Belgian legislation foresees the possibility for employers to have recourse to temporary unemployment for force majeure or for economic reasons. These are regimes of temporary suspension of the employment contract of its employee, during which there is no legal obligation to pay salary by the employer, but the employees would instead receive unemployment allowances paid by the ONEM/RVA (the Belgian unemployment agency). In case of unemployment due to economic reasons, both the system for white collar workers and the one for blue collar workers, the employer should nevertheless continue to pay a (small) allowance.
As it concerns a form of unpaid suspension, the question arises on the impact this has on complementary social security coverage, both the pension coverage and the death coverage.
The general rule
Up to the Act of 7 May 2020, there was no specific legislation on this point.
In case of a defined contribution pension scheme, the contribution is generally expressed as a percentage of the remuneration. If no remuneration is due, there is, in principle, also no contribution to be paid to the pension scheme. A plan generally nevertheless includes a clause stating that certain periods of absence are assimilated to periods worked, for instance maternity leave. Only in a case where there would be a clause stating that temporary unemployment due to force majeure or due to economic reasons is assimilated, will there be a continued accrual of pension entitlements.
A considerable number of employers have entered into an insurance policy – whereby the insurance company continues the payment of the contributions if the employee is absent at work in a number of cases. This type of insurances only apply in the cases expressly listed in the insurance policy, hence it is likely that this coverage will only apply if the employee is actually ill, and not in case of temporary unemployment.
During the period of suspension of the employment contract, a considerable number of pension regulations stipulate that the death coverage is suspended as well, entailing that employees are not entitled to any death coverage during the period of temporary unemployment. The law leaves indeed the employer the freedom to stipulate in the pension regulations whether or not the death coverage is suspended as well. In case of a suspension of the death coverage, only the acquired reserve under the pension coverage is paid out in case of death during a suspension of the employment contract.
The exception in the framework of the COVID-19 pandemic
The Act of 7 May 2020 concerning exceptional measures in the framework of the COVID-19 pandemic in relation to pensions, complementary pensions and other complementary benefits in relation to social security introduced nevertheless an exception to these rules.
This Act stipulates indeed that, irrespective of what is stipulated in the pension regulations, the coverage under the complementary pension scheme should continue in case the employment contract is suspended due to force majeure or due to temporary unemployment for economic reasons. The contributions due should thus be calculated as if the employment contract was not suspended.
The employer can nevertheless request an extension up to 30 September 2020 of the payment date for the contributions due in relation to these assimilated periods.
The same rule holds for insurances covering medical costs, insurances covering the loss of income when unable to work due to illness, and the death coverage.
While the assimilation of a period of temporary unemployment to a period effectively worked is, under the Act of 7 May 2020, automatically deemed to be incorporated in the policy, the employer can under certain conditions decide to amend the plan again and delete this assimilation for the future. In that case, one falls back on the situation as applicable prior to the Act of 7 May 2020. The assimilation in relation to the death coverage must nevertheless, and in any event, be applied up to 30 June 2020.
The insurance company or the pension fund administering the plan, should inform the employer about the practical consequences of this Act of 7 May 2020.
The employer should do what is necessary to ensure that the policy governing the pension plan or the insurance, is amended in order to be in line with the Act of 7 May 2020 by at the latest 31 December 2021. The normal procedures, including the consultation of the staff representatives in the case foreseen by law, should be respected for doing so.
The Act of 7 May 2020 entered into force on 13 March 2020.
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