In its judgment of 20 May 2019, the Court of Cassation confirmed that a premium paid by a third party to employees who are not employed by it must be considered as remuneration to the account of the employer in the sense of the Act of 12 April 1965, insofar as this premium constitutes the counterpart for the work performed in the service of the employer. The Court hereby confirms a judgment of the Brussels Labour Court of 7 March 2018. What are the consequences of these judgments for you as an employer?
Summary of the underlying judgment of the Brussels Labour Court of 7 March 2018
The Labour Court of Brussels ruled on the question whether a sales premium paid by a third party to the employees of the employer should be considered as remuneration "at the expense of the employer" and therefore subject to social security contributions.
In the present case, Sisley, a French company, paid sales premiums to the employees of the perfumeries responsible for selling its products on the basis of the sales they realised.
The National Social Security Office (NSSO) considered that these premiums should be considered as remuneration, given that the sale of Sisley products falls within the scope of the employment contract with the employer (e.g. Planet Parfum).
The Labour Court ruled that the sales premiums do indeed fall under the concept of remuneration (and are therefore subject to social security contributions) and justified its judgment as follows:
- The premiums paid by Sisley constitute the counterpart for the work performed in the context of the employment contract existing between the employer and the eligible employees;
- Neither the fact that the eligible employees cannot assert a right against the employer, nor the fact that the employer has not undertaken to assure the payment the premiums, affect the classification of the premiums as remuneration;
- It is irrelevant to determine whether or not the employer is responsible for what has actually been awarded as counterpart of the work performed.
What are the consequences for you as an employer?
Premiums granted to your employees by a third company for services provided within the framework of the performance of their employment contract, are considered as remuneration at your account as an employer and are therefore subject to social security contributions. These social security contributions are payable by the third party payer.
What impact do these judgments have?
In its administrative instructions (version 2019/2), the National Social Security Office has aligned itself with the Brussels Labour Court’s judgement, which has meanwhile been confirmed by the Court of Cassation, by extending the notion of "at the expense of the employer" as follows: "(...) situations in which the award is the result of the services provided within the framework of the employment contract concluded with that employer or related to the function which the employee performs for that employer".