LABOUR LAW PRACTICE BOOK

Table of contents

I.     THE EMPLOYMENT CONTRACT

     1.     General concept

     2.     Types of contracts

     3.     Trial period

     4.     Non-competition

     5.     Suspension

     6.     Termination

II.     GENERAL OBLIGATIONS OF THE EMPLOYER

     1.     Registrations and insurances

     2.     Work regulations

III.     WORKING CONDITIONS

     1.     Remuneration

     2.     Working hours

     3.     Special conditions for young employees and women

IV.     INDUSTRIAL RELATIONS

     1.     Trade Unions and Employers' Associations

     2.     Employee representation at company level

I. THE EMPLOYMENT CONTRACT

1. General concept

According to Belgian Labour Law an employment contract is a contract by which a person (the employee) performs manual or intellectual services in return for remuneration under the authority of another person (the employer).

The presence of a subordinate relationship is characteristic of an employment contract. Employment contracts are mainly governed by the Law of July 3, 1978.

Belgian Labour Law distinguishes between white- and blue-collar employees.

2. Types of contracts

Employment contracts can be concluded for an indefinite period of time, for a definite period of time, for a specific work, for a full-time or part-time function, for the replacement of an employee, for a seasonal employment, for a traineeship or for students.

The main employment contract is the full-time employment contract for indefinite duration. Only this type of contract can be validly concluded orally. All other types of contracts must be established in writing. Should they not be established in writing, they will be considered as employment contracts of indefinite duration.

3. Trial period

A clause providing a trial period may be inserted in any type of employment contract. The clause must be established in writing on penalty of nullity individually for each employee prior to commencing the employment.

For a blue-collar employee, the trial period may not be less than seven days nor more than fourteen days (Article 48 of the Law of July 3, 1978). For a white-collar employee, the trial period may not be less than one month and may not exceed six months for employees earning up to BF 1,067,000 gross per year (amount valid in 1995). For employees earning more than this amount, the trial period may not exceed twelve months per year (Article 67 of the Law of July 3, 1978).

4. Non-competition

Article 17 of the Law of July 3, 1978 contains a general prohibition for the employee to engage in unfair competition, both in the course of the employment contract as well as after the termination thereof.

However, parties may insert an explicit "non-competition clause" in the employment contract, as to better regulate their rights and obligations in this respect.

There exist three types of non-competition clauses: a general non-competition clause, a special non-competition clause, and a non-competition clause for sales representatives. These clauses must obligatory be established in writing.

A general non-competition clause can be inserted in employment contracts for white- and blue-collar employees. Its validity depends on the salary of the employee concerned (no legal effect when the employee earns less than BF 889,000 gross a year (amount for 1995) (the amounts of BF889,000 BF 1,067,000 and BF 1,777,000 mentioned in this brochure are indextied and are adjusted every year with effect on January 1), full legal effect when he/she earns more than BF 1,777,000 gross a year (amount for 1995), effective upon certain conditions between those amounts). Moreover, the general non-competition clause can only concern similar activities, must be limited to the territory where the employee can effectively enter into competition with the employer (Belgium) and can only have a maximum duration of twelve months. The non-competition clause must explicitly provide for the payment by the employer of a lump-sum compensation, payable unless the employer renounces the application of the clause within fifteen days following the termination of the employment contract. A valid non-competition clause will only be operative if the employment agreement is terminated after the trial period, by the employee without cause or by the employer for cause. If the employee violates the non-competition clause, he/she is bound to refund the lump-sum indemnity received from the employer. Moreover, he/she will have to pay the employer an amount in principle equivalent to this indemnification.

A special non-competition clause can only be inserted in employment contracts for white-collar employees. It may only be used for companies which have an international field of operations or important economic, technical or financial interests on the international markets, or which have their own research services. A special non-competition clause can deviate from the general one on the limitation of the national territory and the maximum period of twelve months.

The non-competition clause for sales representatives deviates from the general clause as to the fact that the employer is not held to pay a lump-sum indemnity. Moreover, its scope must be limited to the area in which the sales representative has exercised his activities.

5. Suspension

Under Belgian Labour Law an employment contract can be suspended for several reasons, the most important of which are :
-  annual holidays: an employee is entitled to annual holidays on the basis of the services rendered during the preceding year. A full service year entitles the employee to twenty days of annual holidays
-  sickness of the employee or accident occurred to the employee
-  pregnancy: pregnant employees are entitled to take a total of 15 weeks of maternity leave
-  paid educational leave of absence: absence of a full-time employee in order to follow a course (number of hours defined by law)
-  career interruption: an employee can stop working or shift from full-time employment to part-time employment for a given period while receiving a financial compensation from the unemployment administration, provided that he/she is replaced by an unemployed person
-  shortness of work due to economic reasons (only for blue-collars)
-  leave of absence due to different events such as marriage, birth of a child, death of relatives etc.
-  military service and civil obligations
-  force majeure
-  bad weather (only for blue-collars)
-  strike and lock out.
In principle, no work means no pay. However, continued salary may be provided for by law (e.g. first month of sickness) or by contract.

Moreover, it must be noted that there are ten paid legal holidays, fixed by law i.e. January 1st, Easter Monday, May 1st, Ascension Day, Whit Monday, July 21st, August 15th, November 1st, November 11th and December 25th.

6. Termination

6.1. Modalities of termination

An employment contract can be terminated in various ways :
-     upon expiration of the duration of the contract or by completion
      of the specific work
-     by accomplishment of a specific event provided in the contract
-     upon the death of the employee (the death of the employer in
      principle does not terminate the employment contract !)
-     due to force majeure 
-     by mutual agreement
-     by court decision to dissolve the contract
-     upon unilateral decision of one of the parties involved.
In the framework of this brief outline of Belgian Labour Law, only the unilateral termination of the employment contract of indefinite duration will be examined.

Under Belgian Labour Law forced specific performance is excluded : the right to terminate unilaterally an employment contract is essential. Commentators agree that this principle is the consequence of the free exercise of trade and industry and that the right to terminate such employment contract has a discretionary character. In other words, the terminating party is, as a rule, by no means obliged to justify his decision and the reasons which bring him/her to the termination are basically irrelevant under the Law.

In the event of a unilateral termination of the employment contract, it must be verified whether the legally prescribed formalities have been observed. If this is not the case, the terminating party will be held to pay a severance allowance to the other party.

6.2. Termination of the employment contract of indefinite duration for blue- and white-collar employees upon notice

An employment contract of indefinite duration can be terminated upon notice. If notice is given by registered mail, such notification is deemed to have effect only on the third working day following the mailing of the letter.

A. Blue-collar employees

If the employment contract of indefinite duration of a blue-collar employee is terminated upon notice, the notice will commence on the Monday of the subsequent week. A blue-collar employee is entitled to a notice period of 28 days or 56 days depending on whether his seniority with the same enterprise is less or more than twenty years. When the blue-collar employee has been in the service of the employer for less than six months, the employment contract may be terminated upon a notice of seven days. In the event the blue-collar employee resigns, the above notice periods are reduced by half.

During the trial period the employment contract can be terminated without notice. However, during the first seven days of the trial period (or should the trial period only last seven days, during the entire trial period) the employment contract of the blue-collar employee may not be terminated unilaterally, except for serious cause, meaning that upon an irregular breach of the employment contract, the blue-collar employee will be entitled to a severance indemnity, amounting to seven days' salary.

B. White-collar employees

If the employment contract of indefinite duration of a white-collar employee is terminated upon notice, the notice will commence on the first working day of the subsequent month.

The length of notice to be given to a white-collar employee is different for an employee earning up to BF 889,000 per year (amount valid for 1995) or more than this amount.

1) During the trial period, either party may end the contract upon seven days' notice (except during the first month of the trial period).

2) When the annual remuneration does not exceed BF 889,000, the notice period is at least three months for employees having less than five years' seniority. This statutory minimum is increased by three months upon commencement of each succeeding new five-year period. If notice is given by the employee, the above-mentioned period will be reduced by half but may never exceed three months.

3) When the annual remuneration exceeds BF 889,000, the notice period to be observed is to be fixed by mutual agreement between the employer and the employee. Such agreement may in principle only be concluded at the earliest when notice is given. In the absence of an agreement between the parties, the notice period is fixed by the courts. Notice given by the employer may not be shorter as set forth in the above-mentioned "three months for five years" rule. Notice given by the employee is half that which the employer would have to observe. However, it may not exceed four and a half months if the annual remuneration is between BF 889,000 and BF 1,777,000, or six months if the remuneration exceeds BF 1,777,000 (amounts for 1995).

In determining the appropriate length of notice, courts must take into account the seniority, age, level of function, salary and the assumed degree of difficulty for the employee to find a suitable new job. When trying to apply these criteria, the courts sometimes take into account certain statistical formulas or schedules, such as the so-called "Claeys Formula".

4) Contrary to the above-mentioned rule, the Law of March 30, 1994 provides that, for contracts concluded after April 1, 1994, an agreement concerning the length of the notice period to be observed by the employer may be concluded between parties at the latest on the date of the entering into service of the employee. This possibility only applies to employees whose annual salary at that moment exceeds BF 1,777,000 (amount for 1995). The agreed length of notice may not be inferior to the statutory minimum.

5) Employees who reach the age of 65 years may be terminated upon reduced notice. Notice given by the employer is, in such event, equal to three or six months, depending on whether or not the employee has less or more than five years seniority. If notice is given by the employee, the above-mentioned notice period is reduced by half.

6.3. Breach of contract

If a contract of a blue- or white-collar employee is terminated, otherwise than for cause, without notice or with insufficient notice, it constitutes a breach of contract, which gives rise to the payment of an indemnity in lieu of notice. Such indemnity is equivalent to the salary that the employee would have earned during the notice period should the contract have been terminated regularly.

A significant unilateral change of an essential element of the employment contract may also constitute a breach of contract.

6.4. Dismissal for cause

An employment contract may be terminated at any time without notice or indemnity in lieu of notice for serious cause. Any major violation of a contractual undertaking or of the principle of good faith, rendering a continuation of the professional relationship between employer and employee (a) immediately and (b) permanently impossible constitutes a serious cause, justifying a termination on the spot without notice or indemnity.

The termination must occur within three working days from the moment the facts are known to the terminating party; the reason(s) for the dismissal must be notified to the dismissed party by registered mail within three working days from the date of dismissal.

6.5. Particular protection

When the Law provides for a special protection against dismissal (e.g. pregnant employees, members and non-elected candidates of the Works Council, Health and Safety Committee or Union Delegation), specific procedures must be followed. A termination notwithstanding this protection does not result in forced specific performance, but in the payment of special indemnities provided for by Law, which can be rather important.

II. GENERAL OBLIGATIONS OF THE EMPLOYER

1. Registrations and insurances

1.1. Registrations

1) In Belgium, the employer must register with the social security authorities (O.N.S.S./R.S.Z.) and pay to the latter the social security contributions quarterly, computed on the basis of the remuneration paid to the employees.

2) As regards the payment of employees' income taxes, the employer is liable for withholding the employees' income tax. The employer therefore must direct himself to an office of tax collection.

3) The employer must register within 90 days after the employment of a first employee with a family allowances fund. In default of registering in due time, the employer will be automatically registered with the National Office for Family Allowances for Employees.

4) Every new employer must register with a vacation fund, unless he intends to employ white-collar employees only. The competent vacation fund depends on the Joint Committee to which the employer belongs. Should the employer not fall under the competence of a specific Joint Committee, he must register with the National Office for Annual Vacation.

1.2. Insurances

1) The employer must subscribe an insurance policy for work accidents with a recognised insurance company. Failing compliance with this obligation, the employer is automatically registered with the Work Accidents Fund.

2) Should the employees of a certain employer risk professional diseases, the employer is held to take out an insurance policy with the Professional Diseases Fund.

2. Work regulations

Work regulations must be established by the employer regardless of the number of employees occupied in the company, and are binding upon the employer and the employees.

The Law of April 8, 1965 imposes a compulsory procedure for the establishment and/or modification of the work regulations which ensures a dialogue between the employer and his employees on the contents of the work regulations. Article 6 of the above-mentioned Law enumerates certain issues which must be provided for in the work regulations.

A notice indicating where the work regulations may be consulted must be posted in a visible location on the premises of the company. Moreover, each employee must be given a copy of the work regulations (and of any modifications).

Parties may, in individual cases, deviate from the company's work regulations, provided they explicitly state so in writing.

III. WORKING CONDITIONS

1. Remuneration

The main legal provisions and basic principles on remuneration are laid down in the Law of April 12, 1965 on the protection of the remuneration of employees. One of the first principles set forth is the employee's freedom to dispose of his/her salary as he/she wishes.

The salary must be paid on certain fixed dates with a maximum interval of sixteen days. However, exceptions are provided for, e.g. the salary of white-collar employees (monthly), the commissions for sales representatives and profit shares and other similar payments (bonuses).

The employee's gross salary is reduced by the employee's personal social security contributions presently fixed at 13.07 % and by a certain percentage of tax withholdings, fixed by Royal Decree.

If the employee performs his function in Belgium, his salary must be paid into the hands of the employee and in money expressed in Belgian currency. Payments by way of a bank transfer or cheque can be made with the written approval of the employee or if such means of payment is in accordance with a decision of the works council, or if there is an agreement between the employer and the union delegation or with the majority of the employees.

In addition to the monthly salary, white-collar employees are entitled to a so-called double vacation allowance. As far as blue-collar employees are concerned, their vacation allowances, amounting to approximately 15.18% of the annual salary, are paid out by a vacation fund. Moreover, in several industries the payment of a year-end bonus is rendered mandatory by collective bargaining agreements. For white-collar employees, this year-end bonus is usually equal to a thirteenth month.

Employees may also receive other fringe benefits or entitlements such as : meal vouchers, reimbursement of (part of) transportation expenses, use of a company car for personal purposes, coverage under extra-legal insurance policies or pension plans, performance bonuses, profit share, etc.

It should be noted that a salary freeze is imposed for the years 1994, 1995 and 1996. The legal framework of the salary freeze measures can be found in the Royal Decree of December 24, 1993, which was confirmed and modified by the Law of March 30, 1994. As for the year 1994, no remuneration increases and no new benefits could be granted by the employer as from January 10, 1994 onward, except by virtue of a collective bargaining agreement properly registered no later than November 15, 1993.

As regards 1995 and 1996, no agreements may be concluded and no unilateral decisions may be taken by an employer which would provide for a remuneration increase or for new benefits in that period. However, there are some explicit and implicit exceptions to this rule.

2. Working hours

In principle, employees may not perform their services more than forty hours a week or more than eight hours a day, nor may they work on Sundays (the Law of March 16, 1971). In a large number of collective bargaining agreements concluded at industry level, the Saturday is added as an obligatory non-working day. In that case, the daily maximum for the five (instead of six) working days is automatically increased to nine hours a day. Moreover, collective bargaining agreements often provide for weekly limits below forty hours.

There are many exceptions to the above-mentioned eight hours per day/ forty hours (or less) per week rule, a.o. in case of a shift system, continuous (non-stop) operation etc. Both the daily limit as the weekly limit may be exceeded in such cases, provided that an average of forty hours (or less) per week is reached over a period of maximum one year.

Overtime is in principle forbidden. There are, however, specific exceptions, determined by law. It must be noted that overtime work (work performed in excess of the above-mentioned limits) gives a right to compensatory rest and to overtime payment (150% of the salary and 200% on Sundays and legal holidays).

3. Special conditions for young employees and women

The above-mentioned rules on working time are applied even more strictly in the case of young employees, i.e. young people under the age of 18. Young employees may by no means work more than 10 hours a day and may not perform more than 4.5 hours continuously. Overtime work is not allowed. Nor may young employees work on Sundays and legal holidays or perform night work. Exceptions to these rules are possible but only under very strict conditions. Very often the Social Inspection must be informed within three days of the exception to the working-time rules.

Young people under the age of 15 or those subject to compulsory attendance at school (in general until 16 or 15 years of age) may not be employed. An individual exception to this prohibition can be accorded in cases determined by law (e.g. for actors, singers, musicians, models etc.).

There are no specific rules for older employees or disabled employees. However, some specific rules concerning night work for women should be mentioned.

In principle, night work for women is forbidden (night in principle being the period between 8 p.m. and 6 a.m.). However, there exist some exceptions to this prohibition. An agreement has been concluded in the National Labour Council as to interpret the existing legal exceptions in an extensive way. Until now, no concrete results have been achieved. It should be noted that the European Court of Justice has ruled that the national legislations containing a prohibition of night work for women do, however, violate the principle of equal treatment.

IV. INDUSTRIAL RELATIONS

1. Trade Unions and Employers' Associations

In Belgium, the relations between employers and employees are institutionalised. The - recognised - unions play a most important role herein. In order to be considered as representative, a union must have an inter-trade character, be established at national level, have at least 50,000 members and be represented at the National Labour Council and the Central Economic Council.

There are three traditional interprofessional trade unions : the christian (A.C.V. - C.S.C.), the socialist (A.B.V.V. - F.G.T.B.) and the liberal (A.C.L.V.B.- C.G.S.L.B.). In one specific matter, the election of employees' representatives in the Works Council, the interprofessional union of executives (N.C.K. - C.N.C.) has been recognised, although it has less than 50,000 members.

The recognised unions participate in labour negotiations which take place at the National Labour Council, in the Joint Committees and within enterprises (the conclusion of collective bargaining agreements). They may defend their members in labour courts and present candidates for the social elections . The unions have no legal identity and thus cannot be sued.

Associations for employers also exist. Employers' associations can be party to the conclusion of collective bargaining agreements at the national level (in the National Labour Council) and at the industry level (in Joint Committees, where both employers' associations and trade unions are represented).

2. Employee representation at company level

Under Belgian Labour Law there are three types of participatory organs: the Works Council, the Health and Safety Committee and the Union Delegation.

The Works Council can be defined as an employee-representative organ which has to be established in each company employing 100 or more persons on an average basis.

The role performed by said body is purely advisory. The Works Council may not interfere in the actual management of the business. The influence of the Works Council is therefore limited to the examination of initiatives that can be taken to increase the co-operation between management and personnel, to make recommendations, to ensure strict compliance with the laws on labour safety, to propose and amend work regulations, etc.

In order to perform its tasks, the Works Council should receive basic information about the financial and economic situation of the company, annual information regarding the situation and evolution of the company, periodical information (every 3 months) regarding the business evolution, and occasional information regarding facts and/or internal decisions capable of seriously influencing the working of the company.

The Health and Safety Committee is an employee-representative organ which must be established in each company employing 50 or more persons on an average basis. The role of this Committee is also advisory, and therefore basically limited to the giving of advice to the employer on all matters or problems relating to the health and safety conditions. The Committee can however decide upon the nomination and the replacement of the Head of Safety and Security and his substitutes, and the termination of their functions.

Moreover, the Committee has some very specific tasks such as the investigation of employee security and safety risks, the indication of a delegation whenever a serious accident has occurred or is likely to occur, the improvement of the work place, etc.

The Works Council and the Health and Safety Committee are in principle composed of an equal number of employer and employee representatives. The employer representatives are designated by the employer and are chosen from the management personnel. The employees' representatives are elected on lists which are presented by the "representative unions" (plus the N.C.K.-C.N.C., the national union for executives) at the occasion of the social elections which are organised every four years.

The Union Delegation consists of employees of the enterprise who are elected or designated to represent the unionised employees before the employer. A collective bargaining agreement can extend this representation to the non-affiliated personnel. A Union Delegation should be installed when one or more representative unions require so. A union may however, only present candidates for election or designation as a union delegate if it can prove a certain representativity as per the industry collective bargaining agreement.

The Union Delegation has a specific competence in labour relations in general, in negotiations with a view to the conclusion of collective bargaining agreements, in the application of regulations, in disputes between employees and the employer and in informing the personnel about professional or trade-union matters. Moreover, when there is no Works Council in the enterprise, the Union Delegation takes over a number of the functions of the Works Council.

The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.

De Bandt, van Hecke & Lagae - Brussels. (32-2) 517.95.79.