The Court of Cassation had to rule in a Judgement of 16 September 2019, on the question whether the employee has to pay back undue wages, in gross or net form, to the employer. Specifically, the question arises as to whether, in addition to the net salary, the employee must first reimburse the withholding tax on wages and, secondly, the employee’s social security contributions.
As regards, firstly, withholding tax on earned income, the Court looks at the relevant articles in the Belgian Income Tax Code. It follows from these provisions that the withholding tax on wages constitutes part of the remuneration owed to the employee, which is withheld by the employer and paid to the tax authorities in the form of advances that must be deducted from the personal income tax payable by the employee, to be determined at a later date, and from which the surplus must be repaid to the employee. It follows that where an employee is obliged to repay undue remuneration, the reimbursements relate not only to the net salary, but also to the related amount of the withholding tax on earned income. The employer will therefore not have to reclaim the withholding tax from the tax authorities, but from the employee.
Secondly, as regards the employee’s social security contributions, the Court looks at the law of 27 June 1969 revising the Decree-Law of 28 December 1944 on the social security of workers. Article 26, paragraph 1 of this law stipulates that the employer cannot recover, from the employee, the amount of the social security contribution of the employee which he did not withhold on time. In accordance with Article 42(1) and (2) of the Act, the claims of the National Office of Social Security (NOSS) against the employers covered by this Act, as well as the claims brought against this service with a view to the recovery of unduly paid contributions, are subject to a limited period of three years. It is clear from those provisions, on the one hand, that the claim for recovery of social security contributions unduly paid by the employer, belongs only to the employer, and can only be brought against the NOSS and, on the other hand, that the employee is not entitled to the contributions paid by the employer to that service. It follows that where an employee is obliged to reimburse remuneration that was not due to him, the refund does not relate to the amount of the employee’s social security contributions.
It is clear from these considerations that an employee, who has received undue pay, has to repay both the (directly received) overpaid net salary and the related withholding tax to the employer, but not the social security contributions.