The Cantonal Court Formula has changed since January 2009. The Cantonal Court Formula (which originally dates from 1996) is frequently applied to determine the level of compensation (usually a number of months salary) an employer must pay to an employee that is laid off. The joint District Courts feel that the formula needed adjusting to better fit today’s labor market conditions. The Cantonal Court Formula will be adjusted in four aspects:

New A-factor
The calculation of the number of years of service (known as the A factor) will change radically. To date, the calculation was as follows. Years of service up to age 40 used to count as 1, years of service between the ages of 40 and 50 used to count as 1.5 and years of service above 50 years of age used to count as 2. Under the new scheme, the years of service up to age 35 will count as 0.5, the years of service between 35 and 45 years of age will count as 1, the years of service between ages 45 and 55 will count as 1.5 and the years of service above age 55 will count as 2. In other words, a slight differentiation compared to the current formula.

Job market position of employees
For the calculation of the C factor there is a general desire to give more consideration to the job market position of employees and the financial position of the employer. This means that the C factor may turn out lower in three cases:

1. if the employer has enabled the employee to maintain and improve his employability and skills through professional education and in-house training;

2. if the employee works in a business sector in which there is a significant supply shortage of candidates;

3. if the employer is able to demonstrate by means of annual report and accounts and substantiated forecasts, that the financial position of the employer is so poor that it is unable to pay a redundancy payment calculated according to the formula.

Retirement versus loss of income
It is increasingly less obvious that employees will retire at the age of 65. Today, the recommendations still state that the compensation will never exceed the expected loss of income until the retirement age. Under the new scheme, more consideration will be given to a possible change of retirement age. Of course, this may vary per employee.

Short contracts
A separate scheme will be included for contracts of employment that are dissolved within 2 years. If it refers to a fixed-term contract of employment, the compensation will be equal to the salary during the term of the contract of employment under normal circumstances. If this refers to a permanent contract of employment, the compensation will be calculated as above.