Thematic feature - redundancies and redundancy costs

This article examines the procedures and costs involved in collective redundancies in Belgium, as well as current trends and debate in this area, as at November 2003.

In November 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to give a brief overview of: the procedures and costs involved in collective redundancies - ie the dismissal of a number of employees for economic/organisational reasons (rather than reasons related to the individuals concerned); the levels of, and reasons for, redundancies over recent years; and current debate on the issue. The Belgian responses are set out below (along with the questions asked).

Redundancy procedures

Please outline briefly the statutory procedures involved in making 'collective redundancies' (please indicate how these are defined) in your country, in terms of: information and consultation of employee representatives/trade unions; notification of (or obtaining permission from) public authorities; notice periods to be given to the redundant employees; rules on the order of priority for redundancy or giving special protection to particular groups of employees; and obligations to mitigate the planned redundancies or provide assistance in the form of redeployment, training, outplacement etc (including provisions on 'social plans'). Where collective agreements add to or improve on these statutory provisions, please provide a brief overview of such additional procedures (with examples).

Collective redundancy procedures are governed by law and by national collective agreements reached by the intersectoral social partners within the National Labour Council (Conseil National du Travail/Nationale Arbeidsraad, CNT/NAR), as follows:

  • national agreement No. 10 of 8 May 1973 relating to collective redundancies;
  • national agreement No. 24 of 2 October 1975 concerning the information and consultation procedure for employees’ representatives relating to collective redundancies;
  • Royal Decree of 24 May 1976 on collective redundancies;
  • law of 13 February 1998 dealing with provisions promoting employment; and
  • Royal Decree of 30 March 1998 implementing Articles 63 and 66(2) of Chapter VII, on collective redundancies, of the law of 13 February 1998 dealing with provisions promoting employment.

Furthermore, when collective redundancies take place as part of the closure of an enterprise, the employer is obliged to abide by the obligations imposed by both the regulations relating to collective redundancies and those specifically related to company closures.

A 'collective redundancy' in Belgium is deemed to be any dismissal which, for one or more reasons not related to the individual employees concerned, affects the following numbers of workers over a period of 60 days:

  • 10 in enterprises employing between 20 and 99 workers;
  • 10% of workers in enterprises employing between 100 and 299 workers; and
  • 30 in enterprises employing 300 or more workers.

When an employer wishes to carry out such collective redundancies, it must comply with the following well defined procedures:

  • inform workers’ representatives in advance. The employer must provide all relevant information to employees’ representatives - that is to say the works council or, in its absence, the trade union delegation or, in the absence of a union delegation, the workers themselves - and notify them in writing of certain matters, including the reasons for the redundancy, the number and categories of workers concerned, and the period over which the redundancies will be carried out;
  • ask for the workers’ representatives’ opinion. The employer must consult employees’ representatives on possible ways of avoiding or reducing the planned collective redundancies, and of mitigating the consequences (eg measures for supporting, redeploying and retraining the dismissed workers). Agreement between the employer and the employees’ representatives, whether focusing on the collective redundancies or an accompanying 'social plan' is not mandatory; and
  • inform the director of the subregional employment office about the proposed collective redundancies. The employer must send the employees’ representatives a copy of the written information and then notify the subregional employment service in the area where the enterprise is located - ie the Flemish Service for Employment and Vocational Training (Vlaamse Dienst voor Arbeidsbemiddeling en Beroepsopleiding, VDAB), the Walloon Service for Employment and Training (Office wallon de la formation professionnelle et de l’emploi, FOREM) or the Brussels Regional Employment Office (Office Régional bruxellois de l’Emploi/Brusselse Gewestelijke Dienst voor Arbeidsbemiddeling, BGDA/ORBEM) - of the proposed collective redundancies.

For 30 days after the director of the subregional employment office is notified, the employer may not dismiss workers covered by the planned collective redundancies. The aim of this period is to give the subregional employment service time to find a solution to the consequences of the projected redundancies. During this period, employees’ representatives may also raise objections over non-compliance with the redundancy procedure. The 30-day period may be reduced (in very special cases) or extended by the director of the subregional employment office. In practice, whether or not it is used to negotiate better severance conditions, the period is often used as a way of obtaining an extended deadline before an enterprise is closed or cut back.

Given, the definition of collective redundancies, the above provisions apply only to enterprises that have on average employed more than 20 workers during the previous year.

Redeployment

A number of nationally applicable regulations govern aspects of the redeployment of redundant workers, notably:

  • national agreement No. 51 of 10 February 1992 relating to outplacement. This seeks to regulate employers' initiatives by providing for trade union supervision over their choice of outplacement office and, in the event of collective redundancies, over the methods used in outplacement; and
  • the law of 5 September 2001 on improving the employment rate and national agreement No. 82 of 10 July 2002 provide that redundant workers aged over 45 with at least one year’s service in an enterprise qualify for individual redeployment and retraining assistance if they meet certain criteria (BE0208301N).

In the distribution of powers between the federal state, the regions and the communities, responsibility for employment and training has been handed over to the regional authorities, leading to different practices in different regions. The subregional employment services (VDAB, FOREM and BGDA/ORBEM) have set up 'redeployment units' with varying roles. For example, the Walloon region was the first to legislate on support for dismissed workers, with a 2001 decree setting up 'redeployment support programmes' involving trade unions and FOREM, and a further decree currently being drafted aiming to establish a new entitlement to support for workers who are made redundant. At the end of 2002, 3,273 workers were covered by redeployment units in the Walloon region.

Redundancy payments

Please outline the statutory rules on compensation for employees affected by collective redundancies, in the form of minimum notice periods, redundancy pay, severance pay etc - ie what is the level of payment, how does it vary with age, service etc. Where collective agreements add to or improve on these statutory provisions, please provide a brief overview of such additional payments (with examples). Overall, please provide any figures or estimates which may be available on the 'average' or 'typical' level of redundancy pay per employee. Where company practice and/or collective agreements provide for accompanying measures (ie set up an recruitment agency, retraining schemes with employer’s contribution, etc) please give an overview of such schemes.

To mitigate in part the consequences of job loss, employers are obliged under the terms of national agreement No. 10 of 8 May 1973 to make a special payment to workers affected by collective redundancies. In this context, a collective redundancy is defined as any redundancy for economic or technical reasons affecting the following numbers of workers over a continuous period of 60 days:

  • six in an enterprise employing 20-59 people; or
  • 10% of the workforce in enterprises employing 60 or more workers.

It should be noted that certain categories of worker are excluded from the scope of this collective agreement, such as: workers employed on fixed-term contracts; workers in the construction industry; temporary agency workers; and workers covered by the national joint committee for ports. Special measures may be developed at sectoral level for these areas of work. Sectoral collective agreements may also exclude other categories of worker from the application of the national agreement.

This redundancy compensation is paid to workers in addition to the unemployment benefits to which they are entitled. The cost is borne by the employer, and the value is equal to half the difference between a net 'reference wage' and the unemployment benefits that workers can claim. The redundancy compensation is payable for a period of four months commencing on the day the contract terminates, and may be reduced if the notice period for which the workers qualify exceeds three months.

Employee representatives on the works council (ondernemingsraad/conseil d'entreprise, OR/CE) and the committee for prevention and protection at the workplace (comité voor preventie en bescherming op het werk/comité pour la prévention et protection au travail, CPBW/CPPT) - formerly known as the workplace health and safety committee- receive special compensatory payments for redundancy, as do trade union delegates.

Specific statutory compensation is payable in the event of the closure of the employing enterprise, from the Enterprise Closure Fund (Fonds de fermeture d’entreprises/Fonds Sluiting van Ondernemingen, FFE/FSO). This Fund was set up in the 1960s with the aim of giving workers dismissed as a result of their employer's closure the compensatory payments due to them from the employer. The Fund may therefore be seen as an insurance policy against the risk of companies failing to meet their legal obligations. It is funded by contributions levied on total paybill, and by the recovery of money advanced to the bankruptcy administrators.

With regard to retraining for redundant workers, the employer may, with the worker’s consent, bear the costs of establishing relevant procedures. Worker retraining procedures become an entitlement for workers aged 45 and above who have at least one year’s service in the enterprise and who have not been dismissed for 'just cause' or in the context of an early retirement scheme. Retraining procedures are not automatic, and require the worker to make an application.

Redundancy levels

Where this is possible, please give statistics on the number of collective redundancies effected in your country each year from 1990 to 2003 (or the latest year for which data are available). If available, please break down by sector, and the jobs, age and gender of the workers affected. Also, please provide any information on the grounds for collective redundancies - eg company restructuring, closure or transfer/relocation. In response to this question, please give an assessment of trends and developments, even where full statistical information is not available.

There appear to be no comprehensive statistics on the number of collective redundancies that have taken place in the last few years. With specific regard to company relocations, the Federal Planning Bureau (Bureau fédéral du Plan/Federaal Planbureau) carried out a study on 'the effects of globalisation and relocation on employment' by means of a survey of trade unions. According to this study, 17,279 workers were affected by collective redundancies that might be linked to relocations during the period from 1990 to 1995. The figures fluctuated between 2,000 and 3,900 workers every year.

With regard to closures of enterprises, it is possible to give the number of enterprises that went bankrupt between 1996 and 2002 - see table 1 below - but no information is available on the number of workers made redundant in these circumstances, or on the size of the enterprises concerned.

Company bankruptcies, 1996-2002
Year No. of bankruptcies
1996 7,559
1998 6,920
1999 7,156
2000 6,805
2001 7,095
2002 7,222

Source: National Statistics Institute (Institut National des Statistiques/Nationaal Instituut voor de Statistiek, INS/NIS).

These bankruptcies may be broken down by economic sector and by region for the period from October 2001 to September 2002 - see table 2 below.

Bankruptcies by sector and region, October 2001-September 2002
. No. of bankruptcies
By sector .
Agriculture and fishing 102
Extractive industry, energy and manufacturing industry 582
Construction 997
Commerce 2,336
Hotels, restaurants, catering 1,223
Transport and other services 1,909
Unspecified activities 357
By region
Brussels region 1,201
Flemish region 4,191
Walloon region 2,108

Source: INS/NIS.

In terms of the legal form of these businesses, most bankruptcies are to be found among private limited companies (56%), followed by the self-employed (19%), public limited companies (17%) and cooperatives (7%).

Lastly, again with reference to enterprises that have closed down or gone bankrupt, the National Employment Office (Office National de l’Emploi/Rijksdienst voor Arbeidsvoorziening, ONEm/RVA) provides an overview of jobs lost as a result of bankruptcy by sector and by region for the period January-September 2003 - see table 3 below. These figures concern only employers which have been unable to fulfil their obligations, and have had to apply to the Enterprise Closure Fund.

Jobs lost through bankruptcy, employers applying to Enterprise Closure Fund, by sector and region, January-September 2003
Sectors* A M I C E B T S Total
Walloon region
Enterprises 17 0 78 152 0 288 48 87 670
Workers 43 0 845 1,539 0 1,207 685 491 4,810
Brussels region
Enterprises 0 0 38 38 0 182 25 152 435
Workers 0 0 741 225 0 1,087 154 1,477 3,684
Flemish region
Enterprises 21 0 131 192 0 470 106 182 1,102
Workers 185 0 3,038 1,954 0 2,105 858 1,726 9,866
Total
Enterprises 38 0 247 382 0 940 179 421 2,207
Workers 228 0 4,624 3,718 0 4,399 1,697 3,694 18,360

* A - agriculture, forestry, hunting and fishing; M - extraction of minerals; I - industry; C - construction; E - electricity; B - commerce, banking and insurance; T - transport and communications; S - services.

Source: ONEm/RVA.

Debate

Please summarise any current debate on the issue of collective redundancies in your country. For example, is this an important topic for trade unions and employers’ organisations and in collective bargaining? Has there been any recent new legislation or proposed legislation on the subject, or the prospect of new legislation - eg to implement EU legislation such as Directive 2002/14/EC on national information and consultation rules (EU0204207F), which requires 'information and consultation on the situation, structure and probable development of employment within the undertaking or establishment and on any anticipatory measures envisaged, in particular where there is a threat to employment'? Has there been any debate on the cost met by the government as a consequence of collective redundancies (ie what is the cost associated with unemployment benefits, training schemes funded by the government etc).

Major collective redundancies that have taken place over the last few years, such as the closure of the Renault plant at Vilvoorde in 1997 (BE9703202F) and the bankruptcy of Sabena in 2001 (BE0102340F), have triggered debates on collective redundancy in terms of both workers’ information and consultation and the retraining of dismissed workers. In addition to these matters, one of the main issues that arise at times of closures of enterprises and collective redundancies is a demand for an increase in the statutory compensation due to workers. It has also frequently been the case that the state itself has granted workers compensation above the level of statutory payments.

At present , although the new Socilialist-Liberal government which came to office in July 2003 is committed to the creation of 200,000 jobs (BE0308302N), collective redundancies continue - eg at the Ford plant at Genk (BE0311305F) and at Belgian Railways (Société nationale des chemins de fer belges/Nationale Maatschappij der Belgische Spoorwegen, SNCB/NMBS) (BE0311301N). The trade unions are demanding measures on job maintenance and to mitigate the impact of collective redundancies. For example, at the national 'conference for employment' launched by the new government in September 2003 (BE0310301N), the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) called for:

  • pre-empting company economic problems through the effective use of economic and financial information via works councils;
  • a statutory overview of redundancies, and the introduction of financial sanctions when profitable enterprises relocate. As matters stand, there are no measures outlawing or restricting the right of employers to close or relocate their enterprises;
  • job-sharing instead of redundancies, through shorter working hours;
  • support for retraining through mandatory employment units and an across-the-board entitlement to outplacement assistance;
  • improved payments from the Enterprise Closure Fund; and
  • extending the scope of the Enterprise Closure Fund to include enterprises employing fewer than 20 people.

(Marinette Mormont, Institut des Sciences du Travail)

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