Multinationals must pay social security contributions on share packages granted to employees, Belgium’s Court of Cassation has ruled.
The 29 June judgment settles a long-running dispute over whether so-called restricted stock units, or RSUs, should be treated as pay and therefore be subject to social security deductions. According to De Tijd, the court said they should.
The ruling means some companies may now have to repay social security contributions retroactively, potentially covering several years.
For a long time, many companies argued that RSUs could not be regarded as pay. They said the awards were not compensation for work performed, but rather an additional incentive designed to stop employees from leaving.
The Court of Cassation has now rejected that reasoning. In its judgment, it said benefits granted to retain employees, encourage them to keep contributing or ensure they work diligently are benefits given in return for labour and therefore count as pay under employment law.
Employment lawyer Nele Van Kerrebroeck described the ruling in De Tijd as “groundbreaking.” She said the broader definition of pay adopted by the court could, in principle, also apply to other benefits granted to employees through third parties, such as sales commissions.
De Tijd reported that some companies awarding RSUs had, in recent years, paid social security contributions under reservation while challenging the issue in court. Around 10 legal cases are under way between the National Social Security Office and those companies.
Those cases alone involve tens of millions of euros and thousands of employees. Experts say the companies are now likely to have little chance of success.
