Modest ‘flexicurity’ steps in Belgium

1.

The key is that dismissed employees can themselves decide not to receive the net proceeds of up to 1/3 of their severance package but to apply it to training costs to be spent within five years from the date of the dismissal. The financial incentive for such employees is that this part of the severance package can be spent 100% on training costs (without undergoing any withholding of social security tax or personal income tax from the gross amount, usually for over 50%). For the employing company, the financial benefit is minimal: the portion of the severance package affected to training costs will only be subject to a flat ‘solidarity tax’ of 25% rather than the usual employer part of social security tax (which can go up to 27-28%).

As it stands, this new feature of Belgian employment law cannot be put to practice since implementing regulations (by way of Royal Decree) are still missing. These are supposed to specify which costs qualify as training costs and which kind of trainings are acknowledged under these rules. Also, implementing regulations will set forth the evidence required to justify compliance with the above rules and practical arrangements on third-party accounts (to protect the funds from the odds and risks of the employing company’s business).

2.

Critical analysis of this measure would readily reveal the different treatment reserved for employees who are dismissed on notice: they cannot avail themselves of this new rule, although they are in the same position as a job seeker. One can appreciate the practical difficulties of extending the above rule to employees on notice, but the difference in treatment does render the whole mechanism vulnerable to claims of discrimination.

Also, it appears there is a double financial effect of limiting the new measure to employees with severance. Indeed, on top of a higher spendable amount, reducing the severance pay-out to a minimum 70% of normal pay-out would logically imply that the time period covered by the termination compensation is equally reduced to 70%. This would mean that such employees can benefit from unemployment benefits up to 30% sooner than their colleagues who are on notice.

Finally, the voluntaristic approach of the new feature is striking: only the dismissed employee can decide to affect part of his severance package to such vocational training, not the employer and not jointly.

3.

In that sense, this measure most probably is linked to the failed attempt in 2013 to introduce concepts of flexicurity in Belgian termination rules. To recall, under article 92 of the Act of 26 December 2013, in principle, as from 1 January 2019 onwards, 30% of severance payments for all employees with notice of 30 weeks or more should be spent on employability enhancing measures (vocational training, outplacement, reconversion efforts etc). However, Belgian social partners on both sides refused to implement these rules (by way of collective bargaining agreements), and the rule remained dormant. It is probably not by coincidence that just over three months later (in the Act of 7 April 2019), the then government tried to produce a watered-down version of this flexicurity mechanism by introducing the rule just outlined.

In addition, Belgian law basically only uses outplacement services – on top of standard termination entitlements – for specific categories of workers as a tool for enhancing employability of dismissed or redundant employees.

Compared to some fellow EU Member States such as Austria or Denmark, these are very modest and minimal steps of flexicurity as a tool of pro-active labour market policy and enhanced employability.

We will need to up our game to achieve higher employment rates.