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Belgium

Transposition of the EU Directive1: The rules of the Directive are mainly implemented by the nation-wide collective bargaining agreement n°32bis of 7 June 1985 (CBA 32bis).

Scope

Covered Employees.
CBA 32bis covers full-time, part-time and indefinite-term or fixed-term employees.  The Directive does not cover independent contractors or other persons who are not regarded as “employees” under national law.  Employees working for employers belonging to the public sector are not covered by CBA 32bis.

Covered Transactions.
CBA 32bis scope of application is aligned with the Directive and its interpretation by the European Court of Justice (“ECJ”).  It broadly covers transactions involving a change in the entity responsible for a business (or part of a business) resulting in a change of employer, such as an asset sale or a merger.  The relevant business (or part) must constitute an “economic entity” which this requires resources (whether tangible and/or intangible) that are deliberately organized together for purposes of pursuing economic activity of some sort, whether or not operating for profit.

Excluded Transactions.
A 32bis does not apply to: 

  • Stock sales.
  • Transfers of assets not constituting an “economic entity” or where the economic entity does not retain its identity.  However, the analysis of whether the transfer of assets constitutes an economic entity which retains its identity is fact-specific, and legal advice should always be sought before concluding that CBA 32bis does not apply.  
  • Liquidations in bankruptcy or analogous insolvency proceedings.
  • Insolvency proceedings that do not involve a liquidation. Some of the more stringent rules of CBA 32bis are relaxed ((i) certain employee debts do not transfer where they are otherwise protected under national law, (ii) the new employer may pick and choose which employees are taken over and (iii) changes to employees’ terms and conditions may be collectively agreed) in order to safeguard employment opportunities by ensuring the survival of the business.
  • Transfers between employers belonging to the public sector.

Transfer of Employment and Certain Rights and Obligations by Operation of Law

  • In General.  Employees assigned2 to the business transfer automatically by operation of law to the transferee at the same time as the business is transferred, and on their existing terms and conditions of employment. Employees belonging to shared services which are not transferred as a separate unit are not in scope of the transfer unless their duties are performed exclusively for the benefit of the part of undertaking transferred.  The transferee becomes the new employer.  As a result, all rights and obligations arising from the employment contracts of those transferred employees are also transferred to the transferee, and (except as provided in “The Pension Exception” and “Joint and Several Liability” below), the transferor is released from those obligations by operation of law.
  • The Pension Exception.  Employees’ rights to old-age, invalidity or survivor’s benefits under supplementary company or intercompany pension schemes outside statutory social security schemes do not transfer automatically by operation of law to the transferee, and so remain with the transferor unless the occupational pension schemes are foreseen in a collective bargaining agreement (see “Collective Agreements” below).  When the transfer of undertaking is the result of the sale or contribution of a “branch of activity”  or of a “business as a whole” as defined by the Belgian Company code, the occupational pension rights will also be transferred by operation of specific provisions of that code.
  • Joint and Several Liability.  After the transfer, the transferor remains jointly and severally liable with the transferee for obligations that arose in respect of the transferred employees before the transfer.
  • Collective Agreements.  The transferee is required to continue to observe the terms and conditions agreed in any collective agreement applicable to the transferred employees on the same terms as the transferor, until the termination or expiry of the collective agreement or the entry into force or application of another collective agreement.  There are arguments, however, to consider that the transferee will no longer be bound anymore by CBAs concluded in another branch of industry when both transferor and transferee do not belong to the same branch.  There is not yet any decisive case law in this regard.
  • Employee Representative Recognition.  Various scenarios are possible: the works council and/or the committee for prevention and protection at work (“CPPT”)  can either (i) be split, (ii) merge, or (iii) cover both transferor and transferee after the transfer.  This depends mainly on the following circumstances: (i) transfer of a full undertaking or of a part of it, and (ii) whether the transferred business (or part) preserves its autonomy and is maintained as a separate technical operating unit after the transfer or not.

Specific Employee Protections

  • Protection Against Dismissal.  The corporate transaction cannot, in itself, constitute grounds for dismissal by either the transferor or the transferee.  However, dismissals for economic, technical or organizational reasons entailing changes in the workforce are allowed by CBA 32bis.  Whether those reasons exist in any particular transaction depends on the facts and circumstances.  Dismissals which breach such prohibition are not null and void and remain effective but are subject to (i) administrative sanctions (administrative fine) and (ii) award of additional damages to the employees.
  • Substantial Changes in Working Conditions.  If the transfer involves a substantial change in working conditions to the detriment of an employee and the employee resigns in response, the employer is nonetheless regarded as having been responsible for the termination (constructive dismissal) and the employee may be entitled to severance benefits.
  • Right to Object to the Transfer.  In the absence of a substantial changes in working conditions (see “Substantial Changes in Working Conditions” above), an employee who decides not to continue to work for the transferee is deemed to have resigned.  An employee cannot be forced to transfer.
  • Contracting Out.  Any purported waiver by an employee of rights under the Directive or CBA 32bis is deemed to be invalid as a matter of public policy.  Such waiver cannot be validly negotiated by the union organizations and laid down in a CBA concluded at the time of the transfer: such CBA is deemed to be invalid.
    However, case law and legal doctrine consider that an employee can validly refuse to be transferred and remain with his current employer but only if the latter accepts.

Employee Engagement

  • Obligation to Provide Information.  Both the transferor and the transferee must provide representatives of their respective affected employees (or, in certain circumstances if there are no representatives, the employees themselves) with specified information about the transfer “in good time before the transfer is carried out”.  The information required to be provided is (i) the date or proposed date of the transfer, (ii) the reasons for the transfer, (iii) the “legal, economic and social implications” of the transfer for the employees, and (iv) any measures envisaged in relation to the employees.
  • Obligation to Consult.  Both transferor and transferee must consult their respective employee representatives bodies (works council or CPPT or trade union) about the contemplated transfer of undertaking.  The consultation must be completed prior to any decision.  Such obligation does not apply in the absence of employee representatives bodies.
  • Sanctions.  Failure to comply with these obligations may trigger criminal sanctions and claim for damages by employees or their representatives.
  • Parent Decisions. The obligations to inform and consult apply irrespective of whether the decision resulting in the transfer is taken by the employer or by a parent.

Cross-Border Transfers

CBA 32bis is generally applicable in cases of a transfer of undertaking to a transferee located abroad. However, the move to another country will generally result in a significant change of an essential element of the employment contract (place of employment, possibly new set of legal rules governing the contract, etc.).  If such change is not accepted by the employees, it cannot be unilaterally imposed  by the employer (constructive dismissal, see “Substantial Changes in Working Conditions” above). Hence, is such a situation, the transferor may have to engage, prior to any decision about the contemplated cross-border transfer, in information and consultation with its employee representatives as required whenever an employer faces a collective dismissal.

[1] Directive 2001/23/EC.

[2] In the absence of statutory definition of “assigned”, the determination of whether an employee is assigned to the business (or part) will be based on the relevant facts and circumstances and the applicable case law of the ECJ.