By 1 January 2019 at the latest, the social partners should have entered into sector-wide collective labour agreements stipulating that dismissed employees entitled to 30 weeks' notice or a corresponding severance payment in lieu should be offered a severance package consisting (as to one-third) of measures promoting the employability of the employee concerned. If, in the absence of such a sector-wide collective labour agreement, an employee performs the entire severance package in the form of a notice period or receives the corresponding severance payment in lieu, the employer and the employee will have to pay a special social security contribution as from 1 January 2019. As no sector-wide collective labour agreements have been entered into, many uncertainties have arisen regarding this special social security contribution. The National Social Security Office has decided that this special social security contribution is not due for now.
In December 2018, the legislator also amended the specific outplacement requirements for employees older than 45 whose termination entitlements are less than 30 weeks' notice or severance payment in lieu. From now on, dismissed employees older than 45 are no longer entitled to outplacement if they are no longer required to remain available for the labour market.
Measures to promote employability
In Eubelius Spotlights December 2018 we discussed the potential increase in termination costs from 1 January 2019 onwards, as no sector-wide collective labour agreements on measures to promote the employability had been entered into. We will briefly reiterate the general principles of the regime for measures to promote employability and then provide an update on the current situation.
The situation before 1 January 2019
Under the Single Employment Status Act, the social partners should have entered into sector-wide collective labour agreements by 1 January 2019, entitling employees who have been dismissed with at least 30 weeks' notice or a corresponding severance payment to a severance package consisting on the one hand of a notice period or a corresponding severance payment (2/3) and on the other hand of measures to promote the employability of the employee concerned (1/3).
In this respect, the Single Employment Status Act sets out that, as of 1 January 2019, the employer and the employee must pay a special social security contribution (1% to be paid by the employee and 3% to be paid by the employer) if the employer terminates the employment agreement and, in breach of the above rules, the full severance package is performed or a severance payment corresponding to the full severance package is paid.
As no sector-wide collective labour agreements have been entered into, the question arose as to whether employers and employees would, in fact, be required to pay this special social security contribution if the severance package does not consist as to 1/3 of measures to promote employability.
The situation from 1 January 2019 onwards
On 18 January 2019, the National Social Security Office (NSSO) published an administrative instruction confirming that – in the absence of any relevant sector-wide collective labour agreements – it will not recover the social security contribution for now. The NSSO also announced that more information regarding the recovery of this contribution will be provided at a later point in time.
Conclusion
In the absence of any relevant sector-wide collective labour agreements, the employer does not have to offer a severance package consisting partly of measures to promote employability. Consequently, the severance package will have to consist entirely of a notice period to be worked or a severance payment corresponding to the full severance package.
Nevertheless, should the social partners enter into sector-wide collective labour agreements regarding measures to promote employability, the situation would be altered. In that scenario, the employer will have to offer a severance package consisting as to 1/3 of measures to promote employability. The employer's failure to do so will result in both the employer and the employee being required to pay a special social security contribution.
The draft interprofessional agreement for 2019–2020 states that the social partners will try to reach agreement on the measures to promote employability and the special social security contribution for the employer and the employee by 30 September 2019. For the time being, however, it remains to be seen whether the draft interprofessional agreement will receive the support of the social partners, the Government and Parliament, and whether agreement on an alternative arrangement can be reached.
Outplacement requirements for employees older than 45
The situation before the statutory amendment of 14 December 2018
The outplacement legislation makes a distinction between two different outplacement regimes: the general regime (for employees who have been dismissed with at least 30 weeks' notice) and the special regime (for employees older than 45 who have been dismissed with less than 30 weeks' notice).
An employee older than 45 was entitled to outplacement under the special regime provided that the following cumulative conditions were met: (1) at least one year of seniority, (2) not yet entitled to commence legal retirement, and (3) not dismissed for serious cause or to benefit from an early retirement regime with a company surcharge. A fully unemployed person older than 45 who is no longer required to remain available on the labour market was only entitled to outplacement if he had made an outplacement request to his employer.
What are the changes from 31 December 2018 onwards?
The Act of 14 December 2018 amends the outplacement requirements for employees older than 45 under the special outplacement regime.
As from 31 December 2018, fully unemployed persons older than 45 who are no longer required to be available for the labour market are no longer entitled to outplacement, even if they explicitly request outplacement. The categories of employees who are no longer required to be available for the labour market are specified in the Royal Decree of 21 October 2007, as amended by the Royal Decree of 15 October 2018. They include, amongst others, employees benefitting from an early retirement regime with a company surcharge who meet certain age and career requirements.