Are ordinary social security contributions due if an employer grants an extra-legal complement to the family allowances only to some of his employees?
The amounts paid directly or indirectly by an employer as a complement to a benefit granted by the various branches of the social security are not considered to be part of the remuneration and therefore exempt of the payment of ordinary social security contributions.
This results from the law. It is recognized that these complements concern family allowances.
What if a complement to the family allowances is only granted to certain employees, depending on subjective criteria linked to the mere will of the parties and not depending on criteria that objectively correspond to the granting of family allowances according to the legal regime? Should this benefit, thus, be considered to be a part of the remuneration and subject to the payment of ordinary social security contributions?
In a judgment handed down on 15 February 2016, the Supreme Court (S.14.0071/F1) had been called upon to answer this question in particular. In this particular case, the complement to the family allowances was granted only to employee working in management level positions or holding a position of thrust and having 5 years' seniority in the same position within the company.
According to the National Social Security Office, an employer is free to grant such a benefit to certain employees and not to others, but in order for this benefit to be considered to be a "complementary social benefit" and, hence, not subject to the payment of ordinary social security contributions, it has to be granted to all employees receiving the social benefit granted by the legal regime to be completed. The National Social Security Office also raised an argument regarding discrimination.
For the Supreme Court, the fact that the granting of an extra-legal complement to the family allowances is based on conditions other than those provided by law, in order to be able to receive the benefit that this benefit complements, does not mean that this extralegal complement should not be considered as such and be subject to the payment of social security contributions. The fact that the payment of this complement has a discriminatory effect among the employees has no implications on the treatment of this complement as far as social security is concerned.
The extra-legal complement that is paid only to certain employees will not be considered to be a part of the remuneration giving rise to the payment of ordinary social security contributions. However, this is not without risks with regard to discrimination.
In Belgium, it is in principle prohibited for employees to carry out night work, which is defined as work usually performed between 8 PM and 6 AM, unless explicitly authorized by law or by royal decree.
This prohibition is in particular problematic for the development of e-commerce activities of Belgian companies of the distribution sector. Indeed, as a result of this prohibition, they cannot process online orders overnight at their Belgian sorting centres, causing slower delivery times.
Besides the high labour costs in Belgium, the prohibition of night work is one of the main reasons why several companies establish their sorting centres for the Belgian territory right across the country borders.
In order to encourage companies to establish their sorting centres in Belgium, a legal framework for e-commerce has been elaborated in the distribution sector, aiming at "enabling the development of e-commerce activities in Belgium" and "creating as many jobs as possible". This legal framework includes in particular an exception to the prohibition of night work for e-commerce activities.
On 14 January 2016 sectorial collective bargaining agreements were adopted in joint committees 201 (independent retail), 202 (food retail), 311 (large retail stores) and 312 (warehouses), outlining general principles for nightly e-commerce activities.
On 13 March 2016 a royal decree was enacted, allowing night work for e-commerce activities in the aforementioned sectors.
According to the aforementioned regulations, night work is allowed for e-commerce activities as of 28 March 2016, provided an agreement is reached at company level with the employees on the below points:
- a clear definition of what is understood by "e-commerce activities" within the company, including the positions associated with them;
- in what form the night work will be carried out in order to develop the e-commerce activities, for instance: individual work or shift work: during what hours the work will be carried out at night, etc.;
- under what employment contracts night work for ecommerce activities can be carried out, for instance: employment contracts for an indefinite duration, a definite duration, full-time and/or part-time employees, etc.;
- specific rules for student labour that would be carried out at night for e-commerce activities.
In companies with a trade union delegation the above mentioned agreement shall be adopted by company CBA. In companies without a trade union delegation, it shall be included in the work regulations with due observance of
the legal procedure for the modification of work regulations.
For the time being, it is unclear, however, whether in practice a lot of use will be made of this legal option to provide night work for e-commerce activities. After all, the other strict legal conditions for night work continue to apply to night work for e-commerce activities, such as:
- in principle, a time schedule for night work needs to count as many daily working hours as a normal "day schedule", with a minimum of six working hours;
- employees carrying out night work are entitled to an additional 1,12 € supplement per hour of night work (1,35 € per hour for employees of 50 years or older);
- preliminary information and consultation requirements with regard to the employee representatives (or, in the absence thereof, with regard to the employees directly);
- specific measurements regarding well-being at work;
The new rules regarding e-commerce include the authorization of night work for e-commerce activities and, as such, meet one of the main complaints of the Belgian companies of the distribution sector in the field of e-commerce. The stringent legal conditions for night work, however, have not been alleviated. Hence, it remains to be seen whether the new rules regarding e-commerce will result, in practice, in the sustained development of e-commerce activities in Belgium.
Administrators of Belgian companies are supposed to be subject to the social security scheme for self-employed persons, according to article 2 of the Royal Decree n° 38 of 27 July 1967 organising the social security scheme for self-employed persons. For individuals charged with the daily management of a non-profit association, article 3 of the Royal Decree of 28 November 1969 for the implementation of the act of 27 June 1969 amending the Decree-Law of 28 December 1944 on social security for employed persons, on the other hand, foresees an extension of the social security scheme for employees. Nevertheless, in its judgment of 25 March 2016 (2013/ AR/288) the Ghent Labour Court (division of Bruges) ruled that this extension of the social security scheme for employees is illegal and therefore cannot be applied.
The Labour Court departs from the basic rule of article 1 of this act of 27 June 1969, saying that the social security scheme for employees applies to individuals bound by an employment contract. However, article 2 of the same act adds that the scope of the social security scheme for employees can be extended by Royal Decree to individuals that did not conclude an employment contract, yet "perform labour in similar circumstances as those of an employment contract". An example of this category is provided in article 3 point 5 of the Royal Decree dated 28 November 1969, namely individuals transporting goods for a company, using a vehicle financed by that company. Such drivers can be selfemployed in terms of labour-law (given the fact that they get to choose their working hours, that they are not under hierarchical control etc.), yet they find themselves in a fairly similar situation as an in-house driver.
Article 3 point 1 of this Royal Decree dated 28 November 1969 foresees such an extension for administrators of non-profit associations provided that the following cumulative conditions are met:
- the person concerned is charged with the daily management of a non-profit association;
- this mandate is paid (with the exception of bed and board);
- the execution of this mandate is the main activity of the person concerned.
In its judgment of 25 March 2016 the Labour Court had to rule about a claim in which the National Social Security Office claimed payment of contributions to the scheme for employees for such a mandate holder.
Although the parties agreed on the fact that the conditions outlined in article 3, point 1, were met, the Labour Court ruled that the claim of the National Social Security Office was disallowed.
As a matter of fact, the Labour Court mentioned that the act of 27 June 1969 solely foresees the option to extend the social security scheme for employees to individuals "performing labour in similar circumstances as those of an employment contract" and also stated that the purpose of the legislator was to combat false self-employment under the scheme for employees. The mere fact that an individual is a mandate holder of a non-profit association by no means demonstrates that he or she would be in a similar situation as an employee. Hence, according to the Labour Court, this provision should be left aside since this extension goes beyond what was allowed under the act of 27 June 1969.
This judgment of the Ghent Labour Court is not legally binding to other courts. Furthermore, the National Social Security Office can invoke other grounds in order to justify the application of the social security scheme for employees (e.g. because the person concerned should, in reality, be considered as an employee).
On 25 March 2016 the Ghent Labour Court ruled that the extension of the social security scheme for employees to certain mandate holders of non-profit associations is considered to be illegal.
In collaboration with UWE (Union Wallonne des Entreprises), DLA Piper organises a conference concerning the following topic: "Cyber Security - Data Breach: Nouveaux challenges - Nouvelles responsabilités."
When? On 10 June 2016
Where? in Namen (Moulins de Beez)
For additional information, please contact Frédérique Gillet - [email protected]