Employers must respect age pyramid in case of collective dismissal

As you know the Di Rupo government has announced and already partially implemented sweeping reforms in important areas of labour and social security law. One of the goals of these reforms is to increase the employment levels of older employees.

Older employees are often selected for dismissal in the framework of a collective dismissal in favor of younger employees. In order to limit the impact of a collective dismissal on older employees, the Parliament passed a law on 29 March 2012 that obliges employers to respect an age pyramid when selecting employees that will fall under the scope of a collective dismissal.

The number of dismissals in case of a collective dismissal must be spread proportionally over three categories of employees:

  • Category 1: employees younger than 30 years of age;
  • Category 2: employees between 30 and 50 years of age;
  • Category 3: employees older than 50 years of age.

Within each of these categories, the number of employees affected by the collective dismissal should be determined in proportion to the number of employees in this category at company level or at the level of a division of the company (in case of a restructuring of that division only).

Three specific deviations to this general rule have been foreseen:

1. A 10% deviation margin per category is allowed;
2. Employment contracts for a definite duration or for a specific work that expires at the agreed end date are not taken into account for the determination of the age pyramid;
3. Employees with a “key function” can be excluded from the application of this new legislation. However, no legal definition of a “key function” exists yet.

Companies that do not comply with this legislation may face financial sanctions. They must pay back the reduction of social security contributions from which they benefited during the 8 previous quarters with regard to the employees older than 50 years of age that were made redundant through the collective dismissal. The Law of 29 March 2012 was not intended, however, to create the possibility for individual employees to challenge the validity of their dismissal in case their employer did not comply with the legislation.

The Law of 29 March 2012 does not apply to companies with an average workforce of 20 employees or less and is also not applicable in case of closure, bankruptcy or judicial dissolution.

It is clear that this legislation seriously influences the flexibility of employers to determine which employees will be made redundant through a collective dismissal and may also impact negotiations in the framework of a “social plan”. This regime was therefore subject to much criticism by the social partners represented in the National Labour Council.

It remains to be seen whether and when this legislation will enter into force. Particular modalities and date of entry into force still need to be determined by way of a Royal Decree. Furthermore, the National Labour Council was given the opportunity to develop a possible alternative before 30 June 2012.