While there was never much discussion that unduly paid salary needs to be reimbursed, uncertainty -and discussions- remained about the exact amount to be restituted.

Is the employee obliged to repay the gross or the net amount?

A judgment of September 16, 2019 answers this question. Remarkably, the Court of Cassation splits the answer in a fiscal and a social security related aspect. In a rather short, but structured judgment, the Court, by analysis of the relevant tax and social security legislation, concludes that, when ordered to repay remuneration:

–        the employee must also repay the withheld payroll tax,

–        but does not have to repay the withheld personal social security contribution.

The court argues that the withheld payroll tax is an element of the remuneration that the employee is entitled to, withheld by the employer and paid to the fiscal administration as an advance payment of the personal income tax due by the employee. Therefore, if an employee has received an undue salary, the obligation to restitute is not limited to the reimbursement of the net amount that the employee received but extends to the payroll tax.

A different reasoning comes into play regarding the social security contributions. This is because only the employer can direct a claim of repayment of the unduly paid social security contributions against the National Social Security Office.

To obtain full restitution of unduly paid remuneration the employer must turn to both the employee and the National Social Security Office.

If you would have any question regarding this particular topic, our Employment practice would be more than happy to assist you in this respect.