The fight against social fraud

A summary of the main new measures

Analyse Secretary of State Crombez introduced some time ago a package of measures in order to fight social fraud more efficiently. Along the same lines, Title 3 of Law-Programme (1), dated 27 December 2012, includes a number of measures in order to tackle social fraud more efficiently.

1. Putting workers at the disposal of third parties

As a first measure, the law, dated 24 July 1987, relating to putting workers at the disposal of third parties has been made more rigorous. As generally known, this law forbids an employer to put his workers at the disposal of a third user, if this third party exercises authority over the workers. This principle was made more flexible in 2000 by authorizing the user to give instructions to the workers with respect to well determined items.

This flexibility has now been scaled down again: only the exercise of authority by the user within the framework of respecting his obligations relating to the well-being at work remains permitted without any additional formalities.

Exercising authority by the user over the workers put at his disposal in other areas (such as, by way of example, working time and times of rest, execution of the agreed upon work) will be allowed in the future only if this is explicitly agreed upon and laid down in a contract between the employer and the user, and provided that

  • the instructions the user is allowed to give, are explicitly and in detail defined in the contract;
  • this right of giving instructions of the user does not undermine the authority of the employer;
  • the implementation in practice of the contract between the employer and the user corresponds completely with the stipulations of the contract.

So, the legislator does not draw a clear line between what is permitted and what is not. The criteria is “undermining the authority of the employer of the workers put at the disposal”. This criteria makes it clear that the user shall not be entitled to intervene with respect to a number of decisions, such as, by way of example, termination of employment (for just cause or otherwise), fixing the level of the salary, transfer of the worker to another assignment, …… However, the grey zone remains very large.

In addition, the user must immediately submit the agreement to the works’ council and, at the request of the personnel representatives at the works’ council, he must submit to them a copy of the part of the contract enumerating explicitly and in detail the permitted instructions. If the user fails to comply with this obligation, the contract is considered not to exist. In the absence of a works’ council, the committee for prevention and protection at work takes over this task and, in the absence of a committee, the union delegation is in charge.

So it is important, not only to see to an accurate drafting of the contract, but also to see to a careful implementation of the contract, that is to see to it that practice and theory match.

The sanctions in case of non-compliance are indeed quite severe: penal sanctions (fines) as well as administrative fines may be imposed; also the prohibition of running a business, the professional prohibition and the close-down of the enterprise are possible sanctions. Furthermore, the user will be considered to be the employer of the workers and he will be jointly liable, together with the employer, for the payment of the salary, vacation pay, severance pay, and the like.

Where there is only a thin line in practice between subcontracting and service providing, extreme care is the message !

2. The implementation of the European coordination rules in the field of social security

The second measure concerns the implementation of the European coordination rules in the field of social security: where more than one EU-member state is involved in the employment of (a) worker(s) (such as in the case of the employment of workers in an EU-member state, other than the EU-member state where the employer is located; a temporary assignment of a worker to another EU-member state; employment of a worker in two or more EU-member states), the national social security legislation, which applies to the situation, is designated by the European coordination regulations. If these European rules  are misused in order to escape from the Belgian social security, these new measures swing into action.

For the purposes of implementing the new measure, abuse is defined as the application of the European coordination regulations in order to escape from Belgian social security to situations, where the conditions, as laid down in the European rules, are not complied with, to the extent the Belgian social security should have been applied, if the European rules had been complied with correctly. The organism, invoking abuse, has the burden of proof.

If an abuse has been established, be it by a tribunal, the National Social Security Office or the social inspection, the worker (or the independent worker, as the case may be) shall be made subject to the Belgian social security as from the moment he should have been subject to the Belgian social security, taking into account the applicable period of limitation.

As a result, Belgian social security may be applied and payment of the contributions may be claimed before the A1 form, issued by the social security authority of the other EU-member state, has been withdrawn. This makes it possible for the Belgian social security authorities to accelerate the collection of social security contributions: indeed, in the case of a dispute between two national social security authorities concerning the question whether or not an A1 form had been rightfully issued, this dispute had to be resolved in principle prior to effective collection of the contributions. As a result of the new measures, the National Social Security Office does not have to wait anymore for the resolution of the dispute in order to start collecting the contributions, possibly with retro-active effect. As a result, pending the resolution of the dispute, payment of contributions may be claimed by two EU-member states, that is the National Social Security Office, on the one hand, on the basis of the new measures, and the social security authority of the EU-member state, which issued the A1 form.

Prudence is called for in order to avoid extremely complex situations and hard efforts to get such situations cleared out.

3. The fight against social law abuses by evasion of the law and avoidance of the law

The third measure relates to the fight against social law abuses by evasion of the law and avoidance of the law. Such abuse is considered to exist if a person, contrary to the purposes of a statutory stipulation of social law, is placing himself within the scope or outside the scope of that statutory stipulation of social law by means of a legal act or the qualification of a legal act. This can be done by an evasion of the law, which is illegal, or by an avoidance of the law, which does not represent any violation of a legal stipulation.

A typical example of an evasion of the law is carrying out a professional activity as a fake independent worker. In such a structure the parties pretend that a person is performing activities for another person as an independent, while that person is in fact an employee, because the other person is (allowed to) exercise authority over him. The purpose is of course to escape from the social security legislation for employees.

A cooperation structure through a management company may be referred to as an example of an avoidance of the law, to the extent the purpose of the structure is to escape from the social security legislation. From a strict legal point of view, there is no violation of any legal stipulation.

The organisms, which may invoke these new measures to their benefit, are the public institutions in charge of the implementation of the social security legislation, such as the National Social Security Office and the Office for Social Insurances for Independent Workers, the institutions of private law, called upon to assist in the implementation of the social security legislation, such as the medical insurance services, and the social inspection.

The fight against the evasions of the law did not require new measures, because these represent in any event a violation of legal stipulations. Nevertheless, the new measures strengthen the position of the institutions and the social inspection also in the case of evasions of the law: an evasion of the law implies an intention of the parties to escape from the scope of a legal stipulation or to fall within that scope. The institutions had quite often a very hard time to submit proof of such intention. As a result of the new measures, it is sufficient for the institution to submit evidence of objective elements of an evasion of the law. If they do so, the legal act, which constitutes the evasion of the law, is not opposable against the institution or the social inspection and the institution can claim payment of the contributions or refuse payment of an allowance. In order to undo the non-opposability, the person concerned must proof by objective elements that  there are no dishonest intentions at stake. So, in a way it is a shifting of the burden of proof.

The same principles apply in the case of an avoidance of the law. Obviously, the position of the institutions and of the social inspection has become much stronger as a result, because the avoidance of the law does not imply any violation of any legal stipulation and the institutions did not have any means of action.

The abuses, to which these new measures will apply, are still to be enumerated by royal decree, to be rendered  after consultation of the Council of Ministers and after advice by the National Labour Council. For an assessment of the real impact of these new measures it is yet too soon.

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Leila Mstoian

Leila Mstoian