On 24 March 2025, the Belgium Supreme Court (Cour de Cassation) issued an important ruling regarding the classification of contractually agreed-upon compensations as wage, even if they are not directly linked to the work for the employer. Such compensations are recognized as "wages," even when they are not directly linked to actual work performed. As a result, they can be classified as wages and are thus protected under the Wage Protection Act and they fall within the scope of Article 162 of the Social Criminal Code (non-payment of wages) which allows employees to claim the longer limitation period for criminal claims instead of the short prescription term for labour law claims.
1. Context
The case concerned a former employee, Mr. W.H., who had contractually agreed with his new employer to include in his employment contract certain compensation payments. These payments were intended to offset income loss resulting from the loss of bonuses and stock options from his previous employer. The amounts in question were to be paid to the employee during the course of 2013.
At the end of 2013, the employment contract was terminated by the employer. In 2015, the employee sent a letter formally demanding payment of the agreed compensation. The employer refused to make the payment, prompting the employee to file a claim before the Brussels Labour Tribunal in 2017. The Tribunal ruled in favour of the employee on 13 December of that year.
However, on 3 October 2023, the Brussels Labour Court of Appeal overturned the earlier judgment, ruling that the employee's claim was time-barred under the one-year limitation period provided by Article 15 of the Employment Contracts Act. The court held that the claimed compensation did not fall within the definition of "wages" under Article 2 of the Wage Protection Act, as the payments were not remuneration for work performed for the employer, but rather compensation for not entering into an employment relationship with a third party. As a result, Article 162 of the Social Penal Code, which criminalizes the non-payment of wages, was not applicable. Therefore, the five-year criminal limitation period did not apply, and the shorter one-year labour law limitation period was deemed applicable instead.
2. Judgment of the Supreme Court
The Supreme Court rejected this approach. It ruled that Article 2 of the Wage Protection Act adopts a broad definition of wages. This includes not only the regular monthly salary but also any monetary benefits or benefits that can be valued in monetary terms, which the employer is contractually obliged to provide under the employment agreement.
According to the Court, it is irrelevant whether the calculation of these benefits is based on the salary received from a previous employer. As long as the payments were contractually promised within the framework of the current employment, they constitute wages within the meaning of the law.
The Court also pointed that failure to pay such remuneration may constitute a criminal offense under Article 162 of the Social Criminal Code. As a result, the longer limitation period of five years applies instead of the shorter one-year period.
Consequently, the Court annulled the judgment of the Labour Court op Appeal and referred the case back to the Labour Court if Appeal in Liège for further consideration.
To be noted: since 28 April 2024, the limitation period for criminal offences (in the Social Penal Code) has increased to 10 years instead of 5 years!
3. What does this mean in practice?
- This ruling confirms that the concept of wages under the Wage Protection Act must be interpreted broadly. Compensation that is not directly linked to work performed but arises from the employment contract still falls within the legal definition of wages.
- For employers, this means they must be cautious when granting certain benefits. Financial advantages that are contractually promised cannot simply be classified as "non-wages." This rule does not apply if the benefit granted to the employee is determined based on the salary he or she would have received from another employer.
- For employees, this decision offers greater legal certainty, as special or additional compensations are also considered wages and can be claimed over a longer period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
