Restructuring in Belgium: Consultation procedures take longer and social plan measures become more expensive

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Date:
16 Dec 2011

A recent study carried out by our firm shows some interesting trends in company restructurings. Early retirement remains popular and the early retirement age has not significantly increased. Voluntary redeployment measures remain rare.

A recent study carried out by our firm shows some interesting trends in company restructurings. Early retirement remains popular and the early retirement age has not significantly increased. Voluntary redeployment measures remain rare.

Claeys & Engels analysed forty restructurings (representing about 30 % of the reported restructurings) involving a collective dismissal and/or a closure of a company or a division thereof. We subsequently compared the 2011 figures with similar analyses which we carried out in 2004 and 2008.

 
Consultation phase takes longer: the average consultation phase increased from 39 days in 2004 to 51 days in 2008 to 83 days in our latest study. The negotiation phase shortened from 39 days on average in 2004 to 36 days in 2008 and to 33 days in 2011. We believe this results from two changes: in recent restructurings negotiations tend to start already during the consultation phase, and second, legislative changes have reduced a series of tax-efficient benefits, thus allowing less room for discussion.

Cost of social plans continues to increase. In our 2011 study, on average the legal costs of a restructuring were increased with 178 % for blue-collar workers and with 32 % for white collar workers. In 2004 blue-collar workers legal costs increase was 162 % and for white-collar workers only 10 %. The significant cost increase for the latter is to a large extent caused by new social security contributions on early retirement allowances.

Early retirement remains popular. Although the government in 2005 announced it would dramatically reduce the number of instances where early retirement was permitted at a relatively young age the average early retirement age only changed from 53.9 in 2004 to 54.2 in 2011.

Contents of a social plan. Social plans (% of all cases) still contain a range of additional benefits: complements to unemployment benefits (56 %); additional departure premiums (46 %); increased severance payments (37 % for white-collar and 15 % for blue-collar workers). Voluntary redeployment measures are still relatively rare: voluntary leave with specific financial conditions (38 %), premiums for employees finding new employment within a certain period after dismissal (24 %).