CMS Expert Guide to employment termination law and legislation

Global comparison

1. Dismissal of employees

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 were 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 notice period in case of employment before 1 January 2014, and some working conditions.

1.1 Reasons for dismissal

A claim for unfair dismissal can be made if the reason for dismissal was not one of a number of ‘fair reasons’ (e.g. conduct, capability, "some other substantial reason", statutory ban or redundancy).

Most employees need a particular length of service to bring a claim for unfair dismissal. At present this is two years’ service. However, all employees can bring a claim for unfair dismissal if the reason for dismissal is deemed to make the dismissal automatically unfair (e.g. for whistleblowing or for family reasons such as dismissals for reasons connected to pregnancy, parental leave, or requests for flexible working).

Even if the dismissal is deemed to be for a fair reason, to avoid a successful claim for unfair dismissal the employer must still follow a fair procedure and act reasonably in dismissing the employee.

If the reason for the dismissal involves discrimination against the employee (because of a protected characteristic such as sex, race, age or disability), employees may make a discrimination claim irrespective of their length of service.

Employees with two years of service have the right to request a written statement of reasons for dismissal. Employers must provide the statement within 14 days of the request.

Irrespective of length of service, employees dismissed during pregnancy or statutory maternity or adoption leave are automatically entitled to a written statement of reasons for dismissal without having to request it.

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 because of business reasons falls under the normal dismissal with compensation.

According to Collective Bargaining Agreement n° 109, the employer does not have to state the motives for a regular dismissal on his own initiative, but only if the employee 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).

1.2 Form

Employees may be dismissed orally or in writing. In misconduct and capability dismissals the ACAS Code of Practice states that the employee should be invited to attend a meeting to explain their version of events. A letter should then be sent to confirm the reason for the dismissal and the date of dismissal in writing to avoid any dispute over the effective date of termination. A right of appeal should be offered. Failure by the employer to follow the Code of Practice does not give an employee a remedy for breach. However in the event that an unfair dismissal claim is successful and there has been non-compliance with the Code the tribunal has the power to increase the award of compensation by up to 25%.

Not applicable.

1.3 Notice period

There is a statutory minimum notice period of between one and 12 weeks, dependent on length of service.

The contract of employment can provide for a longer notice period. Failure by the employer to comply with the contractual notice period can result in a claim for ‘wrongful dismissal’.

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 to perfom, 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.

Termination of an employment contract of unlimited duration

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

  1. either a notice of three months per started period of five years of seniority for white collar-workers earning EUR 32,254 gross or less; or
  2. one month per year of service for white-collar workers 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 (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 in 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 6 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 as from 1 January 2014, fixed notice periods based on the seniority of the employee (white and blue-collars)  – as from that date – apply.

Attention: if notice is given by the employee, the sum of the notice period before 1 January 2014 and as from 1 January 2014 is limited to 13 weeks.

Employment agreement with performances from 1 January 2014

For the termination of employment agreements with performances as of 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. 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 the 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.

Special terms

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.

Protected employees

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 damages 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.

Incapacity to work

If 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 case and under certain conditions, the period covered by the guaranteed salary is deducted from the remaining notice period.

Termination of an employment contract of limited duration (fixed-term or well-defined job)

Fixed-term contracts expire automatically on the date agreed by the parties; consequently, no notice of termination needs to be given or indemnity 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 an employment for unlimited duration.

A fixed-term contract can also be terminated before the agreed term unilaterally 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 6 months); the notice period has to end within this first half of the agreed term (or the period of 6 months referred to above).

Notice must be given in the same manner as for an employment agreement for 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.

1.4 Involvement of works council

No general legal requirement for involvement, but staff forums may be involved in the case of collective redundancies (see below).

The main role of the works council is to be informed and consulted about a range of economic and employment issues, although it does have some 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.

1.5 Involvement of a union

No involvement normally other than in the case of collective redundancies (see below) or if the employee exercises their right to be accompanied by an appropriate trade union representative to a disciplinary meeting.

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.

1.6 Approval of state authorities necessary

Not necessary.

Collective dismissal and closure

There is no approval of state authorities 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.

Protected employees

Employee 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.

1.7 Collective redundancies

If 20 or more employees are proposed to be made redundant at one "establishment" within a period of 90 days or less, consultation with employee representatives (who may be trade union representatives) must begin at least 30 days (or 45 days if 100 or more employees are to be made redundant) before the first dismissal takes effect.

Additionally, employers are obliged to notify the Secretary of State (for Business Innovation and Skills) where they are proposing to dismiss as redundant 20 or more employees within a 90-day period.

The Secretary of State must receive notification at least 30 days (or 45 days if 100 or more employees are to be made redundant) before the first dismissal takes effect.

A copy of the notification must also be provided for the employee representatives.

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.

The 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, it is quite common for social partners to negotiate and conclude a social plan.

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

1.8 Summary dismissals

Summary dismissal (dismissal without notice) is only lawful where the employee has committed a breach of contract that is sufficiently serious to entitle the employer to treat the employment contract as terminated with immediate effect. A typical example is where the employee has committed gross misconduct.

For a dismissal with a 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 authorized to dismiss the employee.

1.9 Consequences if requirements are not met

The employee may have various claims, such as an unfair dismissal claim where the primary remedy is financial compensation. However, there is also scope for the claimant to request reinstatement or re-engagement, and in very limited circumstances (e.g whistleblowing) the claimant can request interim relief, and if the tribunal grants this, then an employer must continue paying the claimant's wages until the date of the substantive hearing. Most employment-related claims in the UK are made in employment tribunals.

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

1.10 Severance pay

The employment contract may provide for the employer to make a payment in lieu of notice, for example, equal to the salary that the employee would have earned during the notice period. If this is not provided for in the contract, the parties can agree for such a payment to be made, for example, as ‘damages’ for breach of contract.

If an employee with two years’ continuous service has been made redundant, they will be entitled to a statutory redundancy payment. The amount is calculated according to a statutory formula based on the employee’s age, length of service and weekly pay (capped at GBP 538 as at April 2020), up to a maximum of GBP 16,140 (as at April 2020). The employment contract may provide for an enhanced redundancy payment.

If the employee has been unfairly dismissed, and brings a successful claim in an employment tribunal they may be able to claim a ‘basic award’ calculated according to the same formula as the statutory redundancy payment (but employees cannot usually recover both a statutory redundancy payment and a basic award), and a ‘compensatory award’ which is capped at the lower of one year’s salary and GBP 88,519(as at April 2020). If an order for reinstatement or re-engagement is made there is scope for this cap to be lifted.

Employees who argue that they were dismissed for making a protected disclosure (whistleblowing) are not restricted by the statutory cap referred to above.

Similarly, the statutory cap does not apply where the dismissal was related to a prohibited ground under the Equality Act 2010. In these scenarios the potential awards can be significant.

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.

1.11 Non-competition clauses

Restrictive covenants will be void for unlawful restraint of trade and so are unenforceable unless they protect the legitimate business interests of the employer and go no further than is necessary to provide that protection, in terms of activity, duration and geographical area. However they are widely used in senior level contracts. It is always recommended to take advice on tailoring such a clause for each individual employee and to ensure that when employees are promoted or their role changes that the restrictions are suitably updated.

General non-competition clause

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; and
  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.

International scope and / or R&D Department

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 must have 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 a dismissal subject to a notice period, the employer will have to 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 will have to pay the non-competition indemnity to the former employee.

Sales representatives

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

  1. the geographical scope is limited to the area of activities,
  2.  the employer does not need to pay a lump-sum compensation,
  3. 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 (seniority, salary, etc.).

1.12 Miscellaneous

Employers may wish to avoid a potential dispute over a termination of employment by obtaining a waiver of rights from an employee in consideration for a termination payment. In the UK this agreement is referred to as a settlement agreement and there are a number of statutory formalities to include before such an agreement is enforceable in respect of statutory rights, including the requirement that the individual takes independent advice on the terms of the agreement. There are also risks attached to making an offer to an employee to enter into a settlement agreement and therefore legal advice should be taken before doing so. In addition, in 2019 the UK Government announced legislation on the use of non-disclosure agreements in discrimination cases which was expected to come into force in 2020, however given the pandemic, this has been delayed and no new time frame has been given. The UK statutory equality body, the Equality and Human Rights Commission issued guidance on this subject in October 2019 setting out good practice for employers to consider. 

Not applicable.

2. Dismissal of managing directors

In the United Kingdom (UK), the rights and obligations of a ‘director’ are the same whether they are for a ‘managing director’ or any other type of director. However, not all directors are employees. ‘Managing directors’, for example, are employees of the company, but ‘non-executive directors’ are not employees. Normal practice is for a managing director to have a service agreement supplementing their statutory and common law obligations as a director. Often a managing director's employment contract will require them to resign any directorships when their employment terminates, so that their directorship and employment terminate simultaneously. It Is therefore often simpler (and preferable) to remove a managing director by dismissing them from their employment, and then requiring them to resign their directorship. Please see the section "Employees: United Kingdom" for information on the relevant issues when taking that approach, as well as the "Miscellaneous" section below.

This table only covers removal of the director from office as a director and does not cover termination of any contract of employment or other employment issues.

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

The Belgian Companies and Associations Code 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 daily management. This manager can be a third party or a director of the company. If a director is appointed in charge of the daily management, this mandate is called “managing director”.

The 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. power to decide what an employee must do and how it 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.

2.1 Reasons for dismissal

The company may remove the director for any reason, unless the articles of association of the company or any other agreement between the director and the company provide otherwise. There is however a statutory procedure that the shareholders of any UK company can use to remove a director (see below). This procedure will apply regardless of any agreement between the company and the director, or any provision of the company's articles.

The mandate of a director of a public limited company (“SA / NV”) can in principle be revoked “ad nutum” (immediately, without indemnity and without having to give a reason 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 appointment of a director, or a management contract state otherwise and provide for a period of notice or an indemnity in case of dismissal.

However, in any case, the General Shareholders’ Meeting retains its right to revoke “ad nutum” a director if there are "justified grounds” for doing so. The Code does not define this concept. According to the preparatory works, it includes, for example, 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 the private company with limited responsibility (‘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.

2.2 Form

The Companies Act 2006 gives shareholders a mandatory right to remove a director by ‘ordinary resolution’ (i.e. a simple majority of the shareholders attending and voting) at a meeting notwithstanding any other agreement between the director and the company. The resolution will be of no effect if passed in writing instead of at a meeting. At least one of the shareholders must give at least 28 clear days’ notice in writing before the meeting of an intention to move the resolution at the meeting. On receiving that notice, the company must forward the notice of the resolution to the director concerned and call a general meeting of the company to vote on the resolution. The director has the right to be heard at the meeting and to make written representations. 

The company's articles of association or shareholders' agreement may contain provisions that make it difficult in practice to remove a director or provide that they can be reinstated. The company's articles of association and shareholders' agreements should therefore be checked before considering taking this route. 

A company's articles of association may set out additional (and usually less complex or time-consuming) bases on which a director can be removed. For example, the 'Model Articles' under the Companies Act 2006 set out circumstances that trigger the automatic removal of a director, including that they are prohibited from being a director by law or a bankruptcy order is made against them. Some companies' articles of association also allow the directors to remove another director by majority vote, for example. The articles of a company should be reviewed for any such procedures if removal of a director is contemplated.

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

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

2.3 Notice period

Removal as a director is immediate unless otherwise specified in the articles of association of the company.

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 same  principles apply without distinction to the NV/SA and the BV/SRL.

For the 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 the daily management can be revoked without any notice period.

2.4 Involvement of works council

No involvement.

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 Belgian Company Code 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, a motivated advice from the Compensation Committee is also required, in addition to the approval by a General Shareholders’ Meeting.

2.5 Involvement of a union

No involvement.

No involvement.

2.6 Approval of state authorities necessary

Not necessary.

Not required.

2.7 Collective redundancies

Not applicable.

Not applicable.

2.8 Summary dismissals

No special rules apply.

Not applicable.

2.9 Consequences if requirements are not met

The removal of the director is void.

A company is bound by the actions of a dismissed company representative until and unless such a dismissal has been officially published in the Official Belgian State 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.

2.10 Severance pay

The director may be entitled to a payment under the terms of any service contract (for example a payment in lieu of notice), or as an employee under statute (for example a statutory redundancy payment). Sections 215 to 222 of the Companies Act 2006 contains special rules relating to compensation given to a director for their loss of office. Such compensation requires shareholder approval, except for certain payments that are made in good faith such as payments made in discharge of a legal obligation, or to settle a claim arising from loss of office or termination of employment.

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).

2.11 Non-competition clauses

Restrictive covenants may be included in any service agreement. However, they will be void for unlawful restraint of trade and therefore unenforceable unless they protect the legitimate business interests of the employer and go no further than necessary to provide that protection in terms of the activities covered, duration and geographical area.

The director may also be subject to post-termination restrictions contained in other agreements such as a shareholder agreement, or (depending on the reward structure) share plans such as LTIPs (Long Term Incentive Plans).

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 the clause may be mitigated  by the court.

2.12 Miscellaneous

Regulated and listed companies should also be mindful of any obligations they may have under their regulatory rules and/or the rules applicable to their market listing. These rules are likely to limit the terms on which such companies can reimburse a director in connection with their removal from office or employment and can also subject a company to reporting obligations.

Not applicable.