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25Jan

New Claeys formula

 

Context

Upon dismissal of an employee whose gross annual salary exceeds EUR 28,580.00 (amount for 2008), the parties have to agree the notice period. Failing an agreement, labour courts determine the severance compensation corresponding to the appropriate notice period.
A number of statistical formulas have been derived from case law to help assess the appropriate notice period. The best known and most used formula is the Claeys formula.

P = 0.88*(Sen.) + 0.06*(Age) + 0.033*(R) – 1

P: notice period
Sen.: seniority in years and fractions of years
Age: age in years and fractions of years
R: yearly gross salary/1000 * 97.96 (basis 2004 = 100) / index of month of termination (basis 2004 = 100)

Issue

Taking the most recent case law into account, the above formula is no longer relevant in order to assess the notice period of highly remunerated employees.

New Claeys formula

Based on case law since 2003, a new formula has been developed, leading to two versions depending on the employee’s gross annual salary.

If the yearly gross salary is lower than or equal to EUR 120,000.00
P = 0.87*(Sen.) + 0.06*(Age) + 0.037*(R) – 1.45

If the yearly gross salary exceeds EUR 120,000.00
P = 0.87*(Sen.) + 0.06*(Age) + 0.029*(R) – 1.45

P: notice period
Sen.: seniority in years and fractions of years
Age: age in years and fractions of years
R: yearly gross salary/1000 * 106.53 / index of month of termination

However, as before, a judge is not bound by this formula that has no legal basis. This formula only has a statistical value as to the likely outcome of a legal procedure on the duration of the appropriate notice period and deriving severance compensation.
It should be noted that where the annual salary exceeds EUR 120,000.00, less importance is given to the salary factor.

Parties can still agree the notice period for dismissal before the employee actually starts to work for the employer. However, such agreed notice period must be at least three (3) months per started 5-year period of continuous employment with the same employer.

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Posted: January 25th, 2008