Termination clauses that have been concluded by "higher" employees must be applied!

This was decided by the Constitutional Court in a judgement of 06 June 2019. Following a preliminary question, the Court ruled that Article 68 § 3 of the Single Employment Status Act is contrary to the principles of equality and non-discrimination as 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[1].

The case

A "higher" non-manual worker whose employment contract was concluded before 1 January 2014 and contained a notice clause[2], was dismissed with the payment of severance pay in the course of 2014. The application of this termination clause gave the employee entitlement to compensation for 60 months' notice period.

However, the employer refused to apply this notice clause on the grounds that it was no longer valid.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, § 3 of the Single Employment Status Act.

The non-manual worker has brought an action before the Antwerp Labour Court to claim the application of the notice clause.

What does article 68 say?

Reminder: the notice period to be observed in the event of termination as from 1 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 1 January 2014[3].

Article 68 of the Single Employment Status Act regulates the first part of the notice period, which is related 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 (article 68, § 3) 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

The Antwerp labour court ruled that the termination clause was valid, but wondered whether it could still be applied, considering the Single Employment Status Act. For this reason, he asked the Constitutional Court about the compatibility of article 68 §3 of the Single Employment Status Act with articles 10 and 11 of the Constitution.

After all, is there no discrimination between the “higher“ non-manual workers and the “lower” non-manual workers if the notice clauses concluded by the “higher” non-manual workers are not accepted by the Single Employment Status Act, contrary to the notice clauses concluded by the “lower” non-manual 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 Employment Status Act 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 provides for a derogating regulation (article 68, §3) 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, whether the distinction thus made between "higher" and "lower" non-manual workers is reasonably justified, 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. In the context of these objectives, the legislature bases itself on an objective but irrelevant distinguishing criterion, since it does not provide for the possibility of applying that agreement for the calculation of the first part of the notice period for 'higher’ non-manual workers who have concluded an agreement on the notice period to be observed before 1 January 2014, to apply this agreement for the calculation of the first part of the notice period, whereas these agreements can be applied to "lower" non-manual workers.

In view of the above objectives, it is also not advisable to treat all "higher" non-manual workers in the same way, regardless of whether or not they have concluded an agreement with their employer before 1 January 2014, with regard to the notice period to be observed.

The derogation for "higher" non-manual workers (article 68 § 3) also applies in cases where there is contractual certainty as to the periods of notice to be observed and to which this derogation did not therefore apply.

3. The Court therefore concludes that Article 68, § 3 of the Single Employment Status Act is not compatible with Articles 10 and 11 of the Constitution. It asks the Antwerp 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.

Source: Constitutional Court, 06 June 2019, No. 140/2018 List No. 6858.

[1] The Constitutional Court had already ruled in this sense in a judgement of 18 October 2018 (see our Infoflash ("Termination clauses for "higher" non-manual workers concluded before the Single Employment Status Act!”).

[2] Prior to the entry into force of the Single Employment Status Act on 1 January 2014, non-manual workers with a gross annual wage of more than 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.

[3] Article 69 of the Single Employment 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).