Bill seeks better legal coordination of company closures

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Belgian law should soon be clearer with regard to company closures. A government bill adopted by the lower house of parliament in May 2002 seeks to coordinate all existing law in this area. It covers a range of issues including information for workers and redundancy payments, and the competences of the Redundancy Payments Fund, particularly in relation to enterprises in the not-for-profit sector. The bill awaits approval in the Senate.

On 2 May 2002, the Belgian House of Representatives (Chambre des Représentants de Belgique/Belgische Kamer Van Volksvertegenwoordigers) adopted a bill dealing with company closures. This bill, an initiative of the Employment and Labour Minister, Laurette Onkelinx, aims to coordinate the various laws that exist in this field. It also incorporates various opinions of the bipartite National Labour Council (Conseil National du Travail/Nationale Arbeidsraad, CNT/NAR). The bill has yet to be voted on in the Senate (Sénat/Senaat); when this has happened, the government will then have to draft the Royal Decrees necessary for it to be implemented.

The bill updates legislation to take account of the law of 8 August 1997 on bankruptcies, and the law of 17 July 1997 relating to 'judicial concordat' (concordat judiciaire). To explain this latter point, a company or individual trader which is temporarily unable to pay back money owed, or whose survival is threatened by difficulties that could lead to cessation of payments in the more or less immediate future, may be placed in judicial concordat as long as the company's financial situation is capable of being resolved and economic recovery seems to be a possibility. If the conditions of the concordat are met, the Commercial Tribunal grants a provisional deferment during which the company has to draw up a recovery plan. The bill also seeks to ensure legal security not only for the Redundancy Payments Fund (Fonds d'indemnisation des travailleurs licenciés en cas de fermeture d'entreprises/Fonds tot vergoeding van de in geval van sluiting van ondernemingen ontslagen werknemers), and for employers and workers, but also for social security institutions and the courts and tribunals.

In addition to these provisions, the bill redefines the information to be given to workers in closure situations, redundancy payments and the Redundancy Payments Fund's competences.

Information for workers and redundancy payments

The bill reiterates provisions relating to prior information that has to be given to workers in the event of company closures. This issue, which had already been incorporated in the law of 28 June 1966 relating to redundancy payments to workers dismissed in connection with company closures, came to the fore in the debate over the closures at the Renault factory at Vilvoorde in 1997 (BE9703202F) and the Bombardier factory at Manage in 2000 (BE0004309F). Since 1997, new legislation - the 'Renault law' (TN0102401S) - has provided for penalties where the steps required when announcing collective redundancies are not adhered to: the decision must be preceded by the provision of information, consultation with workers' representatives, and a meeting of the works council (conseil d'entreprise/ondernemingsraad). Articles 16 and 17 of the new bill delegate to sectoral joint committees or subcommittees and the government the task of 'determining the information that must be made available before company closures, and the ways of communicating this information to the authorities, institutions and workers concerned'.

Another section of the bill deals with redundancy payments for workers dismissed in the event of a company closing down or restructuring, and for workers not kept on in the event of transfer, or the repossession of assets following bankruptcy or judicial concordat. To qualify, a worker must have at least one year's service in the enterprise, and be working under an open-ended employment contract. Redundancy pay can be as much as EUR 116.56 per year of service: 'workers also qualify for a supplement of EUR 116.56 for every year of age over 45, with a maximum of EUR 2,331.19.'

Extension of Redundancy Payments Fund's role

The Redundancy Payments Fund has several competences, and there is currently a separate law covering each of them. The government thus sees a need to coordinate them. One of the Fund's main roles is to pay relevant workers their closure-related payments when their employer, the trustee or the official liquidator fail to pay up. Other roles relate to guaranteeing the payment, where the employer or its representative defaults, of: collective redundancy compensation; compensatory and other payments due to workers under employment legislation and collective agreements; early retirement payments; and transfer allowances and other additional benefits.

Other sections of the bill focus on the financing of the Fund: this is mainly done through employers' contributions.

Another part of the bill deals with extension of the Fund's scope. For example, its scope will be extended to cover enterprises in the not-for-profit sector: this reflects a concern of the social partners, which have expressed a wish in the CNT/NAR that workers in this sector should qualify for the Fund's guarantee (in opinion No. 1320 of 18 July 2000). The bill considers a 'not-for-profit' company to be one that 'does not have an industrial or commercial purpose'– in other words, those operating in the liberal professions and not-for-profit associations (associations sans but lucratif/verenigingen zonder winstoogmerk, asbl/vzw). This is the bill's most innovative feature, in the view of Minister Onkelinx, but there are still questions about the rate of employer contributions to the Fund in this sector, which might be fixed at 0.04% of total paybill.

The bill also opens up the possibility of extending the Fund's coverage to small and medium-sized enterprises (SMEs) employing fewer than 20 people. The prospect of this has angered the Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO). Arnout De Koster, director of FEB/VBO's social department, claims that 'this could push up redundancy costs, and greatly increase employers' contribution to the Redundancy Payments Fund', and points to the impact that the recent bankruptcy of the SABENA airline (BE0109362N) has had on the Fund's budget. The employers' anxieties are further accentuated by the existence of another bill currently being examined in parliament which clearly aims to extend the Fund's cover to SMEs.

For the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV), the director of the Federation's social studies service, Jean-Paul Delcroix, believes that the extension of the Fund to enterprises with fewer than 20 employees is in line with the trade union position that 'workers in SMEs are workers in every sense of the word, and are therefore entitled to this cover.' However, he acknowledges that it will require discussion among the social partners. He is also worried about the Fund's limited room for manoeuvre since SABENA went bankrupt.

Commentary

The debate on company closures began in the late 1950s, and has broadened considerably since then. There is already substantial legislation on the subject, and it now makes sense to ensure that it is coordinated in order to retain a degree of consistency. However, a few questions arise.

An examination of the bill reveals that the decision to open up the possibility of extending the Redundancy Payments Fund's cover to SMEs derives more from a preference on the part of the government than from negotiations between the social partners. This procedure may alarm some people, given Belgium's long tradition of social concertation. However, this new arrangement may be justified in the light of economic developments. Large enterprises no longer have the clout they once had, and SMEs are often buoyant, innovative companies; they are also capable of adapting speedily to market developments. The downside, however, is that they are economically and financially fragile.

At another level, workers in not-for-profit organisations also need to be covered by the Fund, both because they represent a substantial pool of jobs, and because their viability frequently relies on the receipt of subsidies, rather than on making profits. These enterprises, too, are marked by a degree of fragility. However, given the social and professional (re)integration of large numbers of people that they perform, among other reasons, their function is vital. Finally, as some of the social partners have made clear, the very viability of the Fund is not yet assured. (Baudouin Massart, TESA-VUB)