Compulsory Affiliation with the Industry-wide Pension Fund on the Basis of the Literal Reading of the Text

A wholesale company in promotional items and business gifts fell under the requirements for participation in the pension fund for the Fashion, Interior, Carpet, and Textile industries because it also sold and had textile items printed. The fact that it only concerned a small part of the company's activities did not alter this.

A wholesale company in promotional items and business gifts, including work wear, was engaged in designing prints for products, where suppliers were instructed for the imprint or embroidery of these products with the design. In 2019, the pension fund for the Fashion, Interior, Carpet and Textile Industry informed the employer that the employer was obliged to join the pension fund for this industry with effect from 2014. When the employer disputed this notification, the pension fund carried out a reassessment in which the employer had to complete a questionnaire. In doing so, the employer replied in the affirmative to the question of whether the company or a department of the company was active in the Fashion and Interior Industry, and he also declared that the part of the turnover that was generated by manufacturing, processing or treating of clothing or having this done, amounted to 10% of the total turnover.
When the pension fund persisted in its opinion that the employer was obliged to join the industry pension fund and that premiums should be paid retroactively for five years, the Sub-district Court had to rule on the case. The Court ruled in the pension fund's favour. The employer disagreed and appealed to the Court of Appeal.
The employer expressed the view that the Sub-district Court had unjustly assessed the decision of the Minister of Social Affairs and Employment, in which the compulsory participation in the industry pension fund is regulated, on the basis of the interpretation provided for in case law of the Supreme Court for the interpretation of a CLA.

This interpretation implies that the text should be given an objective interpretation, based on the wording of the provision, read in the light of any published written explanation and of the entire text. When doing so, it does not depend solely on the CLA parties’ or, in this case: the Minister’s intention, when drawing up the provision. According to the employer, the standard that applied to the interpretation of the law should be used, because it concerns legislation in a material sense. That is why, according to the employer, under the principle of the protection of legitimate expectations, any ambiguity in the text of the provision should work to the advantage of the employer.
The Court of Appeal rejected this view of the employer, however, and referred to a decision of the Supreme Court in 2018. Next, the Court determined that the company's activities fall under the wide definition of the text of the decision that is compulsory, where it is not relevant that it does not concern a core activity. Also in the employer's case, it is not a one-off activity, but an actual business activity. Even if it concerns only a marginal part of the total activities, the activity is still a structural one. This implies that the employer falls within the scope of the decision that it is compulsory, which simply does not require the employer to be primarily engaged in the activities described.
The employer had also argued that it was unacceptable by standards of reasonableness and fairness for the pension fund to rely on the decision that it was compulsory since the employers' organization that had requested the decision that it should be compulsory was far from representative. The Court of Appeal did not agree with this argument, however, and pointed out that the employer had not set up a pension scheme for its staff himself and that any inability for the employer to pay the premiums for it had not been raised.

Contrary to popular belief, compulsory participation in an industry-wide pension fund, is based on a decision of the Minister of Social Affairs and Employment, in which participation in the pension fund is said to be compulsory for employers named in this decision, and it is not related to the applicability of a CLA.
This idea may be fuelled by the fact that the descriptions of the scope of CLAs and the decisions to make them compulsory are in many cases identical or almost identical. Likewise, compulsory participation in an industry-wide pension fund has nothing to do with the sector classification by the tax authorities.
Under the law, each company is classified in a sector by the tax authorities, the only remaining consequence being that the amount of the differentiated Work Resumption Fund premium of a small or medium-sized employer is fully or partly determined by the sector premium of the sector in question. CLAs, on the other hand, do not apply to companies but to employment contracts, not necessarily to all employment contracts of an employer. Furthermore, not every employment contract is subject to a CLA and it is possible that multiple CLAs apply to an employment contract. As for compulsory participation in an industry-wide pension fund, not every employer is subject to such a decision and, depending on the pension regulations, the employer who is obliged to participate in the pension fund, in principle, has to participate in the pension fund with all its employees.

As for the employer's argument that the compulsory participation decision should not be interpreted using the CLA standard but as a statutory provision, there are some observations to be made, because the decision to make participation compulsory is indeed a statutory provision in a material sense. In 2018, however, the Supreme Court decided otherwise, without giving reasons, and confirmed it again after the Court of Appeal had ruled on the case.
For employers who do not participate in an industry-wide pension fund, the above judgment of the Court of Appeal should be a warning not to conclude too quickly that there is no obligation to do so. Participation in a less obvious industry-wide pension fund may well be an issue, and may well have major financial consequences.