An employment contract may be terminated by giving the employee notice to serve. It is also possible to terminate the employment contract with immediate effect. In this case, compensation in lieu of notice is payable to the employee, unless the employment contract is terminated for serious reasons. This compensation in lieu of notice is equal to the employee's remuneration for the duration of the notice period. But which components of remuneration should be taken into account when calculating this compensation in lieu of notice?
Any remuneration benefits granted to the employee under the employment contract must be included in this calculation basis. This includes not only the fixed salary, end-of-year bonus and single and double holiday pay (for employees), but also variable remuneration such as bonuses, premiums or commissions, as well as the employer's contribution to meal vouchers and eco-cheques. Benefits in kind, such as the private use of a company car, mobile phone and/or laptop provided to the employee by the company, must also be included. If the employee has group insurance and/or hospitalisation insurance, the employer's contributions to this insurance must also be included.
The amount to be included in the calculation basis is the gross amount applicable at the time of dismissal. The law refers to ‘current remuneration’. This means that if a worker is employed part-time at the time of dismissal, part-time remuneration and part-time benefits must be taken into account. However, this rule does not apply if, at the time of dismissal, the worker's working hours are temporarily reduced as part of a time credit scheme, parental leave, etc. or any other form of temporary career break. In this case, the remuneration and benefits that the employee would have received if they had not reduced their working hours must be taken into account. Full-time remuneration and benefits must therefore be taken into account (assuming that the employee is normally employed on a full-time basis).
Variable remuneration refers to remuneration that was paid – or should have been paid – during the twelve months preceding dismissal. Holiday pay paid in addition to this variable remuneration must also be taken into account. However, variable remuneration that has been paid only once or on an exceptional basis to the employee (such as a retention bonus) is not considered “current remuneration”. In addition, non-recurring performance-related benefits granted under CLA No. 90 should also not be included.
Finally, it should be borne in mind that reimbursement of expenses paid to the employee should not be considered as remuneration and should therefore not be included in the basis for calculating the compensation in lieu of notice.
Arnout Crauwels, Senior Lawyer Associate Claeys & Engels