Transition allowance: shortened periods between bankruptcy and takeover

Collective Labour Agreement (CLA) No 32bis provides for the maintenance of employees' rights in several cases, including the takeover of a company following bankruptcy.

The Company Closure Act provides for the granting of a transition allowance by the Closure Fund to staff rehired following this takeover.

Both the takeover of the company's assets and the takeover of its staff must take place within a certain period of time for employees to benefit from these provisions.

These periods are shortened as from 1 April 2019.

Employees concerned

To benefit from these measures, employees must:

• still be under an employment or apprenticeship contract at the date of bankruptcy,
• or have been dismissed in the month preceding the date of bankruptcy and be entitled to severance pay which has not yet been paid to them on the date of bankruptcy.

Deadlines for companies that closed before 1 April

Previously, CLA No 32bis applied to companies taken over within 6 months from the date of bankruptcy. The employees could benefit from the guarantees of this CLA if they were rehired within an additional period of 6 months from the date of the takeover of the company's assets.

In order to qualify for the transition allowance, the Company Closure Act provided that the first 6-month period for the takeover over the company's assets could be extended to 9 months in the event of temporary continuation of the activity by the receivers or by a third party.

These old deadlines still apply to companies that closed before 1 April 2019.

Deadlines for companies that closed as from 1 April 2019

For companies that closed as from 1 April 2019, the deadlines for the takeover of the company's assets and staff are shortened. These deadlines are now the same as those set out in CLA No 32bis and the Company Closure Act.

The takeover of the company's assets must now take place within 2 months from the date of bankruptcy.

This period may be extended by 2 months:

• when the trustee confirms in writing to the Fund that negotiations are ongoing with a prospective acquirer or;
• when the trustee has failed to provide the Fund with information relating to the employment of the employees.

This period may be further extended by 2 months (bringing the first period to a total of 6 months) if the trustee confirms in writing to the Fund that negotiations are ongoing with a prospective acquirer.

The takeover of staff must then take place within an additional period of 4 months from the date of the takeover of assets.

Employees taken over before or at the time of the takeover of the assets are also entitled to the protection provided by CLA No 32bis and to a transition allowance.

Sources: Act of 5 May 2019 amending the Company Closure Act of 26 June 2002, Belgian Official Gazette 12.06.2019. CLA No 32/7 of 23 April 2019 amending CLA No 32bis of 7 June 1985 on the safeguarding of employees' rights in the event of a change of employer following a conventional transfer of undertaking and regulating the rights of employees taken over in the event of takeover of assets following bankruptcy.