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Headline Labour & Employment: Compromise proposal of the Minister for Labour: a new step towards single employment status

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On July 5 2013 the minister for labour presented a compromise proposal that would eliminate certain differences between blue-collar and white-collar workers. The proposal would equalise notice periods and abolish the 'carenz' day (the first day of illness, which remains unpaid for many blue-collar workers) from January 1 2014. This client memo considers the details of the compromise proposal, although it should be noted that the text leaves room for interpretation.

The compromise proposal was published after lengthy negotiations and just before the deadline of July 8 2013 imposed by the Constitutional Court. However, given the date of entry into force of the new regulation, it is still possible that blue-collar workers dismissed between July 8 and December 31 2013 will try to claim a higher severance payment before the courts.

A long walk

It is universally agreed that the different treatment of blue-collar and white-collar workers is outdated. However, the elimination of the differences has been ongoing for some time. Two years ago in

Bellerose (July 7 2011) the Constitutional Court held that the differences in treatment between blue-collar and white-collar workers regarding notice periods and the carenz day infringe Articles 10 and 11 of the Constitution. However, the Court admitted that the effect of those articles would remain in force until the legislature adopted new regulations, and until July 8 2013 at the latest.

The social partners were initially given the opportunity to reach an agreement, but eventually the minister for labour had to intervene. On July 5 2013 – the last working day before the expiry of the deadline – the minister presented a compromise proposal. However, this does not formally constitute an agreement. The social partners will submit the proposal to their members, so there remains much legislative work to do.

The new rules would apply only from January 1 2014, which is past the deadline set by the court. Therefore, a blue-collar worker dismissed in the coming months could try to claim the severance pay of a white-collar worker. However, the social partners assume that the courts will take the latest developments into account.

New notice periods

The compromise proposal provides that in future, blue-collar and white-collar workers (ie, including both lower and higher-level employees) will accrue the same notice periods. Accrual is much more gradual than before, and is set out below.

Duration of employment (dismissal occurs during)                Notice period
   
First quarter Two weeks
Second quarter Four weeks
Third quarter Six weeks
Fourth quarter Seven weeks
Fifth quarter Eight weeks
Sixth quarter Nine weeks
Seventh quarter 10 weeks
Eighth quarter 11 weeks
Year two to three 12 weeks
Year three to four 13 weeks
Year four to five 15 weeks
Per extra year of service Plus three weeks
   
After 20 years 62 weeks
Per extra year started after 20 years Plus one week
   

Notice period previously accrued is secured

The right to a notice period accumulated under the existing rules with the employer until the entry into force of the new dismissal rules will be secured. The intention is to apply the new rules immediately to new and existing contracts, but only for the period from the date of entry into force.

The securing of the accrued notice period is of greater importance to white-collar workers, as they currently benefit from longer notice periods. It is unclear how the notice periods already acquired for higher-level white-collar employees will be calculated. Will higher-level employees who entered into service before January 1 2012 and are dismissed after January 1 2014 still discuss the application of the Claeys formula or the composition of their annual gross salary (of 2013?)...?

For blue-collar workers, a catch-up operation must be carried out. The new notice periods will not be applied immediately to all blue-collar employees dismissed after the date of entry into force of the new provisions. The compromise proposal contains a timetable providing that blue-collar workers who have accrued the most seniority will be entitled to the full notice periods of the new system earlier. Only blue-collar workers having accrued a seniority of 20 years or more will be entitled to a notice period calculated according to the new system as of January 1 2014. Blue-collar workers who entered into service after January 1 2006 will be entitled to a notice period according to the new rules only in case of dismissal after January 1 2017.

Specific provisions

The compromise proposal contains some brief provisions on existing sectoral additional advantages (eg, complements to unemployment allowances). In addition, part of the notice period or indemnity in lieu thereof can be allocated at sectoral level to the improvement of employability of a dismissed employee on the labour market.

The social partners can also exclude particular activities from the scope of application of the new dismissal rules and determine lower notice periods. The media stated that an exception for the construction sector would be provided, but there is no mention of this in the compromise proposal.

As the new dismissal rules of the compromise proposal will cause an additional financial burden, a number of compensatory measures are provided for employers. For instance, the implementation of support measures for companies is envisaged in view of the establishment of a social liability reserve.

Expansion of right to outplacement

At present, only employees who are at least 45 years old and have at least one year of service have a right to outplacement in case of dismissal. The compromise proposal expands this right to all employees provided that they have more than six years of service. The outplacement is assimilated to four weeks of salary and is deducted from the indemnity in lieu of notice if this indemnity covers a period of more than six months. According to the compromise proposal, an indemnity in lieu of notice equal to seven months comprises six months of indemnity and four weeks of outplacement services.

Obligation to motivate dismissal

The compromise proposal implies that the employer will be obliged to communicate the reason for dismissal. However, the duty to motivate the dismissal will not be provided in the new legislation. A collective bargaining agreement, to be concluded by the National Labour Council, will lay down the "rules on the motivation of dismissal and good HR practices", and will apply from January 1 2014.

As soon as the collective bargaining agreement enters into force, the existing rule on the arbitrary dismissal of blue-collar workers (Article 63 of the Employment Agreement Act) will cease to apply. Thus, from January 1 2014 blue-collar workers will no longer be entitled to an additional indemnity of six months' salary if the dismissal was arbitrary.

Abolishment of carenz day

The carenz day will be abolished. The social partners still need to elaborate a specific regulation.

Elimination of other differences

The notice periods and the carenz day are just two areas of difference between blue-collar and white-collar workers. Other differences concern, for example, holiday pay, wage structure and extralegal pensions. According to the compromise agreement, the social partners will lay down the rules regarding these other differences between the blue-collar and white-collar status in due course.

Of course we will keep you posted on the further developments in this matter. Please do not hesitate to contact us, should you require any further information.

 

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