Court of Cassation reverses its case-law on Dimona obligation for (foreign) employers if A1 form is available
04 Aug 2022
On 19 April 2022, the Belgian Court of Cassation ruled that (foreign) employers have to file a Dimona notification for their employees who are habitually working in Belgium, even if an A1 form – detailing their subjection to the social security legislation of another EEA Member State or Switzerland – is present for these employees, thereby reversing their previous case-law on this matter.
Previous case-law
As of 2016, the Court of Cassation held that the Dimona notification concerned an obligation that was solely imposed by the Belgian social security legislation and was as such covered by the binding nature of an A1 form. This implied that (foreign) employers didn’t have to file a Dimona notification for employees working on the Belgian territory while subject to the social security legislation of another EEA Member State or Switzerland – evidenced by an A1 form. Moreover, if cases of fraudulent deployment of employees to Belgium – e.g. posting of sham self-employed individuals to Belgium – were discovered and prosecuted, the failure to file a Dimona notification couldn’t be sanctioned if an A1 form was present. The Court of Cassation’s case-law was therefore widely criticised.
Facts in the case at hand
The facts in the case at hand can be summarised as follows. A Bulgarian transportation company, employing Bulgarian drivers, exercised activities in Belgium with trucks that were registered in Bulgaria. A1 forms, detailing their subjection to the Bulgarian social security regime, were available for the drivers and the application of Bulgarian labour law was chosen in the employment agreements. A string of social inspections, however, brought to light that the sole director of the Bulgarian company was also an employee of a Belgian company, the latter of which was the Bulgarian company’s only client, acting as an intermediary between the Bulgarian company and the actual clients. It became apparent that the drivers solely worked in or from Belgium for periods of up to three months, interspersed with one month intervals of stay in Bulgaria, during which they, however, didn’t perform any professional activities and the trucks remained in Belgium. When in Belgium, the drivers stayed at premises of the above-mentioned Belgian company, started and ended their trips in that location, received all general- and dispatching instructions in Belgium from the sole director of the Bulgarian company (who himself permanently resided in Belgium and was never present in Bulgaria) and were paid wages according to Bulgarian standards, from a Belgian bank account. The inspectorate services also found that the Bulgarian company’s seat was registered at the home address of one of the Bulgarian drivers.
Following the findings of the inspectorate services, the case was brought before court, with the public prosecutor arguing that the above-mentioned construction concerned a fraudulent set-up with a Bulgarian letterbox company and claiming infringement of several criminally sanctioned Belgian labour law provisions. In the present newsletter, we’ll focus on the obligation to file a Dimona notification.
Court proceedings
The Bruges court of first instance ruled that the set-up of the employment of the Bulgarian drivers in fact constituted fraud and therefore found that the Bulgarian company and its sole director (as well as the closely-related Belgian company and their two directors) infringed several Belgian employment law provisions. This included an infringement of article 4 of the Royal Decree of 5 November 2002 for failing to file the necessary Dimona notifications. In its appeal against this ruling, the Bulgarian company claimed that it wasn’t obliged to carry out the Dimona notification, arguing that this notification concerned a social security obligation and their employees were in the possession of A1 forms, detailing their subjection to the Bulgarian social security legislation.
In its judgement on the case, the Ghent court of appeal found that the drivers in question habitually worked from Belgium, as Belgium was the place from which they mainly carried out their obligations towards their employer. To wit, the drivers performed their transportation activities mainly in Belgium, started and ended their trips in Belgium and received their instructions in Belgium. In addition, based on the facts as set out above, the court found that the Bulgarian company, because it didn’t perform any of its activities in Bulgaria but rather performed them all from Belgium, had a sustainable establishment in Belgium.
After having determined that the drivers habitually worked from Belgium for a sustainable establishment of the Bulgarian company, the court of appeal found that the Dimona obligation was therefore applicable. The court continued by ruling that the fact that A1 forms were available for the drivers – detailing their subjection to the Bulgarian social security legislation – didn’t detract from this obligation, thereby going against the standing Court of Cassation case-law at that time (see above). In this respect, the Ghent court of appeal firstly noted that the binding nature of A1 forms only covers social security obligations. They therefore have no binding effect with regards to obligations imposed by national legislation in other matters, including i.a. obligations imposed by national labour law. To this end, the court referred to the 2020 judgement of the European Court of Justice in the ‘Elco’-case (no. C-17/19), which confirmed this principle. Secondly, the court held that the Dimona notification is of a hybrid nature; it does not solely concern a social security obligation, but is also a labour law instrument, as it replaced the general staff register. As such, the Dimona-system makes it possible to identify employees and their employer, which in turn enables checks by the inspectorate services, making it at least partly an instrument of labour law enforcement.
In its recent judgement, the Court of Cassation, also referring to the ECJ’s ‘Elco’-case, confirmed that the Dimona-system is of a hybrid nature and therefore not covered by the binding nature of A1 forms, effectively reversing its previous point of view on the matter.
Legal implications
This recent ruling by the Court of Cassation will probably mostly impact foreign employers, which – for their employees who are habitually working on, or from, the Belgian territory – will have to file a Dimona notification from now on, even if an A1 form is available, detailing the employees’ subjection to the social security legislation of another EEA Member State or Switzerland.
Note in this respect that, in the event of a labour law posting from another EU Member State to Belgium, the place of habitual employment will in principle remain the home Member State, not Belgium, provided of course it concerns a valid posting that complies with the conditions of the Posted Working Directive no. 96/71/EC and its Enforcement Directive no. 2014/67/EU. In such a case, the foreign employer will not have to file a Dimona notification, although it will have to file a so-called Limosa notification (notification that is required if a foreign employer temporarily or partly employs a worker in Belgium). However, if it would appear that the conditions for a valid posting are not met, the fact that the foreign employer had filed a Limosa notification will in principle not detract from the fact that a Dimona notification is still due. On a side note, it’s also important to point out that the scopes of application of the Dimona and Limosa obligations are not mutually exclusive, making it not inconceivable that – depending on the specific set of circumstances – a foreign employer might have to file both notifications for one employee.
Failure to comply with the Dimona obligation is punishable by a level 4 sanction; either imprisonment of 6 months up to 3 years and/or a criminal fine of EUR 600 to EUR 6,000 (to be multiplied by the number of employees involved, with a maximum of 100) or an administrative fine of EUR 300 to EUR 3,000 (to be multiplied by the number of employees involved, with a maximum of 100). If a criminal or administrative fine is imposed, the amount has to be multiplied by a surcharge factor – the ‘opdeciemen’/’décimes additionnels’ – which is currently set at 8.
Conclusion
Foreign employers will, going forward, have to take into account the Court of Cassation judgement and make sure that, if necessary, they file a Dimona notification for their employees who work in Belgium. If you are looking for more guidance in this respect, don’t hesitate to reach out; we’d love to hear from you.
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