Fines imposed by the Social Affairs and Employment Inspectorate
Employing foreign nationals in the Netherlands often requires a permit, the so-called work permit for non-EU nationals. This is provided for in the Dutch Foreign Nationals (Employment) Act (Wet arbeid vreemdelingen – Wav). At present, the permit requirement does not apply to employees from other EU countries or employees from the countries that are members of the European Free Trade Association EFTA: Switzerland, Liechtenstein, Norway and Iceland. For employees from all other countries, a permit must be applied for before the employee is allowed to get to work in the Netherlands. If that permit has not been obtained, there is a major risk of an inspection by the Social Affairs and Employment Inspectorate (formerly named: Labour Inspectorate), and a fine report.
Inspection by the Social Affairs and Employment Inspectorate
If, upon inspection, the Social Affairs and Employment Inspectorate finds that there have been violations, it will impose heavy fines. Certain sectors are subject to more frequent illegal employment inspections; this include the hotel and catering industry, horticulture, inland waterway transport and sports associations (that operate on a national or international level). During these inspections, which take place unannounced, the Social Affairs and Employment Inspectorate regularly finds foreign employees who are employed without a work permit having been granted. In such case, a fine report is drawn up and a fine can be imposed without judicial intervention being required.
The definition of employer
Please note! Even if you are not the employer yourself, you be faced with fines. If employees are hired through a temporary employment agency and it is discovered that there is no work permit, both the employment agency and the recipient can get a fine. The same applies to contractors and subcontractors; if the subcontractor employs an employee without a work permit, the fine may be imposed on the main contractor as well.
The Council of State argues that the party that actually has the foreign national perform work is the employer obliged to apply for a permit and that this employer is always responsible and liable for the presence or absence of the required work permit. Whether there is an employment agreement is not relevant. The fact that work is performed on the instruction or for the benefit of the relevant employer is enough for that party to be considered the employer.
On 4 May 2010, the Council of State ruled that the publishers of the De Volkskrant, De Telegraaf, Trouw and Algemeen Dagblad newspapers could be considered to be the employers of those delivering the papers. De Volkskrant, Algemeen Dagblad and Trouw each owe the minister a € 224,400.00 fine. De Telegraaf owes a € 298,000.00 fine. These were imposed even though these publishers did not employ foreign nationals themselves. So why did they receive these heavy fines anyway?
In these proceedings, it was established that the publishers had contracted the distribution of the papers out to a distribution company, which, in turn, had contracted the work out to a network of distributors that subsequently went on to hire deliverers.
Still, the publishers were considered the actual employers within the meaning of the Wav, and the high fines were upheld. The Council of State stated:
It is unlikely that [the publisher] had insufficient influence on the organisation of the distribution activities to ensure that measures were taken to prevent the papers from being delivered by foreign nationals without a work permit.
It may be concluded that the Council of State’s interpretation of the definition of employer is very broad, and imposes a considerable duty of care on companies that contract out work. Those who contract out low-value work, are wise to perform a risk analysis. In fact, in the case of temporary employment agencies, a work permit is always required, regardless of the contract the personnel deployed has with the temporary employment agency.
No work permit? Fines
In principle, the fine to be imposed amounts to € 12,000.00 per foreign national or, if the client is a private individual, € 6,000.00 per foreign national. In the event of repeated violations, these amounts can be increased by a maximum of 50%.
These amounts quickly become substantial. In June 2005, the Labour Inspectorate (now known as the Social Affairs and Employment Inspectorate) visited a transport company, which resulted in 23 employees made available by temporary employment agencies being taken away, as these were foreign nationals who had no work permits. The Labour Inspectorate imposed a € 184,000.00 fine on the transport company for allowing foreign nationals who had no work permits to perform work in the Netherlands. It resulted in lengthy proceedings, and eventually, the case was taken all the way to the Council of State. The Council of State finally delivered its decision on 1 July 2009. The fine imposed was upheld.
This does not mean that there is no point in instituting proceedings. Quite the contrary, there have been several more favourable decisions as well.
Objection and appeal
Mistakes in the preparation of a decision to impose a fine are not uncommon. One example from case law involved a general partnership that received a fine because one of its partners was a foreign national for whom a work permit should have been acquired. However, given the nature of the general partnership, the court found that there was no employment relationship between the general partnership and the partner. This meant that there was no employment in violation of the Wav. Therefore, the decision to impose a fine was declared void.
The court will also declare decisions void if there is no relationship of authority between the foreign national and the person or company on whom/which the fine has been imposed.
People tend to disregard the fact that this is a punitive sanction. Sufficient care must be taken in imposing such sanctions, including in those situations in which the law seems to make imposing fines easy. If, for example, there has been much too little investigation into the relevant facts and circumstances, the court will have to declare the decision to impose a fine void. The inspection, the imposition of the fine itself, or the decision-making process involved in taking a decision on an appeal may show significant faults.
As the law is complicated, careless mistakes are not uncommon either. In fact, in a decision of the Council of State of 16 July 2008, an appeal was allowed on multiple grounds. It had not been proved that the appellant had violated the Wav, the decision to impose the fine on the appellant had not been substantiated and the law only allowed for fines to be imposed on legal entities or natural persons on an individual level. In other words, you can do something to avoid having to pay an administrative fine.
Further information
For additional information please feel free to contact Mieke Bestebreurtje.
