26/12/2018

Terminating a worker’s employment in 2019…is the employer obliged to offer an enhanced redeployment package?

The Unified Employment Status Act, which entered into force on 1 January 2014, provides for a general framework to increase the redeployment of terminated employees by converting 1/3rd of the dismissal package into redeployment measures. This regime is due to apply from 1 January 2019. A crucial role was attributed to the joint committees that were given the responsibility to work out, at the sector level, the details and mechanisms of this new regime. Now, 5 years later and with the target starting date almost here, there is a lot of uncertainty amongst employers due to the lack of the legally-required sector level CBAs.

General principles as set out in the Unified Employment Status Act

  • From 1 January 2018, if an employee is entitled to a notice period or an indemnity in lieu of notice of at least 30 weeks, then 1/3rd of the “dismissal package” should consist of redeployment measures, without the notice period being shorter than 26 weeks or the indemnity in lieu of notice being lower than 26 weeks’ salary. If applicable, outplacement offered when applying the general outplacement regime would be part of the 1/3rd redeployment package.
  • Each joint committee should conclude a sector level CBA with the practical modalities to implement this enhanced redeployment package by 1 January 2019 at the latest.

  • If an employee performs the entire notice period or receives the full indemnity in lieu of notice while he or she is entitled to an enhanced redeployment package (corresponding to 1/3rd of the dismissal package) then both the employer (3%) and the employee (1%) are liable for the payment of a specific ‘penalty’ social security contribution.

Current status

  • As to this date (24 December 2018), not one joint committee has concluded a sector level CBA that determines the modalities of such an enhanced redeployment package.

  • Some discussions are currently taking place at the level of the National Labour Council regarding the uncertainties that have arisen as a result of this lack of sector CBAs. One of the scenarios that is being discussed is the possibility of postponing the 1 January 2019 starting date to a later date.

  • In the meantime, the Social Security Administration has confirmed that it will not apply the specific financial penalties to employers and employees who do not offer/accept an enhanced redeployment package as long as no sector level CBAs have been concluded.

Conclusion

  • For the time being, employers cannot offer an enhanced redeployment package to an employee. Even if an employer would be willing to offer such a package, doing so could trigger a risk that an employee would claim a balance of the indemnity in lieu of notice as the legal notice period/termination indemnity will not be complied with.  

It already looks like 2019 will be both an interesting and challenging year for HR-managers and legal counsel who will be faced with dealing with new obligations when terminating a worker’s employment. We will keep you fully-informed as this matter develops.

 altius emploment team best labour law firm1



real estate gazette button en

follow us on