Belgium

    1.1 In what circumstances does the employee transfer law apply?

    Employee transfer legislation applies upon a change of employer resulting from a transfer of ‘an economic entity which will retain its identity after the transfer’. Various criteria must be considered, including:

    • the type of business being transferred;
    • whether tangible assets are included;
    • the value of intangible assets at transfer;
    • whether a significant portion of the staff are being transferred;
    • whether there is a transfer of customers;
    • the degree of similarity of activities before and after the transfer;
    • the duration of any interruption.

    None of the above is alone sufficient to determine the existence of a transfer and an overall assessment should be done. 

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    Author: Claeys & Engels

    Date: September 2016

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business

    Employee transfer law applies regardless of the legal context in which a business is transferred to another legal entity. This may be, for example, the sale of the business, a merger, an acquisition or a gift.

    If a sale only concerns specific assets, such as premises, equipment, customers, staff and/or goodwill, employee transfer law will apply if these assets are sufficiently central to the business, i.e. if their transfer implies that the business will retain its identity with the transferee.

    The employee transfer rules do not apply to share sales.

    (b) Outsourcing

    Outsourcing will not be covered by employee transfer law if it only involves the transfer of an economic activity. There must be a transfer ‘as a going concern’, of the economic entity retaining its identity. For example, if the outsourcing company also takes over the way the work is organised, the operating methods and/or, where appropriate, a significant portion of the workforce or the resources available to the business, employee transfer law may apply. None of these alone are sufficient to determine the existence of a transfer and an overall assessment should be done to determine whether the business of the service provider is sufficiently similar to the activity exercised before the outsourcing.

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    Author: Claeys & Engels

    Date: September 2016

    1.3 In outline, what are the implications of the employee transfer law?

    If the employee transfer law applies:

    • the employment contracts of all employees assigned to the undertaking transfer automatically from the transferor to the transferee, keeping their seniority and all employment conditions;
    • the transferee is bound by the collective bargaining agreements that applied to the transferor, until they cease to apply;
    • the transferor and transferee are required to provide information on the transfer to employee representatives and to consult them (if there are no employee representatives, the employees should be informed);
    • the transferor and the transferee are jointly liable for any claims employees may have relating to employment with the transferor (e.g. for pay, for personal injury or for discrimination) prior to the transfer;
    • the employee cannot be dismissed because of the transfer itself and if this happens, the employee may claim damages, although the law does not fix the amount of those damages.
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    Author: Claeys & Engels

    Date: September 2016

    2.1 Who transfers?

    Only employees are protected by the employee transfer rules, i.e. persons who perform work in exchange for pay in a subordinate position. Self-employed persons are not protected. 

    Protection is only provided to those who have employee status at the moment of transfer and after the transfer. An employee dismissed prior to the transfer in violation of the prohibition against dismissal will be protected by the employee transfer rules and can claim an indemnity from both the transferor and transferee.

    Protection is provided to employees who are attached to and predominantly perform their services for the part of the business being transferred to the transferee. This needs to be analysed on a case by case basis, but it is arguable that that an employee that spends more than fifty per cent of his or her working time on activities for that business, is attached to that business. Employees working in support functions for several businesses will not transfer if only one of these businesses is being transferred.

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    Author: Claeys & Engels

    Date: September 2016

    2.2 Can employees object to transferring?

    Generally, if the employee is not confronted with significant changes to his or her employment conditions and he or she refuses to transfer, it will be deemed that the employee has resigned. 

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    Author: Claeys & Engels

    Date: September 2016

    2.3 What happens to terms of employment contracts?

    The employment contract is passed on automatically as it exists at the moment of transfer. This implies, for example, that notice periods or periods of leave (e.g. for pregnancy or time credits) continue to run and seniority continues to accrue.

    The rules do not provide for the automatic transfer of work regulations. The transferee is bound only by the individual rights and obligations contained in the work regulations, and not by the text of the work regulations itself.

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    Author: Claeys & Engels

    Date: September 2016

    2.4 What about other employee benefits?

    The transferee must grant the same benefits as the employee received with the transferor. This includes, for example, base salary, bonuses, company cars, meal vouchers, expense allowances. If the transferee cannot provide a particular benefit (such as participation in a share plan or stock option plan), it must provide an equivalent or compensate employees, unless the transferee and the employees agree otherwise. However, rights in relation to benefit schemes such as occupational company pension schemes (group insurance and pension funds) and invalidity schemes are treated as an exception. 

    Past employment with the transferor counts as continuous employment with the transferee.

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    Author: Claeys & Engels

    Date: September 2016

    2.5 What happens to pension rights?

    The rules do not apply to supplementary social security schemes, including occupational company pension schemes. Therefore, there is no automatic transfer of occupational pension rights in the event of a transfer. It is up to the transferor and transferee to negotiate occupational pension arrangements. However, if the occupational pension scheme of the transferor arises from a collective bargaining agreement, the transferee will be obliged to respect this scheme. The parties may agree that vested rights will be transferred to the transferee’s benefit plan.

    If the occupational pension scheme is not transferred to the transferee, the employee is considered to be leaving the scheme of the transferor. The employee could then, for example, transfer to the pension scheme of the transferee or leave vested reserves in the pension institution of the transferor.

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    Author: Claeys & Engels

    Date: September 2016

    2.6 What liabilities transfer?

    The transferor and transferee are jointly liable for the payment of debts flowing from employment contracts, if the debts existed at the moment of transfer. This means that, for example, arrears of salaries and severance indemnities can be claimed from both the transferor and transferee. However, there is no joint liability for debts stemming from supplementary social security schemes, such as occupational pension rights or where the transfer takes place within the framework of insolvency (where specific conditions must be fulfilled).

    The transferee is only liable for existing claims towards the employees. Any criminal liability resulting from infringements of social laws prior to the transfer remain exclusively with the transferor.

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    Author: Claeys & Engels

    Date: September 2016

    2.7 Do collective agreements transfer?

    The transferee must respect the collective bargaining agreements by which the transferor was bound until their expiry.

    There are three types of collective bargaining agreements:

    • A national agreement binds the entire private sector and the transfer will therefore not have any impact.
    • An industry-level agreement will continue to apply if both the transferor and transferee belong to the same branch of industry. If not, the transferee will only be bound by the agreements of its own industry. It will, however, still have to respect the individual working conditions resulting from the industry agreements applicable to the transferor.  
    • A company level agreement binds the transferee in the same way as the transferor. Thus, if the agreement is fixed term it will automatically cease to have effect upon expiry. If it is of indefinite duration, the transferee will have the right to give notice. The transferee can also negotiate a new agreement to replace or modify the existing one.
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    Author: Claeys & Engels

    Date: September 2016

    2.8 How does the transferee obtain information on transferring employees?

    The law does not provide any obligation for the transferor to exchange information with the transferee on the identity of the transferring employees or their working conditions.

    If the transfer results from a contract between the transferor and the transferee (in case of a sale of a business or outsourcing), parties will usually make arrangements in the contract.

    If the transferor and transferee do not have a contractual relationship (e.g. if the transfer is between two successive service providers of one client), the transferee must count on the goodwill of the transferor. It is theoretically possible that the transferee will only discover the identity of the transferring employees on the day of the transfer, when the employees present themselves for work, but in practice this does not happen.

    Note that the exchange of information on transferring employees must be done in a way that respects data privacy rules.

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    Author: Claeys & Engels

    Date: September 2016

    3.1 Can employers make changes to employment contracts?

    Employment contracts may not be changed at the time of the transfer.

    Unilateral changes are in principle not allowed. However, once the transfer has occurred, the transferee enjoys the ‘ius variandi’, i.e. the right to make reasonable changes to the employment contract, within the same limits as any other employer. Whether a change is reasonable will depend on the nature of the employment condition (i.e. whether it is essential or secondary) and on the impact of the change (whether it is major or minor). Generally:

    • changes to base salary will not be accepted;
    • changes to benefits will only be accepted if they are fully compensated by equivalent benefits;
    • changes to functions and job descriptions will be accepted if the new function is equivalent, for example, in terms of function level and reporting lines and there is an objective operational need for the change.

    After the transfer it is possible to agree different working conditions with the employees (either by an annex to the employment contract or by company collective bargaining agreement).

    A unilateral change in the terms and conditions of employment to the detriment of the transferred employees, without agreement and outside the scope of what is considered reasonable (‘ius variandi’), can amount to constructive dismissal.

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    Author: Claeys & Engels

    Date: September 2016

    3.2 When can employers safely dismiss employees before or after a transfer?

    There’s no specific timeframe for a safe dismissal. Any employee involved in a transfer of business is protected against dismissal: the transfer as such cannot be a reason for the transferor or transferee to terminate the employment of its employees. The employees are protected against dismissal before, during and after the transfer. However, this protection is not an absolute protection: employees can be dismissed on economic, technical or organisational grounds, for serious misconduct (‘serious cause’) or by reason of their behaviour or suitability for the job. These reasons must be established by the employer.

    There is no particular sanction in the case of dismissal despite the general prohibition. Administrative sanctions may be imposed on the transferor and/or the transferee. The courts treat a dismissal which breaches the employee transfer rules as unlawful and subject to an award of damages.

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    Author: Claeys & Engels

    Date: September 2016

    4.1 Who must employers consult?

    Prior to the decision to transfer the business, both the transferee and the transferor must inform and consult their respective employee representative bodies, i.e. the works council or, in its absence, the trade union delegation or, in their absence, the Committee for Protection and Prevention at Work. Depending on the circumstances, the European works council, if any, may also need to be consulted.

    The information and consultation must be completed whilst the transfer is at the proposal stage.

    If there are no representatives, the transferor must inform the transferring employees individually, but no consultation is required.

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    Author: Claeys & Engels

    Date: September 2016

    4.2	What information must they provide?

    The following information must be provided:

    • the intended date of the transfer;
    • the economic, financial and technical reasons for the transfer;
    • the economic, financial and social consequences of the transfer;
    • the measures intended to be taken with respect to employees.
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    Author: Claeys & Engels

    Date: September 2016

    4.3	What does consultation involve?

    Prior to making the decision concerning the transfer, both the transferor and the transferee must consult with the employee representative bodies, that is, the works council or, in its absence, the trade union delegation or the Committee for Protection and Prevention at Work on a number of topics determined by law. The aim of the consultation is to give the employee representative bodies the opportunity to ask questions and advance their opinions and proposals.

    Employee representatives must not issue formal advice about the transfer. Consequently, they are not in a position to prevent the transfer from going ahead.

    The consultation will end when all relevant questions and proposals have been answered by management.

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    Author: Claeys & Engels

    Date: September 2016

    4.4	How long does consultation last?

    The law does not provide a minimum or maximum duration for the consultation process. The consultation takes as long as necessary to answer all relevant questions and proposals from the employee representatives.

    On average, consultation can be completed in one to three weeks, with one to three meetings.

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    Author: Claeys & Engels

    Date: September 2016

    4.5	What happens if an employer fails properly to inform or consult?

    The Social Criminal Code provides a sanction level 2 (administrative or criminal fine) for failure to inform and consult with the employee representative bodies. Moreover, the failure to inform or consult is also an infringement of the terms of a collective bargaining agreement that has been declared generally binding, which is subject to administrative sanctions.

    Employees or their representatives may ask the court to suspend the transfer until proper information and consultation has taken place. However, this is very unusual.

    They may also claim damages, but will then have to prove the actual financial damage suffered as a result of the lack of information and consultation. This is also exceptional.

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    Author: Claeys & Engels

    Date: September 2016

    5.1	Identify up to three issues in this country of which employers should be aware?

    A transfer may affect the employee representative bodies (i.e. the works council, the Committee for Protection and Prevention at Work and the trade union delegation). If the transferor and the transferring business remain one single operational unit, the existing bodies will continue to function. Conversely, if the transferring business constitutes a new operational unit, or joins with that of the transferee, the employee representatives of the transferring business will either constitute a new employee representative body or will join with that of the transferee.

    The fate of industry-level CBAs where the transferor and the transferee belong to separate branches of industry is uncertain in Belgium. One view is that the transferee is only bound by CBAs of the branch of industry it belongs to, but another is that the transferee may have to combine the CBAs of both branches. We do not share this interpretation, but it cannot be excluded.

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    Author: Claeys & Engels

    Date: September 2016

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    Belgian employee transfer law applies on cross-border transfers out of Belgium. This means that the employees of a Belgian transferor will be protected by the provisions of the employee transfer law. If the transferee decides to transfer the activities and the transferring employees outside of Belgium, this would imply a significant change to the workplace (in breach of employee transfer law), tantamount to a breach of contract. This will require payment of an indemnity in lieu of notice. If several employees refuse to transfer abroad and invoke constructive dismissal, the company could be faced with making a collective dismissal.  

    Belgian employee transfer law will not usually apply to a cross-border transfer into Belgium, but the transferring employees will be protected by the employee transfer law of the country in which the transferor is based.

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    Author: Claeys & Engels

    Date: September 2016

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    The main laws are:

    • CBA no. 32bis of 7 June 1985, which implements Directive 2001/23/EC;
    • CBA no. 9 of 9 March 1972 concerning the information and consultation of the employee representative bodies (works council, trade union or employees);
    • Act of 20 September 1948 concerning the works council;
    • CBA no. 5 of 24 May 1971 concerning trade unions;
    • Act of 4 August 1996 concerning the wellbeing of workers in the execution of their employment contract; and
    • Act of 5 December 1968 concerning CBAs and joint committees of industry.
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    Author: Claeys & Engels

    Date: September 2016

     

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