Notice clauses concluded by "higher” non-manual workers before the single status act remain valid!

This was decided by the Constitutional Court in a judgement of 18 October 2018.

Following a preliminary question, the Court ruled that Article 68 of the Single Status Act is contrary to the principles of equality and non-discrimination since, for "higher" non-manual workers, the article does not allow the application of a notice clause valid on that date for the calculation of the first part of the notice period which relates to the seniority acquired on 31 December 2013. 

THE FACTS

A "higher" non-manual worker whose employment contract was concluded before 1 January 2014 and contained a notice clause[1], was dismissed with the payment of severance pay in the course of 2015. The application of this notice clause entitles the worker to compensation for 41 months and 10 weeks’ period of notice, taking into account his seniority, age and wage at the time of termination.

However, the employer refused to apply this notice clause on the grounds that it was no longer valid. To this end, he invokes Article 68 of the Single Status Act.

The worker has brought an action before the Ghent Labour Court to claim the application of the notice clause.

WHAT DOES ARTICLE 68 SAY?

As a reminder, the notice period to be observed in the event of termination as from 01 January 2014 of an employment contract concluded before that date, is determined by adding two periods:

• an initial period of notice calculated on the basis of seniority acquired on 31 December 2013,
• a second period of notice calculated on the basis of seniority acquired as from 01 January 2014[2].

Article 68 of the Single Status Act regulates the first part of the notice period, which relates to the seniority acquired on 31 December 2013. In principle, this period of notice is determined in accordance with the legal, regulatory and conventional rules applicable to the worker on 31 December 2013.

However, a special regime applies to non-manual workers whose gross annual wage exceeds 32,254 EUR (i.e. "higher" non-manual workers): the notice period must be set at one month per year of seniority commenced in the event of notice given by the employer, with a minimum of three months.

For these non-manual workers, the first part of the notice period is therefore fixed at a flat rate. The conventional derogatory rules cannot be applied (unlike what is provided for "lower" non-manual workers). Consequently, any notice clause that may have been concluded at the time of the non-manual worker's recruitment could not be applied.

PRELIMINARY RULING

Before giving a verdict, the Ghent Court of Justice wanted to ask the Constitutional Court to give a preliminary ruling about the compatibility of article 68 of the Single Status Act with articles 10 and 11 of the Constitution.

After all, is there no discrimination between the higher non-manual workers and the other workers if the notice clauses concluded by the higher non-manual workers are not accepted by the Single Status Act, contrary to the notice clauses concluded by the other workers, since the notice period for the latter is determined according to the conventional rules in force on 31 December 2013?

WHAT DOES THE CONSTITUTIONAL COURT SAY?

According to the Court, Article 68 on the single status is clear and unambiguous. It stipulates that the first part of the notice period is determined on the basis of the legal, regulatory and conventional rules in force on 31 December 2013. On the other hand, for higher non-manual workers (earning a gross annual wage over 32,254 EUR), it establishes a derogating regulation which, in the event of dismissal, determines the first part of the notice period on the basis of a fixed formula. There is no reference whatsoever to the possibility of applying any contractual notice clauses.

On the basis of this article, the Court examines, only with regard to the first part of the notice period:

• on the one hand, if there is discrimination between the higher non-manual workers and the other workers and
• on the other hand, whether it is reasonably justified that all higher non-manual workers are treated in the same way, regardless of whether or not they have concluded a valid notice clause before 1 January 2014.

The Court's reasoning is as follows:

1. The legislator's objective was, on the one hand, to avoid that higher non-manual workers still had to negotiate the period of notice at the time of termination of the contract for the seniority acquired on 31 December 2013 and, on the other hand, to take into account the legitimate expectations of the employer and the worker with regard to the seniority acquired on that date.
2. The Court considers both objectives to be legitimate.
3. On the other hand, the Court decided that the criterion for distinguishing between higher non-manual workers and other workers and between higher non-manual workers depending on whether or not they have concluded a valid notice clause before 01 January 2014, is not relevant in the light of the objectives pursued. Indeed, the statutory notice regime applies to higher non-manual workers even in the case of a valid notice clause. However, in this case, there is already contractual certainty about the applicable notice period.
4. The Court therefore concludes that Article 68 of the Single Status Act is not compatible with Articles 10 and 11 of the Constitution. It asks the Ghent Court Judge to put an end to the violation of these standards, pending an intervention of the legislator. In practice this means that the judge can apply the notice clause.

OUR ADVICE

Before you dismiss a higher non-manual worker, check that his employment contract does not contain a notice clause that was validly concluded before 01 January 2014. If this is the case, you must take this into account for the first part of the notice period, i.e. the notice period relating to the seniority acquired before 01 January 2014.

On reading the judgement, it seems that the notice clause must also be applied in the event that it gives a less favourable result for the worker than the application of the legal regime (i.e. one month per year of seniority commenced, with a minimum of three months).

Source: Constitutional Court, 18 October 2018, no. 140/2018 List no. 6668.

[1] Prior to the entry into force of the Single Status Act on 1 January 2014, non-manual workers with a gross annual wage over 64,508 EUR (amount on 31 December 2013) had the possibility, at the latest at the start of the employment, to conclude an agreement on the notice periods to be observed by the employer pursuant to Article 82, §5 of the Employment Contracts Act.

[2] Article 69 of the Single Status Act regulates the second part of the notice period, calculated on the basis of seniority acquired as from 1 January 2014. In principle, this period is determined in accordance with the legal or regulatory rules applicable at the time of notification of the termination notice and therefore on the basis of the harmonised regime (notice periods in weeks).