Federal Government Agreement topical deep dive: dismissal regulations

With significant changes on the horizon following the Arizona Agreement, now is the time to prepare. In our deep dive series, we go beyond the initial overview, providing a more detailed and concrete analysis of key measures and assessing their potential impact for your business. 

In this newsflash, we focus on dismissal regulations. While at first glance, the measures may seem substantive, we anticipate only a limited impact on day-to-day practice. 

Return of the trial period

The trial period was abolished as part of the Act on the unified status, which harmonized notice periods for blue- and white-collar workers as of 1 January 2014. The rationale behind this decision was that newly introduced notice periods for dismissals within the first year of employment were already relatively short, rendering the trial period largely redundant according to the legislator.

Given that in 2018, the legislator introduced even shorter notice periods for dismissals within the first 4 months of employment, it is somewhat surprising that the trial period will be reinstated. 

By 31 December 2025 at the latest, parties will once again be able to include a trial period in new employment contracts. Under this provision, either party may terminate the employment contract with a one-week notice period during the first 6 months of employment – a setup that is even more flexible than the pre-2014 regime, which required a fixed first month during which no notice period could be served. 

It remains to be seen how widely companies will adopt this renewed option, as a one-week notice period already applies during the first three months of employment:

Cap on dismissal entitlements for new employment contracts

The agreement introduces a cap on dismissal compensation, setting a maximum of 52 weeks’ notice for employees hired under new contracts. This measure aims to strike a balance between maintaining a solid level of social protection and fostering a more attractive investment climate. By capping dismissal entitlements, the new government seeks to encourage employers to hire on indefinite-term contracts.

Compared to other EU countries, this cap is a welcome introduction considering Belgium’s relatively high position in the rankings for dismissal costs (see our International Employment Law Guide). However, given this new measure will only apply to employees hired after the law comes into effect, its full impact will not be felt until 2042 – since under the current dismissal rules, it takes more than 17 years of seniority to exceed 52 weeks of notice.

Dismissal Protection for Non-Elected Employee Representatives

Earlier versions of the Federal Government Agreement suggested a general reduction of dismissal protection for employee representatives to 6 months (compared to the current worst-case scenario of 8 years). 

However, in the final version, the measure has been significantly diluted. The dismissal protection for elected employee representatives in the works council and the committee for prevention and protection at work remains unchanged. For non-elected employee representatives, however, “the dismissal protection after an unsuccessful candidacy will be reduced from two years to six months”.

The precise wording of this paragraph seems to imply that the reduction applies only to candidates who have been unsuccessful in at least 2 consecutive social elections. Currently, dismissal protection currently ends, in principle, as follows:

• For elected members (full or substitute): on the date the next elected candidates are appointed (= 4 years);

• For non-elected candidates in their first 'unsuccessful' candidacy in the social elections: on the date the next elected candidates are appointed (= 4 years); and

• For non-elected members in their second 'unsuccessful' candidacy: two years after the announcement of the election results.

We hope that the new legislative measure will clarify key uncertainties, such as:

• Does the “second unsuccessful candidacy” have to be consecutive?

• Should elections prior to a split of a technical business unit be considered?

• Hould this be assessed separately for each social body (e.g., works council vs committee)?

We believe this is an opportunity for the legislator to thoroughly reassess the current dismissal protection framework for employee representatives.  While it is crucial to safeguard their ability to fulfill their mandate, the existing system often misses its mark. 

Some key concerns include:

• Hidden protection periods: During social elections, employers are restricted from freely dismissing employees for 65 days, as any dismissed employee during this period (from X-35 till X+30 in the procedural calendar) could potentially be retroactively protected as a candidate. Should this restriction be lifted?

• Limited grounds for dismissal: Should companies be allowed to dismiss protected employees for reasons beyond serious misconduct – for instance, if an employee is clearly underperforming or no longer capable of fulfilling their role? A system allowing courts to grant dismissal authorization in such cases could provide more balance.

• Dismissals for economic or technical reasons: Currently, a company can only dismiss a protected employee for economic or technical reasons if the competent Joint Labour Committee (JLC) grants approval. However, in practice, the JLC only rarely recognizes these reasons unless an agreement at company level (such as a social plan) is in place – essentially requiring companies to “buy” protection by giving a dismissal package to the broader personnel population. If no such agreement exists, dismissal is only possible in cases of a full or partial closure, or the dismissal of a well-defined personnel category, which requires a separate court proceeding.

A more balanced and modernized approach to dismissal protection is long overdue. If the implementation of the Federal Government Agreement would not trigger further meaningful reforms, it could be considered as a missed opportunity to create a system that is both fair and sustainable.