Court of Cassation confirms possibility of five-year prescription period for recovery of social security contributions by the NSSO
30 May 2023
In a recent judgement, the Court of Cassation ruled that the National Social Security Office (NSSO) – taking into account the fact that not paying the required social security contributions is a criminal offence on the part of the employer – can also base their claim for the recovery of unpaid social security contributions on grounds of the restitution of damages incurred as a result of that criminal offence. Using this route would in practice give the NSSO the possibility to extend the prescription period for the recovery of social security contributions, which can have a significant impact. Indeed, this type of civil claim ‘ex delicto’ comes with a prescription period of five years instead of the three-year prescription period for the regular recovery of social security contributions.
Background – recovery of social security contributions
Employers are required to withhold employee social security contributions every time they make a payment to their employees and, together with the employer contributions, have to pay these contributions to the NSSO on a quarterly basis. If an employer fails to (fully) pay the required contributions, the NSSO can firstly collect the unpaid contributions by enforcement order (‘dwangbevel’/’voie de contrainte’). It can also choose to recover the contributions by filing a lawsuit against the employer with the labour tribunal, based on specific provisions of the NSSO-Act. For these two types of collection of social security contributions, a prescription period of three years applies, except in the event of fraud, in which case the prescription period is set at 10 years.
Non-payment of social security contributions is a criminal offence
However, the non-payment of social security contributions is also included in the Social Criminal Code as a criminal offence. And in the event of a criminal offence, the aggrieved party can claim compensation for damages that result from the criminal offence based on the civil law principles of non-contractual liability.
As such, the question arose whether the NSSO could be seen as the aggrieved party in the criminal offence that is the non-payment of social security contributions and could thus file a civil claim ‘ex delicto’ for compensation of these damages (equal to the amount of the unpaid social security contributions, contribution surcharges and interests). This question is important because this type of civil claim ‘ex delicto’ in principle comes with a prescription period of five years, instead of the three years for the ‘regular’ claim for the recovery of social security contributions (see above).
Court of Cassation judgement
In its judgement of 3 April 2023, the Court of Cassation answered this question in the affirmative. Indeed, the Court ruled that nothing precludes the NSSO from seeking compensation for the damages they incur as a result of unpaid social security contributions by using the system non-contractual liability following a criminal offence.
There are two ways the NSSO can go about this. The first option is to join a criminal lawsuit against an employer as a civil party. Alternatively, the NSSO can file their civil claim ‘ex delicto’ directly with the labour tribunal. In the latter case, the tribunal will have to determine whether the required elements for the criminal offence are present in order to award compensation for the damages resulting from the offence (in the amount of the unpaid social security contributions, surcharges and interests), however, without criminally convicting the employer.
Impact
This Court of Cassation judgement can have a significant impact as it in essence gives the NSSO the opportunity to extend the regular three year prescription period for the recovery of social security contributions to five years. Moreover, if it can be argued in a certain case that the criminal offence of not paying the necessary social security contributions constituted a continuing offence ('délit continué'/'voortgezet misdrijf'), the actual prescription period can be extended even further. A continuing offence is an offence that consists of multiple punishable acts that follow each other and that are considered to constitute a single offence due to the unity of criminal intent on the part of the perpetrator. In the event of a continuing offence, the prescription period only commences after the last instance of the unified criminal offence takes place. In such a case, a timely claim for restitution of damages can encompass the entirety of the continuing criminal offence, however long it was. In this respect, it’s certainly conceivable that some types of non-payment of social security contributions – notably unduly unpaid social security contributions on amounts that are awarded periodically (such as salary) – will constitute continuing criminal offences.
This new case-law must therefore be duly taken into account going forward, e.g. when assessing a possible liability for unpaid social security contributions. If you have any questions on the impact of this judgement, don’t hesitate to reach out; we’d love to hear from you.
