Belgium: Constitutional Court confirms validity and enforceability of (deviating) notice clauses in pre 2014 employment contracts (Case 140/2018)

By Mary Ann Staar, Pieter De Koster

10-2018

The Belgian Constitutional Court confirmed that valid notice clauses, entered into before 31 December 2013, continue to be enforceable.
For employees in service since before 31 December 2013, it therefore is essential to review the contractual provisions to determine the statutory notice period or severance pay. Only as of 1 January 2014, the statutory notice period or severance pay is entirely determined by seniority only (in the absence of a more favorable notice clause for the employee).

As part of the so-called Single Status Act (of 26 December 2013, the 'SSA'), Belgian dismissal rules were drastically changed with effect from 1 January 2014 onwards.  For employment contracts starting before that date, the SSA provides for a two-step approach where the pre-2014 seniority generates entitlement to a notice period, and the post-2013 seniority generates an additional notice period (from that moment on, notice is equal for blue- and white-collar workers).

For the pre-2014 part of service, the SSA makes a distinction between so-called lower paid and higher paid white-collars (the threshold being 32,254 EUR annual pay): for the first category, notice is determined based on statutory or conventional rules in effect on 31 December 2013; for the second category however, the SSA sets the notice at one month per commenced year of service as at 31 December 2013 (with a minimum of 3 months).  In the preparatory works of the SSA, however, the Government – in reaction to a comment of the State Council on the bill – confirmed to give effect to deviating valid contractual notice clauses.

Under prevailing dismissal rules prior to 2014, it was indeed allowed (for certain categories of white-collars) to provide for a notice clause in the employment contract.  The minimum required notice under such rules was 3 months per 5-year period of service commenced at the time of termination, without a maximum threshold (quite often parties referred to case-law standards in such clauses, such as the so-called 'Claeys-grid').

The above SSA rule (of one month/commenced year of service) has led to numerous court cases in relation to the application of such deviating contractual notice clause.  So far, case-law (up to the level of Court of Appeals) had been unsettled as to the effect to be given to valid deviating notice clauses in current termination situations.  Most case-law appears to point into the direction of refusing any further application of such clauses, based on the simple holding that the SSA is clear (one month/commenced year of service) and need not be interpreted.

In the case at hand, the parties concluded an employment contract well prior to 1 January 2014, containing a notice clause referring to the Claeys-grid (a doctrinal formula which attempted to capture case-law standards to determine an "appropriate" notice, based on length of service, compensation levels, and the age of the employee).  The contract clause generated a notice of 41 months (for the pre-2014 seniority) whereas the application of the basic SSA rule generated a far shorter (but not identified) notice. 

The Labour Court raised a prejudicial question with the Constitutional Court asking whether the different treatment in the SSA between lower-paid and higher-paid employees is in violation of equal treatment provisions (articles 10-11 of the Constitution), i.e. provisions of the SSA allowing for contractual/conventional notice clauses to be applied and effective for the former, whereas refusing such application for the latter.

The Constitutional Court now confirms, in a holding of 18 October 2018 (Case 140/2018),  that such different treatment is in violation of the Constitution, taking into account the rationale of the legal provision (as confirmed in the preparatory works to the SSA)  and the principle of legitimate expectations for the contract parties, as to the continued validity and enforceability of validly agreed notice clauses. 

A few comments on the holding:

First, the holding expressly spells out that only the pre-2014 period of service was the subject of the question.  In other words, the issue remains unsettled whether the continued application of contractual notice clause can also extend beyond 2013 (and until today).  This is not a theoretical issue since the SSA allows for parties to individually agree on longer notice periods (for the post-2013 period of service) than the ones set forth in the SSA.  In the case at hand, for instance, the employee may have a claim for more than 10 additional weeks of notice (based on the SSA notice period since the start of 2014) if the contract clause (and the Claeys-grid) were applied up until the termination date (as opposed to end 2013).    

Second, the holding and the reasoning of the Constitutional Court appears to be neutral in terms of the content of the notice clause.  Based on its express reference to legal security and legitimate expectations of the parties, it therefore appears to cover both the situation of a pre-2014 notice clause which is more favorable to the employee (as in the case at hand) as well as the situation of a notice clause which generates a shorter notice than the one month/year of service rule (e.g. the so-called statutory minimum of 3 months' notice/5-year period of employment).

Third, the issue remains open whether lower labour courts will readily and automatically  align to this holding or not.    

 

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