In light of the current economic circumstances, the ongoing war for talent and the challenge to keep personnel costs under control, many employers are forced to rethink and rightsize their workforce. Companies need to be able to adapt quickly to the changing business environment, and this sometimes includes collective dismissals. The current legislative framework (including the so-called ‘Renault Act’) provides for a burdensome procedure to be complied with before a collective dismissal can be implemented. This procedure starts with the employer announcing their intention to implement a collective dismissal and only after having completed the required information and consultation rounds with the employees, the employer can notify the authorities confirming the collective dismissal. According to a remarkable study issued by the Organisation for Economic Cooperation and Development (the ‘OECD’) in 2020, of all of the 37 OECD countries – including many EU countries, which are all subject to the same European Directive on this subject – Belgium has by far the most rigid rules on collective dismissals.
Collective dismissal in figures – 2017-2022
Based on recent statistics published by the Federal Public Service Employment, Labour and Social Dialogue (as summarised in the table below), there was a peak in collective dismissal intention announcements in 2020. This was certainly linked to the COVID-19 crisis. Whereas 5,087 employees were involved in collective dismissal intention announcements in 2019, the figure for 2020 was a staggering 9,414. The number of employees involved in the announcements in 2021 dropped back to roughly the same level as in 2018 and 2019, but we see that the average duration of the information and consultation procedure in 2021 increased to 105 days. When taking into account that, after completing the information and consultation process, the employer must still comply with a mandatory waiting period of (in principle) 30 days. This results in a total period of approx. 4.5 months (but often even longer) during which the employer cannot implement the dismissals.
In the first quarter of 2022, 13 collective dismissal intentions were announced, involving 760 employees. This is less compared to the first quarter of 2021, when there were 36 collective dismissal intention announcements, involving 2,824 employees.
“TBUs” = “technical business units” at the level of which social elections (for works council and committee for prevention and protection at work) are organised every 4 years.
Future legislative changes?
On 20 April 2021, a draft Act was submitted to the Chamber of Representatives in which certain changes to the current legal framework are being proposed. The draft introduces i.a. an obligation to conclude a social plan in case of collective dismissal, further possibilities for involving a social mediator and additional information obligations towards the authorities (i.a. in case the information and consultation procedure is not terminated after 3 months). The initial draft was amended in September 2021 and was discussed in the Chamber’s Commission for Social Matters last week. However, it remains unclear if and when we can expect this Act to enter into force.
Given the burdensome and lengthy collective dismissal procedures and considering the huge impact of a collective dismissal intention announcement on the workforce and the social climate, alternative cost saving and/or rightsizing measures should preferably be explored first. This includes, but is not limited to, voluntary leave arrangements, salary optimisation or salary freeze and temporary unemployment. If a collective dismissal would be inevitable, it will be crucial to rely on advice from legal counsels who can guide employers through this very formalistic process. The PwC Legal Employment law team has extensive experience in assisting employers in workforce reorganisation and rightsizing. Do not hesitate to reach out to us for any questions on this topic.
Pascale Moreau - Partner, PwC Legal BV/SRL - Tel: +32 479 90 02 76
Sara Vanderstraeten - Advocaat Vennoot / Avocat Associé, PwC Legal BV/SRL
Ellen Devloo - Managing Associate, PwC Legal BV/SRL - Tel: +32 494 08 20 59