Benelux Employment Update – June 2023

Companies with at least 50 employees on the payroll must set up an internal reporting channel. Financial institutions must set one up regardless of headcount.

Employers may also need to consider the headcount of in-country linked or partner entities to verify whether the employee threshold is met, but this is not yet entirely clear.

The scope of the Belgian Whistleblower Act goes beyond the requirements of the European Directive in terms of matters that can be reported.

It must be possible to file a report locally, in the hands of a service or person acting within the legal entity of the Belgian employer itself.

International companies with global reporting channels will need to set up local whistleblowing structures in Belgium, which should to a certain extent be separate from their global reporting channel.

The Dutch law requires employers with at least 50 employees to establish a local internal reporting procedure. Employers with less than 250 employees are allowed to share resources, for receiving a report, and for conducting investigations.

There are new procedure rules, including that the employee can report internally in three ways: in writing, orally by phone or other voice message systems, or by request within a reasonable time in an interview on location. The person(s) to whom the suspected wrongdoing is reported and who follows up on the report must be an independent official(s). The reporter should also be given the opportunity to consult an advisor in confidence. The reporter may also choose to report directly externally to the authorities specified in the Dutch law.

Employers with at least 250 employees must comply with these new rules. Employers with 50-249 employees will have longer to adjust their internal procedures accordingly, until 17 December 2023. Employers with fewer than 50 employees do not have to comply with the new rules.

On 16 May 2023, the Luxembourg Law implementing the EU Directive 2019/1937 on whistleblowing was adopted.

Reporting of a breach by a reporting person can be done via internal channels, external channels, or public disclosure, within the framework of the legislation.

The main Luxembourg specificity is that any breach of national or European law can be reported by whistleblowers – whereas the Directive provided for an option to provide for a narrower scope of breaches that could be reported. Private sector entities employing more than 50 employees need to have established internal channels by 17 December 2023, while entities employing more than 249 employees shall need to be compliant as of 21 May 2023.

Failure to comply with these provisions is punishable by an administrative fine of between EUR1,500 and EUR250,000 and imprisonment from eight days to three months.

In Belgium, three different types of non-compete clauses exist, all with different validity and enforceability requirements.

All these non-compete clauses are subject to strict regulations, particularly regarding their scope – for example limited to similar activities performed on behalf of competitors – and formalism.

Unlike most other jurisdictions, two of the three types of clauses require the payment of a non-compete fee to apply the clause.

Moreover, the waiver of a non-compete clause must be explicitly confirmed in writing by the employer to prevent its application, and the associated payment of the non-compete fee when the law imposes payment for application.

Non-compliance with the validity and enforceability requirements can result in the nullity or invalidity of the entire non-compete clause for the benefit of the employee.

Belgian courts also tend to restrictively interpret these conditions, in an employee-friendly way.

Non-compete clauses in the Netherlands are governed by strict laws that protect employees' rights to work freely. These clauses are only valid if they meet certain conditions, such as being in writing, having a specific duration, and being necessary to protect the employer's interests. A non-compete clause may be included in an indefinite term employment agreement.

A non-compete clause in a fixed-term agreement is valid if the employer can substantiate that there is a compelling business interest to include a clauses for the specific job title and/or employee. However, a legally valid non-compete clause is not always enforceable in court. A court has the authority to mitigate or even nullify a non-compete clause that has been validly agreed, if the court is of the opinion that the clauses are unreasonably onerous on the employee, taking into account all relevant circumstances.

Non-competition clauses are provisions by which employees undertake, for a determined period of time after leaving the company, not to perform activities similar to those of their employer so as not to prejudice its interests by operating a personal business.

This clause is only valid if:

• it’s made in writing;
• the employee has a gross annual salary of more than EUR62,812.48 (index 921,40);
• it’s geographically limited (max. national territory);
• it’s limited in time (max. 12 months);
• it concerns activities that are identical or similar to those of the original employer.

However, according to Luxembourg case law, the conditions of the non-competition clause can be more flexible when, in return, remuneration is paid to the employee.

It’s not possible in Belgium to agree to a trial period during which shorter legal termination notice periods apply, except in case of an employment contract for students or for interim agency work.

The Belgian legislator has nevertheless implemented shorter notice periods during the first six months of employment to overcome the absence of trial periods, which allows employers to terminate the employment contract with a notice period of one week up to five weeks depending on the seniority of the employee.

Trial periods in the Netherlands are common in employment agreements, allowing the employer and employee to assess whether it is a good fit. The maximum length of a trial period depends on the type of contract and can range from one to two months. It is permissible to agree on a trial period of two months in an employment agreement for an indefinite term or in a fixed-term agreement of two years or more and a trial period of one month in a fixed-term employment agreement with a term of less than two years. During this time, both the employer and employee can terminate the contract without notice. However, no trial period can be agreed if the employment agreement has been entered into for a period not longer than six months or if it is a successive employment agreement. A trial period clause that violates Dutch law is void.

The trial period may not be shorter than 2 weeks or longer than 12 months. The maximum duration depends on the employee's level of qualification and pay.

Its duration must be stipulated in writing at the latest when the employee starts work, otherwise the employment contract will be considered definitive.

Both the employer and the employee may terminate the employment contract, without compensation and unilaterally during this period. However, the party wishing to terminate the contract must give notice, the length of which depends on the duration of the trial period and if the party ending the trial period is the employer or the employee.

There will be further updates with the draft Bill transposing the EU Directive 2019/1152 on transparent working conditions.

The register must be available for inspection by the labour authorities.

Failure to comply with the maintenance of a register or file with all mandatory information can result in an administrative fine.