Do some corona measures open the door to social security fraud?
Exceptional circumstances call for exceptional measures. To deal with the enormous increase in the number of applications for the temporary laying-off of staff (around 1.2 million applications), and in view of the unwieldy system for applications for temporary lay-offs for employees and the discussion about the form of application for temporary laying-off (lack of work or force majeure), a number of measures have been taken to simplify the whole procedure.
Thus, among other things, temporary lay-off for reasons of force majeure was quickly and readily accepted (a measure in force at least up to and including 31 May 2020), applications could be lodged retroactively from 13 March 2020 onwards, the control card was temporarily done away with, etc. These are all well-intentioned measures aimed at enabling organisations to cope with the coronavirus crisis, but at the same time they are also measures that leave the door wide open for abuse or social security fraud.
Temporary lay-off... a means of reducing the wage bill
Your employees receive their (net) salary at the end of the month, on which you pay both the employer’s and employee’s social security contributions. The temptation can be great to introduce (“make incorrect use of”) the system of temporary lay-off, not on account of the economic impact of the coronavirus crisis on your company, but with the sole aim of reducing your wage bill.
In addition to his temporary lay-off benefit, an employee who has been temporary laid off receives an additional payment from the National Employment Office (RVA). As a rule this is not enough for the individual to remain at the same wage level, and the employer is free to make a supplementary top-up contribution, which is exempt of employer’s and employee’s social security contributions.
There are two conditions:
- the amount of the top-up contribution may not be such as to lead to the employee receiving higher net pay than before, and
- employees of the same category should be treated equally.
Should you use the system of temporary lay-off wrongly and you nonetheless want to pay your employees the same wage, then you, as the employer, pay that top-up amount. Your wage bill will be very substantially lower than normal, while your employee nonetheless receives the same pay. The penalties for misuse of the temporary lay-off system are severe, the offence representing a level 4 infringement punishable with a prison sentence of between six months and three years and/or a criminal fine of between EUR 4,800 and EUR 48,000.
If the infringement is handled under administrative law, the fine amounts to between EUR 2,400 and EUR 24,000. Irrespective of the kind of punishment (administrative or criminal law), the fine is multiplied by the number of employees who were wrongly included in the temporary lay-off system, meaning the total fine can run to a very high figure indeed.
If you are temporarily laid off you do not do any work for your employer
What is sometimes forgotten is that an employee who has been temporarily laid off must be without “work” from his employer, meaning that you cannot apply a temporary lay-off to your employee and simultaneously ask him to finish off a report or deal with an order. Temporary lay-off entails the discontinuation of all professional activity for the employer who has requested the temporary lay-off.
Penalty level 4 applies here, too, if you nonetheless allow your employees to work. As an employee you could also be liable to a penalty; you will have to pay back your temporary lay-off benefits and in many cases you will additionally be suspended from the RVA for at least four and up to a maximum of 26 weeks (although in some cases this can run to as much as 52 weeks). As an employee on a temporary lay-off you are in fact allowed to work elsewhere, provided you report this.
Temporary lay-off... a means of not having to pay the guaranteed salary
The rules applicable in cases where temporary laying-off and occupational disability concur are not simple. Imagine that an employee is still in a guaranteed pay period (first 30 days of incapacity for work). The moment temporary laying-off is introduced for the whole company, the employer will no longer have to pay any guaranteed salary, with the result that the employee will have to contact his mutual insurance fund for his sickness benefit payments. If the company were only to allow some of its employees to work, it only has to pay the guaranteed salary for those days that the sick employee was scheduled to work.
Further to the simplified application procedure, the employer can now report at the end of the month the names of the employees who were temporarily laid off and the days on which this was the case (wholly or partially). In this way it is quite easy to circumvent payment of the guaranteed salary: by preference you temporarily lay off an employee who is unfit for work so that you are not liable for payment of the guaranteed salary. If, after the period of temporary lay-off has come to an end, the employee is still incapacitated for work and is still entitled to the guaranteed pay, you will only then have to pay the remaining balance for the days of occupational disability. As an employer you can be penalised here, too, for this infringement (level 4 penalty).
To counter this abuse, the Group of 10 (the major social partners) have reached an agreement on the compulsory serving of notice of temporary lay-offs to employees by the employer. The notification must state the period of temporary laying-off and the days on which the employee is temporarily laid off. As an employer you can still recall employees who have been temporarily laid off, to come and work, even though it was originally stated in the notification that there was a temporary lay-off for that day.
If no notification is given, no temporary laying-off is possible. Attempts are reportedly also being made to set the temporary lay-off benefit amounts at the same level as the amounts of the sickness benefit payments (primary occupational disability period). NB: this is a recommendation for the government that now has to take the initiative of transposing it into legislative texts.
Temporary lay-off... provides an income
If an employee starts work in one of the weeks in which your company is nonetheless inoperative, can you immediately put the employee on a temporary lay-off? In principle this was not possible, but the whistle was recently blown on the RVA. So it can be done; as the employer you will have to demonstrate that the recruitment had already been planned before 13 March 2020 (backing this up with evidence such as e-mail correspondence, etc.). Knowing that in theory you do not have to furnish proof of days’ work for a temporary lay-off on account of force majeure, it is fairly simple for an employee to be eligible for a temporary lay-off benefit.
In this way someone who does not have any income can fraudulently obtain replacement income. The employer will only have to show that the recruitment had already been planned before 13 March 2020. The most severe penalty level, i.e. penalty level 4, applies here, too.