14/07/20

Impact of temporary unemployment due to COVID-19 on holiday entitlements and year-end premiums

Now that the Council of Ministers extended the simplified procedure of temporary unemployment due to "COVID-19" force majeure until 31 August 2020 for all industries and until the end of the year for industries in difficulties, the question arises what the impact will be on the accrual of future holiday and year-end premium entitlements.

Introduction

In Belgium, a full-time employee is normally entitled to 20 statutory holidays in any given calendar year. The entitlement to these statutory holidays - and accompanying single and double holiday pay - is determined based on the employee’s working days (including days of inactivity that are considered equal to days worked) in the preceding calendar year. In so far as the employee cannot evidence having worked full-time working days (or having equalised days) during the preceding calendar year, his holiday entitlement will be prorated accordingly.

Similarly, an employee’s entitlement to a full year-end premium in December of a given calendar year - if provided for on a sectoral or company level - will usually depend on him evidencing having worked full-time working days (or having days of inactivity that are considered equal to days worked) during that calendar year. 

The question arises whether periods of inactivity resulting from temporary unemployment due to force majeure as a result of the COVID-19 pandemic will be considered equal to days worked for determining an employee’s entitlement to statutory holidays or a year-end premium.

Holiday pay

Periods of temporary unemployment due to force majeure are in principle not equalised with days worked for the legislation on annual holidays, which means that periods of temporary unemployment due to force majeure as a result of the COVID-19 pandemic in 2020 would have a negative impact on the employee's holiday entitlements in 2021. 

However, in order to counter this negative impact on 2021 holiday entitlements, the government has taken legislative action. To this end, the Royal Decree of 4 June 2020 on the equalisation of days of inactivity resulting from temporary unemployment for force majeure due to the coronavirus pandemic in the system of annual holidays for employees, for the period from 1 February 2020 up until and including 30 June 2020, was adopted.

As its title indicates, this Royal Decree is aimed at equalising the days of temporary unemployment due to force majeure resulting from the COVID-19 pandemic during the period from 1 February 2020 up until and including 30 June 2020 for the determination of white-collar and blue-collar workers’ holiday entitlements in 2021. This means that a full-time employee who was temporarily unemployed due to force majeure resulting from the COVID-19 pandemic during the equalised period in 2020 will still be entitled to all of his 20 statutory holidays (including full holiday pay) in 2021.

Note that the above Royal Decree only equalised these days of inactivity during the period from 1 February 2020 up until and including 30 June 2020. Since the simplified procedure of temporary unemployment due to "COVID-19" force majeure has already been extended until 31 August 2020 for all industries (and until the end of the year for industries in difficulties), an additional Royal Decree will still be required in order for days of temporary unemployment due to "COVID-19" force majeure after 30 June 2020 to be equalised for the application of the legislation on annual holidays. If not, days of temporary unemployment due to force majeure resulting from the COVID-19 pandemic as from 1 July 2020 will not be equalised and will cause a decrease in holiday entitlements in 2021.

Year-end premium

Employees may be entitled to a year-end premium if this is provided for on a sectoral or company level.

Within the most common Auxiliary Joint Committee no. 200 for white-collar workers, if an employee was not in service during the full calendar year, the amount of the year-end premium must be prorated based on the number of complete months in service. Certain days of inactivity - such as annual holidays and illness - are explicitly considered equal to days worked and will therefore not affect the amount of the year-end premium. Periods of temporary unemployment are, however, not equalised. Based on a strict interpretation of the provisions applicable within JC no. 200, the above prorating approach would mean that the year-end premium of an employee who was e.g. only temporarily unemployed due to force majeure resulting from the COVID-19 pandemic during a couple of days in April would be decreased by 1/12th, which seems excessive. However, JC no. 200 confirmed that, although they have no intention to equalise periods of temporary unemployment due to force majeure resulting from the COVID-19 pandemic, they are of the opinion that - when determining the impact of such periods of temporary unemployment on the year-end premium - the amount of the premium may be prorated on a daily basis instead of on a monthly basis. In other words, it is acknowledged that it would be unfair if a couple of days of temporary unemployment caused the year-end premium to decrease by 1/12th. 

Note, however, that most of the joint committees that grant a year-end premium do not equalise these temporary unemployment days with working days for the entitlement to a year-end premium. Consequently, the impact may differ per joint committee/sector and it always needs to be verified whether the year-end premium must be prorated, and, if so, how (i.e. on a daily or monthly basis).

Conclusion

Where days of temporary unemployment due to force majeure resulting from the COVID-19 pandemic taken until 30 June 2020 are equalised with days worked for the entitlement to annual holidays in 2021, an additional Royal Decree is still required to extend the equalisation period for annual holidays beyond that date. If a year-end premium is provided for, the impact of periods of temporary unemployment due to force majeure resulting from the COVID-19 pandemic can vary depending on the sector involved. 

For an employer, it is thus important to keep the above principles in mind when determining the employees’ entitlement to annual holidays or a year-end premium. 

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