Court of Cassation tough on prohibited hiring out of workers

On 15 February 2016, the Court of Cassation issued an interesting decision on the prohibited hiring out of workers for the benefit of users, and more particularly on the financial consequences this can entail. The Court ruled that, in the event of prohibited hiring out of workers, the employer cannot sue the third-party user in order to collect the invoice for the services of the unlawfully lent-out personnel if that user simply decides not to pay.

Besides the permitted cases of temporary agency work and temporary work, under Belgian labour law it is in principle prohibited for an employer to lend out its employees to another company which then uses these employees and exercises authority over them (Act of 24 July 1987 on temporary work, temporary agency work and hiring out of workers for the benefit of users).

Nevertheless, many companies do need to have certain works performed by “external employees”, because e.g. they simply don´t have the necessary knowledge in house. The aforementioned Act of 24 July 1987 makes it possible, within the framework of an underlying contract, to lend out employees to a third party-user whereby the latter can give certain instructions to the employee, without this being qualified as a “prohibited hiring out of workers”. For this to be allowed, four cumulative conditions must be fulfilled: (1) an underlying contract exists between the employer and the third-party user, (2) the possible instructions are enumerated in the contract, (3) such instructions may not undermine the employer´s authority and (4) the actual situation must be in conformity with the contract. Moreover, the user has a duty to provide information on this to the employees´ representatives in the works council (or the prevention committee or the trade union delegation).

Any hiring out of workers that does not take place in accordance with these conditions can lead to substantial civil-law and criminal-law sanctions, such as a criminal-law or administrative fine and joint and several liability for both the lending company and the third-party user for the payment of e.g. the salaries and social security contributions.

In its decision of 15 February 2016, the Court of Cassation added yet another important sanction. The case concerned a service-providing company that had hired out a number of its specialised personnel to a third-party user and for which it had drawn up an invoice of 217,640.35 euros in personnel costs for the lent-out employees. The third-party user didn´t pay the invoice, and the lending company sued in an attempt to collect. The Court of Appeal dismissed this claim since it involved a prohibited hiring out of personnel. The Court of Cassation affirmed this position, observing that this is a matter of public order and the contract is thus absolutely null and void. The Court of Cassation rejected the consideration that this might lead to an “unjustified enrichment” on the part of the third-party user due to the unremunerated use of someone else’s employees, essentially ruling that the “impoverished” party got what it deserved.

This decision illustrates the reality that non-compliance with the prohibition in principle on hiring out personnel can have very serious consequences indeed. When hiring out personnel, the existence of a proper contract will always be a matter of fundamental importance.

For more information on this topic, you can consult Sébastien van Damme (author) and Sara Cockx (author and department head).