Cessation of activities: a radical move

Planning to partially or fully cease your business activities? Do you foresee the dismissal of at least 75 percent of your employees? Then the restructuring is subject to specific rules.

Company closure: in theory

A company closure is carried out as follows:

• You declare the definitive cessation of your primary activity – or a department thereof – either voluntarily or as a result of bankruptcy.
• You reduce the number of employees to one quarter (25 percent) of the number of people employed in the year prior to the cessation of activities.

A company closure can also take place under different circumstances, such as the relocation of the company headquarters, a merger or the sale of the company.

Your obligations upon the cessation of your company's activities

If you have decided to close your company, you must do the following:

• In advance of the closure, inform your employees and their representatives, as well as the relevant authorities and bodies that you will be ceasing your company's activities.
• Pay a one-time severance fee (compensation for closure) to the affected employees. This special fee is calculated using a basic compensation amount in function of the length of employment at the company and the age of the employee.

Are you stopping your activities due to financial reasons?

Still owe money to your employees at the the point of closure? Under certain conditions, the affected employees will still enjoy a guaranteed compensation amount. The Closure Fund pays out:

• contractual compensation (wage arrears, severance pay, year-end bonuses)
• pre-retirement compensation

Do you have further questions about the cessation of your company activities? Would you like to receive professional guidance during the closure of your company? Call Partena Professional.