In this case, an employee had benefited from free housing provided on the premises of his employer. After being dismissed, he filed claims with a Labour Court to challenge the termination of his employment contract and to seek various compensations, including compensation for undeclared work, due to the due to non-submission of the benefit in kind (the free housing) to social security contributions.
The Court of Cassation upheld the decision of the Court of Appeal, ordering the employer to pay the employee a lump-sum indemnity for undeclared work of six months’ salary, based on the following findings:
- Benefit in kind established: It was demonstrated that housing had been provided to the employee free of charge. This constituted a benefit in kind, which should have been reported on the employee’s payslip and subjected to social security contributions.
- Deliberate intent to conceal: The failure to declare this benefit on the payslips, combined with its exclusion from social security contributions, evidenced the employer’s deliberate intention to evade its legal obligations.
Key takeaways for employers:
- Any benefit in kind provided to an employee must be properly valued, included in the remuneration items mentioned in the payslip, and subjected to social security contributions.
- The failure to mention them on the payslip and to submit them to contributions may suffice to establish the intentional element of concealed work.
- In cases of undeclared work, the employer may face not only potential criminal sanctions but also be ordered to pay the employee damages, including, in the event of termination of the employment contract, a lump-sum indemnity equivalent to six months’ salary.
This decision underscores the strict approach of case law on undeclared work and highlights the importance for employers to secure the management of benefits in kind. In this respect, it is worth noting that the section of the Official Social Security Bulletin (BOSS) relating to benefits in kind has been updated for 2025.
Cass. Soc., 4 December 2024, n°23-14.259
