Belgium has
foreseen no exceptions on the principle of free movement of services. This
means that service providers from the new EU Member States are able to offer
their services in Belgium and here in Belgium with their employees can run out
orders without that they must have a
work permit or card (provided they fulfil a number of formalities dealt with
below).
The fact
that transitional agreements are foreseen in the framework of the free movement
of workers, is without prejudice to the principle of the free movement of
services. As a result of the accession of Portugal, the Court of Justice at
that time already pronounced on this issue.
The Court
of Justice pointed out that the foreign service provider must not be confined
to merely employing local labour forces to broadcast them to other Member
States. The foreign service provider may in other words be no interim office,
nor de facto acting as an interim agency
Formalities to fulfil
A foreign
EU service provider who comes to run out orders in Belgium with its own staff
must take into account following formalities:
the social
security scheme of the interim state will only apply in the case of posting (if
not the foreign service provider in Belgium will be subject to the Belgian
social security);
the
external service provider needs to respect the Belgian labour legislation with
respect to its employees who are employed in Belgium (which inter alia means
that the Belgian minimum wages have to be paid, that the stipulations on
working hours must be respected and that social documents must be kept in
Belgium);
the foreign
service provider should do a LIMOSA declaration;
there
should be fulfilled some formalities regarding the access to the territory;
what their
tax situation is concerned, the foreign labourers should take into account, the
rules included in the applicable double-taxation treaty.
We discuss
these conditions in detail below.
Social security: posting
The
designation of the applicable social security legislation is regulated in the
European Regulation 1408/71. This Regulation is applicable to the new EU Member
States.
The basic
rule of the regulation is that social security is applicable in the country
where one has being worked in. For example, when workers from Bulgaria come to
work in Belgium, in principle the Belgian social security regulations will
apply.
This means
that the Bulgarian employer must apply for a social security number and will
have to pay social security contributions in Belgium.
The
possibility exists, however, to diverge from this rule and yet to remain
subject to the social security of the interim state. In this case, one must
rely on the rules on posting.
In order
for a foreign EU employer to be able to have workers in posting to another EU
Member State, in which the workers remain subject to the social security of the
posting state, following points should be taken into account:
posting is
always temporary
the
duration of the labour in the receiving state shall be not more than 24 months
and the employee should not be broadcast to replace another employee whose
posting is terminated.
exceptional
postings for longer duration can also be requested. Belgium, however, only
accept postings available up to 5 years, the original period of 24 months
included.
the
"organic band ' with the interim employer must be preserved
Posting is
only possible when an "organic band ' is preserved between the sending
employer and the posted worker. This means that the employee must remain
subordinate to the sending employer which one has still the employers’
authority. Consequently, the sending employer remain responsible for things
like recruitment and dismissal, determination of the nature of the work, the
contract of employment, ...
This means
that the employment contract with the interim employer should not be suspended
and that no employment contract (not even of limited duration) may be closed
with the company in the receiving state, and that this company may not exercise
any employers ' authority in respect to the workers.
the sending employer must have substantial
economic activities in the interim state
Posting
rules are sometimes abused by companies which in reality turn out to have no
activity in the interim state (so-called ' mailbox companies '). However, the
Court of Justice has concluded that the sending employer should exercise
substantial activities in the interim state so that a legal posting might be
accomplished.
The
European Administrative Commission on social security for migrant workers has
developed a so called “code of good practices” in which are discussed a number
of problems of interpretation and ambiguities concerning to the posting. This
code is not legally binding, but the administrative institutions of the Member
States will in principle be pointed to. In the code states that the existence
or non-existence of significant activities in the interim state can be traced
on the basis of a number of objective criteria.
Following
elements are important:
where has
the posting company its seat and administration;
the number
of administrative staff of the posting company in the posting state and in the
state of labour (if there is only administrative staff present in the posting
state, the application of the posting stipulations is excluded);
where are
the posted workers recruited;
where are
most of the contracts with customers concluded;
what
legislation is applicable to the contracts that the posting company conclude with
its customers and its employees;
the turnover
realized by the posting company in the interim state and in the receiving state
during a sufficient representative period (if the turnover in the interim state
is less than 25%, one will examine the situation further);
the company should already have done activities
for at least four months on the territory of the interim state.
Application
for a document A1: the posting employer must request for its employees a
posting form (formerly E 101 document).
This should be done at the social security administration of the posting state.
It is
therefore extremely important that the concerned workers always have their A1
form with them, and certainly at work. So in case of control they can
immediately demonstrate that they are posted and therefore not subject to the
Belgian social security.
Until
recently, the Belgian client in addition had the obligation to present to the
social inspection in writing, the names of the employees who are not able to
present the A1 form, as well as the name and address of their employer and this
had to be done during the first day of presence of employees of a third-party
who are working for him or with him and remain subject to another social
security scheme than the Belgian.
The
non-compliance of this obligation was criminally sanctioned. This obligation is
cancelled with effect from 1st of April 2007 and replaced by the
LIMOSA declaration where there is also a control obligation.
Nevertheless,
we believe that it is preferable that the Belgian client checks whether the
foreign workers of subcontractors are in the possession of an A1 form.
Employment
law: compliance with Belgian rules
Wage and
working conditions
When a
foreign service provider comes to Belgium with its employees to run out orders,
it will have to comply with the Belgian labour law provisions. It comes in
particular to ensure compliance with ' the labour, wage and employment
conditions which are determined by legislative, regulatory or conventional
provisions that are criminal punished. '
The
reference to provisions ' that are criminal punished ' implies that almost the
entire Belgian labour law is applicable. To illustrate the Minister for
employment and labour referred in the discussion of the law, among other
things, to:
the labour
law of 16 March 1971 (which includes the rules on working hours, overtime,
night work, work on Sunday, ...);
the law of
4 January 1974 on the holidays;
the laws
regarding annual leave of workers coordinated on 28 June 1971;
the law of
24 July 1987 on temporary work, interim work and hiring-out of workers for the
benefit of users;
the law of
4 August 1996 concerning the welfare of workers at work;
the law of
8 April 1965 establishing the labour rules;
the Royal
Decree No. 5 of 23 October 1978 on tracking social documents;
the law of
12 April 1965 on the protection of wage;
the
implementing decrees of these different laws;
the
declared generally binding collective agreements.
In certain
circumstances, the foreign employer is not required to the Belgian wage
conditions and regulations on annual leave.
It concerns
the situation in which certain works are carried out whose duration is no
longer than eight days. It concerns in particular work on the initial assembly
and/or first installation of a good, form an integral part of an agreement for
the supply of goods, which are necessary for the entry into force of the
delivered good and be carried out by qualified and/or specialist workers of the
supplying company.
Specifically,
it concerns the situation where a foreign company delivers a good in Belgium
and therefore sends its employees to Belgium to properly assemble and/or
install this good. It is required that there is an agreement for the supply of
the goods in which this is expressly included and that the work will not take more than eight days.
This
exception does not apply for certain activities in the construction sector.
Social documents
As was
indicated under previous point, the foreign employer in principle must fulfil
the law on labour regulations and the Royal Decree nr. 5 on tracking social
documents. This means that the foreign employer need to keep a labour
regulation in Belgium, to keep pay slips, ...
Above-mentioned
Act of 5 March 2002, however, had introduced an exception regime that was
significantly altered by the program act of 27th of December 2006.
Since 1st
of April 2007, the concerned employers when they do a LIMOSA declaration, they
do not have to keep a labour regulation and they do not have to fulfil the formalities
for part-time workers.
New notification requirement from 1st
of April 2007: LIMOSA
The program
law of 27th of December 2006 with effect from 1st of
April 2007 introduces a new system, called ' prior notice to posted workers and
self-employed persons '.
The foreign
employer (or his representative), is previous required to report to the social
security that his ' posted worker ' will
come to work in Belgium.
It concerns
an electronic report, called LIMOSA, mapping the employment of foreigners. The
intention is to set up an electronic system with the information obtained that
should allow control for any kind of employment of foreigners in Belgium.
This new
mandatory declaration is important for subcontractors from all over Europe
(new, like the Bulgarian contractors, but also from old Member States), even
from across the world who would work in Belgium, with their foreign workforce.
What is the LIMOSA Declaration?
Prior to
the employment on Belgian territory, the employer of the posted worker must
inform the Belgian social security company RSZ. This notification shall be done
electronically via the website www.LIMOSA.be, where the foreign employer must create an account.
By Royal Decree is decided which data will have to be mentioned in the
notification.
The foreign
employer – here the subcontractor – should report following data in the
declaration:
WHO will be
posted? Identification data of the workers who will carry out the work.
WHEN will
the work be done? Starting date of the order / last date of the order. When the
order lasts longer than foreseen, a new declaration
has to be done. If the posting will not go on, the declaration must be
cancelled.
WHAT? At
the declaration, the type of services or the economic sector should be
indicated.
WHERE?
Location in Belgium. On which yard will the activities take place?
For WHOM will
the activities occur? Also the identification data of the Belgian client must
be indicated.
Who is the
posting employer? The foreign subcontractor will also have to report his
identification data.
HOW LONG
PER WEEK? In order to allow effective control the working week should also be
reported.
WHEN
EXACTLY? Also the working schedule of the foreign workers should be indicated
The
employer gets a receipt of this notification. This receipt is called LIMOSA
1-form or L1 form.
The Belgian
client will have to consider whether the foreign employer or self-employed
person has complied with this obligation. In particular, he will have to
consider whether the employee has the receipt (the L1-form), and if not, the
client itself must do the declaration to the RSZ (and this prior to
employment).
This
obligation does not apply if the client is a natural person and the employment
is done for strictly private purposes.
As a result
of this, the obligation for the Belgian client to check the presence of the A1
form is not needed. The LIMOSA declaration, however, by no means replaces the
A1 form. Only the duty to control the A1 form is abolished.
Exemptions
Since the
scope of the LIMOSA declaration is very spacious, the draft Royal Decree has
foreseen some exemptions from this prior notification. These exemptions are
either motivated by the nature or duration of the employment. Often the
declaration of employment is only exempted, when this does not exceed a certain
duration. So are the workers exempted from declaration in LIMOSA, if they are
be sent to Belgium for the initial assembly and/or first installation of a
good. It must be about qualified and/or specialised employees of the company
delivering the good. The duration of the work may be no longer than 8 days. For
an extended period there has to be a prior notification. The construction
sector cannot invoke this exception occupations and should therefore always do
a declaration.
Also
specialised technicians of foreign companies are exempt if they come to Belgium
for urgent maintenance work or urgent repair works. This exception only applies
to repairs to machinery or equipment that are provided directly by their
employer to the company where the repair or maintenance takes place. The
exemption only applies when the workers concerned are no longer than 5 days per
month in Belgium.
Also
employees who attend meetings in a closed circle are not subject to the
notification requirement, provided that there are no more than 60 days meetings
per year of which a maximum of 20 calendar days per meeting. The travel days or
days for tourism prior to or subsequent to the meeting are no longer charged.
Generalized declaration
When the
foreign employer has regular orders in Belgium and its employees, consequently,
are working on a regular basis in Belgium, in addition to activities in one or
more other countries, and they are not living in Belgium, they can file a declaration
that is valid for 24 months. That way they avoid that they should do a declaration,
every time they come again to Belgium.
Their
employers must not indicate the location, nor the work schedules (note, the
working week should be indicated).
This generalized
notification requirement does not apply to everyone. The interim sector and the construction sector are
excluded. At frequent postings in both sectors the employment from
abroad must therefore continually be reported. In addition, the KB mention what
should be understood under ' regular activity in Belgium and one or more other
countries '. The Royal Decree sets out in this way, the scope of this
generalized notification off.
It must be concerning
' an activity that structurally is carried out in different countries with an
substantial part in Belgium, whereby the person concerned is frequently present
in Belgium for short periods for vocational reasons '.
Although
the practice will tell how this strict definition should be understood, we
believe that it is already clear that this generalized declaration must remain
the exception.
Consequences of the Declaration
The
employer who has done the prior declaration, has not the obligation during the
next 24 months:
to draw up labour regulations;
to fulfil certain
disclosure obligations regarding part-time work;
to set up
and maintain social documents (with the exception of the individual account,
unless a copy of similar foreign documents is available);
to make pay
slips (provided that a copy of similar foreign documents is available).
For a
period of 2 years after the end of the employment period, the competent
inspectors can ask to the employer the transferring of these similar documents.
So in
practice, this means that the foreign employer in Belgium for each worker
employed in Belgium need to keep following documents: a Belgian individual
account or a copy of a similar foreign document and a copy of a foreign
document that is similar to the Belgian wage sheet.
Sanctions
Infringements
of the above-mentioned provisions are criminally sanctioned, both on the part
of the employer who posted the employees as on the part of the Belgian client.
Access to the territory
no work
permit or card
As already
indicated, free provision of services implies that no work permits or cards
must be requested, provided that it concerns a legal service. So there is an
exemption to apply for a work permit and – card for persons employed by a
company in the European economic area who go to Belgium for the provision of
services, provided that:
they are
lawfully employed in the Member State of residence;
this
legally way of employment at least is valid for the duration of the work to be
carried out in Belgium.
As a
consequence an employment of posted Bulgarian in Belgium in the context of
providing a service can happen without
work permit or card, provided that these Bulgarians validly are employed in
Bulgaria and that this valid way of employment persists for the entire time
required for carrying out the work effectively in Belgium.
administrative
formalities
Subjects of
the new EU Member States who are posted to Belgium in the context of providing
a service must present at the time of arrival on Belgian territory, in addition
to the identity card or a valid national passport, following items to the
Municipal Council of the municipality where they stay:
the proof
of service;
the proof
of posting (A1 form issued by the social security institution of the employment
State);
If
necessary, the authorization to work in the interim State.
On
presentation of these documents the municipality will than hand over a
document, depending on the foreseen duration of the service:
planned
duration shorter than or equal to 3 months: certificate in which the
notification is confirmed (so-called ' annex 22 ');
planned
duration longer than 3 months: inscription in the foreign register and hand
over a certificate of registration (' model B ').
Tax: double tax treaties
In function
of the actual data, there is a
possibility that the foreign labourers in Belgium will be subject to the
personal income tax (as a non-resident). This should be assessed on the basis
of the relevant double-taxation treaty.
Additional points of interest
Even if the
rules are fulfilled on free movement of services, posting, employment law
provisions and administrative formalities on entry to the territory, there are
risks associated with working with subcontractors from other EU Member States.
