31/10/17

Deduction of 4 weeks’ full salary from the indemnity in lieu of notice for outplacement: also confirmed for ‘high’ salaries

On 18 May 2017, the Dutch-speaking Labour Tribunal of Brussels confirmed that an employer can deduct 4 weeks’ salary from the indemnity in lieu of notice that is due to a dismissed employee for outplacement services, even if this amount exceeds the maximum value of the outplacement assistance that the employee is entitled to.

When an employee is dismissed and he/she is legally entitled to an indemnity in lieu of notice amounting to at least 30 weeks’ salary, the employee is also eligible to receive outplacement assistance to help him/her quickly find new employment.

The employer pays for this outplacement assistance. The value of the outplacement assistance equals 1/12th of the employee’s gross annual salary of the calendar year preceding the dismissal, with a minimum value of 1,800 EUR and a maximum of 5,500 EUR. The law provides that the value of this outplacement assistance is deemed to be equal to 4 weeks’ salary.

In return for offering outplacement assistance to the employee, the employer can (but is not obliged to) deduct 4 weeks’ salary from his/her indemnity in lieu of notice. Contrary to what is determined for the value of the outplacement assistance, the law does not include any limitations regarding the deduction of the 4 weeks’ salary. This situation implies that the amount of the 4 weeks’ salary deduction can exceed the maximum value determined for the outplacement assistance.

Example: in 2017, an employee is dismissed by his employer. He is entitled to an indemnity in lieu of notice amounting to 33 weeks’ salary. Since the indemnity in lieu of notice that is due, exceeds 30 weeks’ salary, the employee is also entitled to outplacement assistance.
The employee’s 2016 gross annual salary amounted to 90,000 EUR. Although 1/12th of the annual salary equals 7,500 EUR, the value of the outplacement assistance that the employee is entitled to is limited to the maximum amount of 5,500 EUR. However, the employer can, in return for the outplacement assistance, choose to deduct an amount of 4 weeks’ salary amounting to 6,923.08 EUR (= 90,000 EUR : 52 x 4) from the employee’s indemnity in lieu of notice. If the employer decides to apply this deduction, then the employee will receive an indemnity in lieu of notice equal to 29 weeks’ salary and outplacement assistance valued at 5,500 EUR.

These rules on offering outplacement assistance and having the option to deduct 4 weeks’ salary comply with the position taken by the Belgian Ministry of Work and have now recently been confirmed by the Dutch-speaking Labour Tribunal of Brussels in its judgment of 18 May 2017.

Moreover, in the latter judgment the Labour Tribunal confirmed that these rules comply with the constitutional principle of equal treatment.

Even though these rules do not benefit some employees for whom the deduction of the 4 weeks’ salary will exceed the value of the outplacement assistance that they are entitled to, they are of benefit to other employees with low salaries because these rules guarantee that these employees will be entitled to high-quality outplacement assistance for a minimum value of 1,800 EUR, even if 1/12th of their annual salary does not equal the latter amount.

Therefore, the Labour Tribunal has ruled that, although there is a difference in treatment between certain categories of employees, this difference is based on an objective criterion, namely the employee’s financial power. The Tribunal has further explained that this difference is justified because it contributes to the Belgian law’s legitimate purpose of reducing dismissal costs for employers and enhancing reemployment opportunities for dismissed employees by guaranteeing high-quality outplacement to all eligible employees.

While this Labour Tribunal judgment should be welcomed because it has given legal clarity to the matter, it should, however, be noted that it is not yet final as it still remains possible that an appeal will be lodged.

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