Use of the Claeys formula to calculate term of notice for higher employees
The employment contract law does not contain a clear calculation method for the term of notice for 'higher' employees. When you want to dismiss such a 'higher' employee you should agree with this employee on the term of notice. The Claeys formula serves almost 40 years as a handy tool to calculate the term of notice for 'higher' employees. Recently a new version of the formula was published.
Term of notice for employees
The calculation of the term of notice for employees is foreseen in the employment contract law. The term of notice depends on the annual gross salary. A subdivision is made based on the annual gross salary (figures 2012): 31.467€ or less; between 31.467€ and 62.934€; and more than 62.934€.
For employees with an annual gross salary below 31.467€ the term of notice (for the employer) amounts to 3 months for every seniority period of 5 years which has started.
For (higher) employees with an annual gross salary of 31.467€ the law foresees that the term of notice (when the employer wants to dismiss) contains minimum 3 months for every seniority period of 5 years which has started. The law does not give any indication on a suitable term of notice. If parties do not agree, the judge will rule. Lawyer Thierry Claeys developed the 'Claeys formula' to calculate the term of notice of a dismissed employee. The formula takes the salary, seniority and age of the employee into account at the time of the dismissal. The formula is regularly updated. On 10 October 2011 a new update was published.
For executives the employer can determine the term of notice ultimately at the time of commencement of employment. This term of notice cannot be less than the legal minimum term for employees with an annual gross salary of maximum 31.467€.
New employment contracts (execution as from 1 January 2012)
Attention. Next year the dismissal rules for employees and workers change. The law of 12 April 2011 (BOG 28 April 2011) states that the term of notice for all employees, including 'higher' employees, should be determined by the law and no longer by the parties. This is the case for new employment contracts, i.e. contracts which are executed at the earliest on 1 January 2012. When the contract is concluded, is of no importance. An employment contract is still considered as an 'old' employment contract if the employee already had a contract with the same employer starting before 1 January 2012 and the next contract is concluded within a timeframe of maximum 7 days. The new dismissal rules do not apply to these contracts, and therefore the Claeys formula will remains important.
However the dismissal rules will be amended further in the future following the harmonization of the different social statuses. As the Constitutional Court ruled that the legal provisions concerning the term of notice and the 'carens day' for workers are contrary to the constitutional equality principle. The legislator was given a period of two years by the Court - ultimately until 8 July 2013 - to amend the discriminatory part of the employment legislation and to cancel the non-alignment in periods of notice between workers and employees (Judgement n° 125/2011 of 7 July 2011).
Claeys formula 2011
The new Claeys formula for employees is the following:
for an annual gross salary < 120.000€:
(0,87 x seniority) + (0,055 x age) + (0,038 x annual gross salary/1000) - 1,95
= months term of notice
for an annual gross salary ≥ 120.000€:
(0,87 x seniority) + (0,055 x age) - (0,0029 x annual gross salary/1000) + 2,96
= months term of notice