Between 2008 and 2012, the Belgian construction company Absa outsourced all of its work to Bulgarian subcontractors. The subcontractors’ employees all held E 101 certificates (now known as A1 certificates) issued in Bulgaria. The Belgian Social Inspectorate investigated Absa in 2012 and questioned the existence of the Bulgarian subcontractors. It then wrote to the Bulgarian social security agency concerning suspected fraud. In the view of the Belgian authorities, the reply from the Bulgarian institution was inadequate, and so they brought legal proceedings before the Belgian court in 2013.
The main proceedings
On 27 June 2014, the Belgian construction company was acquitted on the grounds that the employment of Bulgarian workers was fully ‘covered’ by the E 101 certificates, which were regularly and lawfully issued. This was also clear from the response of the Bulgarian social security institution, which again sent a copy of the E 101 certificate, despite the issue of fraud raised by the Belgian authorities.
The public prosecutor successfully lodged an appeal against the judgement. The court found that the E 101 certificates had been obtained fraudulently. The subcontractors had misrepresented facts in order to circumvent Community legislation on the posting of workers, and thus gain an advantage.
The construction company appealed against the second judgement. The Belgian Court of Cassation questioned whether a court of the host Member State can annul or disregard an E 101 certificate issued in another Member State, particularly if the certificate appears to have been obtained or invoked fraudulently. Therefore, they stayed proceedings and referred the matter to the European Court of Justice (ECJ).
Advocate General disregards settled case-law
According to settled case-law of the ECJ, the E 101 certificate is binding on the social insurance institutions of the host Member State. Furthermore, a court in the Member State is not permitted to revoke or invalidate a certificate.
In his Opinion from 9 November 2017 (Case C-359/16), Advocate General Henrik Saugmandsgaard Øe proposed that the Court disregard this previous case-law and enter uncharted territory because the question asked is a novel one. He proposes that the Court rule that the E 101 certificate is no longer binding on a court of the host Member State where that court has found that the certificate was obtained or invoked fraudulently.
It is for the court of the host Member State to determine whether objective and subjective criteria have been met for a suspected case of fraud. The objective criterion is that the conditions required to obtain the advantage have not been met. The subjective criterion is the intention to commit fraud. If both these criteria are fulfilled, the general rule is that workers are subject to the law of the Member State in whose territory they are employed.
The ECJ is expected to make its judgement in a few months.
The ECJ’s press release can be viewed here.