal is not specified, the mandate can be revoked “ad nutum” and no reason needs to be given.

The mandate of a director can be revoked by decision of the General Shareholders’ Meeting. The mandate of a manager in charge of daily management can be revoked by decision of the board of directors.

The revocation of either a director or a manager in charge of daily management must be published in the Official Belgian State Gazette (Belgisch Staatsblad / Moniteur Belge).

As stated above, the principle of the revocability "ad nutum" remains the default rule, unless the bylaws, the terms of appointment or a separate agreement stipulate otherwise. The revocability “ad nutum” remains also applicable in case of "justified grounds”. The same principles apply without distinction to the NV/SA and the BV/SRL.

For daily management, the procedure for the nomination and dismissal can be stipulated in the company’s bylaws or in a separate service agreement.

If nothing is specified therein, the mandate for daily management can be revoked without any notice period.

In companies listed on the stock market, the termination indemnity of the executive directors, the members of the board committee and other persons in charge of daily management may not exceed 12 months’ remuneration. The BCCA permits derogations from this rule, provided that the Works Council (or in its absence, the Committee for Prevention and Protection at work or the union delegation) is notified beforehand and the prior consent of the General Shareholders’ Meeting is obtained. If a departure fee of more than 18 months' remuneration is granted, motivated advice from the Compensation Committee is also required, in addition to approval by a General Shareholders’ Meeting.

No involvement.

Not required.

Not applicable.

Not applicable.

A company is bound by the actions of a dismissed company representative until and unless such a dismissal has been officially published in the Belgian Official  Gazette. However, if this protection is beneficial to third parties, it cannot be invoked by third parties that know that the company representative has already been dismissed.

There is no mandatory severance pay, unless stated otherwise in the bylaws of the company. Parties may agree upon severance pay in a separate agreement (when such an agreement is permitted).

It is possible to agree upon a non-competition clause. If the scope of the clause is too wide (according to its geographic area, its length, or the activities it concerns), its validity may be challenged or a court may mitigate the clause.

Not applicable.