Death or physical incapacity of an employer

Last updated more than 5 years ago

In the event of the death or physical incapacity of the employer that results in the termination of their business activities, the employee's employment contract will be terminated with immediate effect.

In view of this sudden change in circumstances, and in the absence of a successor to the employer, employees are entitled to special benefits for a certain period of time and under certain conditions.

Who is concerned

All employees, regardless of their status (pregnant employees, reassigned employees, etc.) and type of employment contract, shall have their employment relationship terminated as a result of the death or physical incapacity of their employer, unless a successor to the employer takes over.

How to proceed

Rights of employees after termination of an employment contract

In the event of termination of an employment relationship due to the physical incapacity or death of the employer, the employee's employment contract is terminated with immediate effect.

To compensate for the loss of income, employees are entitled to:

  • payment of their salary or wages for the month in which the event occurred and the following month; and
  • an allowance equal to 50 % of the monthly payments for the notice period they could have claimed in the event of dismissal.

However, the compensation and allowances may not exceed the amount of the compensation and allowances to which the employee would have been entitled in the event of termination of employment with notice.

The compensation and allowances are not paid if the employer's successor continues the operation of the business. In that case, the takeover of the business must occur within 3 months of the cessation of operations.

Employees' rights in the event of a change in ownership

Maintenance of employees' rights

In the event of a change in ownership of a business, establishment or part of a business due to a transfer, succession, merger, spin-off, conversion of funds or incorporation, the employment contracts of the affected employees are automatically transferred to the new employer.

As a result of the transfer, all of the rights and obligations attaching to the transferor (former employer) of an employment contract or working relationship that exists on the date of the change in ownership are transferred to the transferee (new employer).

It is important to note that should a business change owners, an employee cannot object to the transfer of their employment contract, but can only resign from their post.

Furthermore, a change in the ownership of a business does not in itself constitute sufficient grounds for dismissal by the new employer or the former employer.

In addition, if an employment contract or working relationship is terminated because the transfer entails a substantial change in the working conditions to the detriment of the employee, the employment contract or working relationship shall be deemed to have been terminated by the employer. In that case, the employee can take legal action against the employer and thus claim compensation for the termination of the employment contract, whether the termination was unfair or not.

Obligation to inform and consult with employees

The staff representatives—i.e. the Staff Delegation—of both the transferor and the transferee must be informed of the following:

  • the scheduled or proposed date for the transfer;
  • the reasons for transfer;
  • the legal, economic and social consequences of the transfer for the employees;
  • the measures planned with regard to the employees.

This information is to be communicated:

  • for the transferor, in a timely manner before the transfer occurs; and
  • for the transferee, in a timely manner before its employees' employment and work conditions are directly affected by the transfer.

If measures that will affect the employees are being considered, the transferor or transferee must consult with the staff representatives sufficiently in advance of the completion of the transfer so that an agreement can be reached.

If there is no staff delegation, the transferor or transferee is required to inform the affected employees in advance, in writing, of the 4 points mentioned above.

Finally, it is important to note that these obligations to inform and consult with employees must apply, regardless of whether the decision comes directly from the employer or from a company that controls it.

Impact of termination of the employment contract on parental leave

The termination of an employment contract due to the physical incapacity or death of the employer should in principle result in the termination of parental leave, with no obligation on the part of the employee on leave to reimburse the parental leave benefits already received, as the cause was external to the termination.

Employees redeployed internally due to disability

The internal redeployment of an employee with a disability ends following the termination of their employment contract due to the physical incapacity or the death of their employer. Instead of being redeployed internally, the employee will ultimately be redeployed externally.

For this reason, employees are required to inform the Department for Workers with Reduced Working Capacity (Service des salaries à capacité de travail réduite) of the National Employment Agency (Agence pour le développement de l'emploi - ADEM) of the physical incapacity or death of their employer by registered letter within 20 working days.

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