Within the Budget 2013 framework, the Di Rupo I government has adopted a new string of measures against fraud. These measures are included in the Program Act of 27 December 2012 (published in the Official Journal on 31 December 2012) and will enter into force on 10 January 2013.
The measures also focus on secondment fraud. The legislation narrows down the definition of ‘transfer of part of the employer’s authority’ when employees are hired out and introduces the possibility for social security authorities and courts to disregard an A1-form in cases of legal abuse.
Hiring out of employees
Triangular employment relationships, i.e. when an employer hires out an employee to another company (the ‘user undertaking’), are strictly regulated. According to Belgian legislation, the hiring out of employees with a transfer of part of the employer’s authority is in principle prohibited. In the event a prohibited hiring out of employees occurs, the user undertaking is considered to have concluded an employment contract for an indefinite duration with the hired employee from the start of activity. In addition, criminal and/or administrative sanctions may be imposed.
The new measures introduce a stricter definition of the notion of ‘transferring part of the employer’s authority’ by delineating the instructions that can be given by the user undertaking.
Only the following instructions are no longer part of the employer’s authority:
- Instructions with regard to health and safety regulations
- Instructions given by the user undertaking in the framework of a written agreement concluded between the employer and the user undertaking on the condition that:
- the agreement contains an explicit and detailed description of the instructions that can be given by the user undertaking;
- these instructions do not erode the employer’s authority;
- the factual execution of the agreement between the user undertaking and the employer is fully in line with the details of the agreement on the instructions.
All instructions by the user undertaking not complying with the above conditions will be regarded as part of the employer’s authority and will thus trigger the prohibition of hiring out employees. In addition, the user undertaking must inform its works council (or trade union delegation) of the existence of such an ‘instruction agreement’ and must provide the members of the works council with a copy of the agreed provisions on the instructions upon their request.
Abuse concerning the determination of the applicable legislation
According to the new measures, an A1-form – a document determining the social security legislation applicable in cross-border employment situations – can be disregarded by the Belgian social security authorities (Social Inspection, RSZ/ONSS, RSVZ/INASTI, etc.) and the courts in cases of legal abuse (e.g. in the event of transfer of the employer’s authority during a secondment, false self-employed persons, etc.). Legal abuse exists if the conditions prescribed in EU social security coordination instruments (1) are not complied with to circumvent the application of Belgian social security legislation. Intention needs to be proved. The burden of proof lies with the social security authorities.
In case of abuse, the Belgian social security legislation will be applied from the first day on which the conditions for the Belgian social security legislation’s application were met, taking into account the statutory period of limitation (7 years in cases of fraud).
However, according to the European legislation on the coordination of social security systems and the related European Court of Justice case law, an A1-form cannot be contested as long as it is not withdrawn by the social security institution that has issued it. Therefore, we must wait and see whether this new measure will survive a test of its compatibility with EU law.
The new measures on the hiring out of employees render the existence of a written agreement regarding the instructions necessary. Consequently, a thorough analysis of what should be included in such an “instructions agreement” is indispensable to establish a legitimate and flexible triangular relationship, as well as to avoid the erosion of the employer’s authority. If this is not carefully taken into account, the user undertaking risks the severe sanctions related to the prohibition of hiring out employees.
As to the possibility to disregard A1-forms, the legal value which was accorded to these forms at EU level will be undermined by the new Belgian legislation. For the time being and as long as there is no reaction at EU level, companies have to take this into account in case of a cross-border employment relationship.