Background
Facts
Decision
Comment


In a 19 April 2022 ruling, the Supreme Court decided that an A1 certificate issued by a competent foreign authority to a posted worker does not exclude compliance with the immediate declaration (DIMONA) obligation. Does this mean that all foreign employers that post employees to Belgium must now file both a cross-border information system for the investigation of migration by the social security administration (LIMOSA) and a DIMONA declaration? This article provides an overview of the scope of the Supreme Court's decision and the context in which it was taken.

Background

Before examining the Supreme Court's decision, the table below summarises some administrative formalities that employers that post workers should know.(1)

LIMOSA obligation

Apart from some specific exceptions, a foreign employer that is temporarily employing a worker in Belgium must file a LIMOSA declaration. The purpose of this declaration is to provide different information to the Belgian authorities about:

  • the identity of the foreign employer and its posted workers;
  • the nature of the activities or services provided in Belgium; and
  • the workplace and work schedule of the posted workers while in Belgium.

A1 certificate(2)(3)

Subject to different requirements, posted workers can continue to remain covered by their home social security system. In such cases, the Belgian social security regime does not apply. To prove the continued affiliation to the home social security system, an A1 certificate can be applied for at the social security office in the worker's home country. Once issued, the A1 certificate is bound by the Belgian authorities, as long as it has not been withdrawn or declared invalid in the framework of a contestation procedure.

DIMONA obligation

According to the Belgian Social Security Office's instructions, a DIMONA declaration is not required if the posted worker remains subject to the home social security system.

If the posted worker is subject to the Belgian social security system, the employer must file a DIMONA declaration.

Therefore, legal practitioners often consider these formalities as an "either/or" obligation as:

  • either the posted worker can remain subject to the home social security system, and then the foreign employer must proceed with a LIMOSA declaration; or
  • the posted worker becomes subject to the Belgian social security system, which means that the foreign employer must proceed with a DIMONA declaration.

Although this position is generally valid, there might be situations where a foreign employer posting a worker to Belgium must comply with both the DIMONA and the LIMOSA declarations. For example, when the requirements are not met for remaining subject to the home social security system, a foreign employer must file both a DIMONA and a LIMOSA declaration.

Facts

FONAK EOOD, a company of Bulgarian origin and registered in Bulgaria, executed transport and logistics services in Belgium. FONAK EOOD only had one client, the Belgian company NV Fonteyne and CIE. FONAK EOOD's director was employed by NV Fonteyne and CIE as a driver. FONAK EOOD, NV Fonteyne and CIE, as well was their respective directors were prosecuted for several serious infringements, including human trafficking. They were also prosecuted (and convicted) for non-compliance with the DIMONA obligation.

Following investigations, social inspectors observed that the drivers were working predominantly in Belgium and were only returning periodically and for short periods of time to Bulgaria to take rest and leave. The drivers did not carry out any substantial activities in Bulgaria. In addition, there were a number of other relevant factors, such as:

  • the vehicles were permanently parked in Belgium;
  • FONAK EOOD had a Belgian bank account;
  • FONAK EOOD kept its vehicles permanently in Belgium;
  • the employment contracts with the Bulgarian drivers were executed in Belgium; and
  • the Bulgarian drivers resided in a space that was leased by FONAK EOOD in Belgium.

The Gent Court of Appeal's judgment found, after a long and elaborate explanation, that the conditions for an employment posting had not been met and that FONAK EOOD merely acted as a "letterbox" company in Bulgaria to circumvent the provisions of the Belgian Posting Act of 5 March 2002. Indeed, the employees were employed permanently (rather than temporarily) in Belgium. The Gent Court of Appeal concluded that Belgium could be considered as their habitual place of work, making Belgian law the objectively applicable law governing the employment contract.

This meant that, despite the choice of law for Bulgarian law, the mandatory provisions of Belgian law (ie, the provisions that cannot be derogated from by agreement) applied to the employment relationships in question, including the obligation to proceed with a DIMONA declaration as soon as the workers in question started their work.

On the other hand, the Gent Court of Appeal observed that the Bulgarian drivers, allegedly posted to Belgium, were in the possession of A1 certificates. The Bulgarian administration that issued the A1 certificates was never requested to reconsider its decision to issue the A1-certificates or to withdraw them. According to the defendants, the Gent Court of Appeal had to respect the binding nature of these A1 certificates. They argued that, as a consequence, they did not have to file any DIMONA declarations before the workers started to work in Belgium.

The Gent Court of Appeal reasoned that the DIMONA declaration obligation is in fact hybrid in nature and does not only serve purposes relating to the social security laws, but it is also an instrument of personnel policy and enforcement as it seeks to ensure the effectiveness of the checks carried out by the competent national authorities. By introducing the DIMONA declaration requirement, the legislator intended not only to ensure that the workers concerned were affiliated to the Belgian social security regime but also to guarantee the effectiveness of control carried out by the social inspection services.

In other words, being in the possession of an A1 certificate did not necessarily exclude FONAK EOOD from complying with the DIMONA declaration obligation.

The parties involved challenged the Gent Court of Appeal's reasoning by arguing that there was no validity to the ruling that the A1 certificates of their workers were not binding when assessing compliance with other (non-social security-related) obligations imposed by national law, such as the DIMONA obligation.

Decision

The Supreme Court confirmed the Gent Court of Appeal's decision. This ruling essentially reversed the previous jurisprudence of the Supreme Court of 2 February 2016, in which it had decided that the DIMONA regulations were aimed at applying the Belgian social security provisions and, therefore, applied only to persons to whom those provisions covered (ie, it excluded persons holding an A1 certificate from an EU member state).

The outcome is not totally surprising as the Supreme Court has now aligned its position with the latest Court of Justice of the European Union (CJEU) case law, in particular the Elco(4) case where the CJEU held that:

  • A1 certificates do have binding effects but only in the area of social security;
  • A1 certificates have no binding force regarding obligations imposed by national law in fields other than social security, such as obligations concerning the employment relationship between employers and workers and, in particular, the terms and conditions of employment; and
  • it is up to the national court to determine whether an obligation to register workers prior to the start of employment, imposed by national legislation, is solely to ensure that the workers concerned are affiliated to one of the branches of the social security system and is, therefore, limited to ensuring compliance with the legislation in question (in which case, the A1 certificates issued by the home country would preclude such an obligation) or whether that obligation is also intended, even partially, to guarantee the effectiveness of the checks carried out by the national social inspection services of the host state (to verify compliance with the terms and conditions laid down in the host state's employment legislation).

Applying the Elco case, the Supreme Court confirmed the Gent Court of Appeal's assessment and concluded that the binding value of an A1 certificate issued by the social security office in the worker's home country must be limited to ensuring adherence to a social security system (ie, in the worker's home country). However, a DIMONA declaration must still be made.

Comment

The Supreme Court's ruling does not mean that foreign employers that post workers to Belgium now must systematically file a DIMONA and a LIMOSA declaration.

The Gent Court of Appeal's ruling, which the Supreme Court confirmed, demonstrated that the Belgian DIMONA obligation applies to foreign employers when habitual employment in or from Belgium exists, regardless of whether the conditions for a social security posting have been met (which was not the subject of the criminal investigation in this case).

By specifying that the DIMONA obligation is compulsory when habitual employment in or from Belgium exists (as opposed to a temporary posting), it can be concluded that the scope of the Court of Appeal's direction in this case must remain limited to situations where there is no genuine posting under EU and Belgian law and where Belgian labour law must be considered to apply in full, even if there are valid and non-retracted A1 certificates.

For further information on this topic please contact Emma Van Caenegem or Astrid Caporali at ALTIUS by telephone (+32 2 426 1414) or email ([email protected] or [email protected]). The ALTIUS website can be accessed at www.altius.com.

Endnotes

(1) Further information is available here.

(2) For EU nationals or non-EU nationals working in an EU country.

(3) Alternatively, the certificate of coverage should be used for employees who work in a non-EU country.

(4) Bouyges travaux publics, Elco construct Bucarest and Welbond armatures, C-17/19, 14 May 2000.