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Work Stability Indemnity: Not Submitted to Social Security Contributions

Posted on December 17, 2010 by Claeys & Engels

Certain collective bargaining agreements compel the employer to follow a specific procedure when dismissing an employee. In general, an employer's failure to respect such procedure entitles the employee to a so-called work stability (or security) indemnity.

In accordance with social security regulations, such indemnity is excluded from the remuneration submitted to social security contributions since it is "an indemnity due in the event of non-respect by the employer of his legal, contractual or statutory obligations."

However the National Social Security Office (NOSS) presents a contrary opinion in its 'Instructions to employers.'

In its judgment of 10 May 2010, the Brussels Labour Court of Appeals invalidated the position of the NOSS concerning an indemnity provided for in the insurance industry (collective bargaining agreement of 8 November 1987). The court thus confirmed that social security contributions were not due on these indemnities.

This case-law can also be applied to other industry sectors or companies where collective bargaining agreements contain similar work stability clauses.

Tags: Social Security
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