€ 100,000 Compensation due to Refusing CAO Compliance Control

Year of publication

2014


Edition number

246


Reference

The Hague Court of Appeal, 30th September 2014, www.rechtspraak.nl, ECLI:NL:GHDHA:2014:3035


Decision

In a very hard way an employer experienced that he could not avoid control on compliance with the CAO (Collective Agreement) for temporary employees and control on joining the industrial pension fund for temporary employees. At least not with an appeal to a report of the tax authorities, released under the industry classification, and with an appeal to the classification in another sector by the tax authorities.

The CAO-Compliance Temporary Employees Foundation (SNCU) was created by the CAO parties in order to monitor compliance with the CAO for Temporary Employees. The Pension Fund for the Employment and Staffing Services Industry (StiPP) authorized the SNCU to monitor compliance with the legal obligation to join the pension fund. By letter of 29th October 2010 SNCU instructs an employer to provide them with certain documents in order to check for compliance with the CAO and the StiPP membership obligation, arguing that it has been found that the employer makes human resources available for third parties to operate under the direction and supervision of these third parties. The employer denies that he falls under the scope of the CAO and denies the obligation to be a member of StiPP. When, even after reminders, the employer does not send any documents to SNCU, SNCU, under the terms of the CAO, fixes a flat rate penalty of € 100,000. And this is what is being challenged at the Sub-district Court. The Sub-district Judge grants the claim, because the employer, even though he shows up in the proceedings, does not mount a defence. On appeal the Court of Appeal has to decide the case.
Then the employer states that a report from the tax authorities shows that the employer should be classified in the “agricultural” sector and not in the agency sector, because the employer has employment contracts with its employees and no agency contracts. The Court, however, considers this defence as insufficient. In order to answer the question whether the employer comes under the CAO for Temporary Workers and whether the employer is obliged to join StiPP, it is crucial to know whether the employer has concluded temporary employment contracts. However, this is of no importance for sector classification by the tax authorities. Besides, an agency contract is also an employment contract, and the employer has failed to bring in the concluded employment contracts in the procedure. The employer is therefore sentenced to pay the € 100,000 compensation.


Comments

The question of which CAO applies to an employment contract, the question of which pension fund an employer should join and the question in which sector the tax authorities classify an employer are questions that, in practice, are interrelated but, for the application of the law, entirely disconnected from each other. Not only the effects are different, but also the legal criteria, the procedure to follow in cases of a dispute and the competent Courts for dispute settlement. Unfortunately, these differences are not always recognized in practice, quite often with adverse consequences for the employer, like in the present case.
Although SNCU is only competent to examine when the CAO for temporary employees applies to employment contracts of the employer or when the law obliges the employer to join StiPP, the employer needs to take a request to cooperate in an investigation very seriously. When he wrongfully refuses to cooperate in such investigation, he risks a flat rate penalty of € 100,000. The great social importance of the fight against rogue agencies persuades judges to actually assign this compensation. Recently (20th May 2014; ECLI:NL:GHAMS:2014:1888), the Court of Amsterdam judged that, even after expiry of the extension of the CAO, SNCU is competent to control, even if the investigation refers to a period in which the CAO still was universally applicable.



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