Wage arrears due to the payroll office

Most companies outsource their payroll administration to a payroll office. Payroll processing has become so complicated that only specialized companies can bring it to a successful conclusion. But what if they make mistakes?

In practice

Payroll office X is responsible for the payroll administration of a non-profit association. Mr A has been working for the non-profit association since 2006, but in 2016 it turned out that his remuneration was not calculated in accordance with the scales of the applicable joint committee. The non-profit association changes its payroll office in May 2017 and on 2 May 2017 asks the new payroll office to do the necessary to rectify the error.

The new payroll office will take over the payment of wages and the arrears will be paid from the end of May 2017.
However, the new scales will only be applied from 1 October 2016. Nothing will be done about the wages before that. That is not to the liking of employee A, who goes to court.

Statute of limitations

The first judge orders the non-profit association to pay the arrears for the period from 2 May 2012 to 30 September 2016. The date of 2 May 2017 is the date on which the non-profit association instructed the social secretariat to make the necessary corrections. The limitation period is 5 years. As a result, the staff member receives the arrears of wages for that period. That amount is increased with late payment interest, calculated at the legal interest rate and this until the judgment of the court.

The old payroll office must prepare corrective pay slips at its own expense. In addition, the payroll office must also reimburse the interest that the non-profit association has to pay to the employee. Finally, the first judge sentenced the payroll office to an amount of 4.000 as compensation for the loss of the opportunity to adjust the management of the budget of the non-profit association Y to the real labor costs of A.

The parties appeal, but the Labor Court retains a large part of the verdict.
The Labor Court confirms the statute of limitations and the conviction of the non-profit association. The court also confirms that the payroll office must prepare correction statements at its own expense, but it reduces the compensation for the missed opportunity and the interest on arrears.

With regard to late payment interest, the Court of Appeal is of the opinion that the non-profit association could have paid the wages arrears up to 2012 in the course of June 2017. The fact that this payment will only be made in 2019, after the court decision, is not the fault of the payroll office.
The compensation is therefore limited to late payment interest for the period from May 2012 to June 2017.

With regard to the missed opportunity, the Labor Court acknowledges that there was damage, but reduces the compensation to 1.500.

Payroll office pays for the costs

If the error of the payroll office has been proven, the costs incurred as a result of this error can be passed on to this company. Not the wage itself, of course, but there are plenty of other costs that arise from an incorrect wage calculation, such as corrective pay slips, social security increases, interest due and, as is the case here, the damage resulting from the loss of the opportunity to adjust the budget taking into account the actual cost of wages.