Directors’ liability for unpaid salaries

Directors' liability for unpaid salaries

A judgment of the Brussels labour court states that directors remain jointly liable for the correct payment of employees' salaries, also after the company was declared bankrupt. The social secretariat remains unaffected.


In 1997 L. and D. founded their company (a BVBA) and both took a director position. One year later they hire Mr. X. In 2009 X voluntarily retires on his 60th birthday. In 2010, the company went bankrupt. At that time X did not have received his full allowance and therefore turns to the Fund for allowances to fired employees in case of the closure of companies (FSO). It turned out that X was not correctly classified and therefore underpaid. FSO only compensates him partly, and X turns to both company directors to obtain the regularization of his salary, overdue holiday allowance and loss of pension.

Directors' liability

In principle directors cannot be held accountable for damage to third parties bases on a contract or wrongful act. In other words, when you as a third party are faced with a company not fulfilling its obligations, you can only turn to the directors personally if you can show that you had other damage than the non-performance of the contract and that the wrongful act is not linked with the non-performance of the contract.

However, an important exception exists, i.e. criminal liability. If you can demonstrate that the fault of the director is a crime, you can direct an action against the company, but also against its executive body (being the directors). In such case, you do not have to prove any fault or damage outside the contract. It is even not necessary to start criminal proceedings.

In this case, the Nijvel tribunal was of the opinion that there was indeed a crime involved (being the non-payment according to the correct salary grade and the holiday allowance), so the directors were held jointly and severally liable to indemnify X.

Director in fact or in law

One of the directors was of the opinion that he could not be held liable because on the one hand he was not involved in human resources and on the other hand he was incapacitated during the last months of the activity of the company.

The Brussels labour court rejected the first argument, but followed the second argument. The director demonstrated that he could no longer work as from 1 April 2008. It was only during the general shareholders meeting of 15 April 2009 (published in the Belgian Official Journal of 26 August 2009) that his resignation was confirmed. But this is for the court no objection to liberate the director from damages as from the moment he became incapacitated. After all, in order to be held criminally liable, there should an effective exercise of the function as director, which was here no longer the case.
Watch out: directors remain liable to civil action up to the end of their mandate published in the Belgian Official Journal.

And the social secretariat?

The social secretariat was also involved in this case since it had in first instance miscalculated the allowances. But the Nijvel tribunal and the Brussels court disregard the directors' request. For the tribunal, it is not sufficiently demonstrated that the social secretariat has made a mistake.

The court even takes a step further by stating that the company has provided incorrect and/or insufficient information to its social secretariat. An employer can delegate additional tasks to his social secretariat (such as determining the professional category in which the employee should be reported), but this should happen under an explicit mandate (such as an additional agreement), which was not the case here.