The Court of Appeal of The Hague rules that Booking.com must join Pension Fund PGB as of 1 January 1999. The court finds that the so-called main business criterion from the Ministerial Decree has been met. After proceedings against Picnic, Deliveroo and others, this is yet another case where companies with new, technology-driven business models run up against the limits of regulated labor and pension law.
Supreme Court
Employees in certain specific industries or sectors in the Netherlands are obliged by law to participate in an industry-wide pension fund. The scope of an industry-wide pension fund is described in a Ministerial Decree which is published in the Government Gazette.
This case revolves around the question if Booking.com is obliged to participate in Pensioenfonds PGB where the travel industry’s pension plan is administered as of January 1, 2021. Previously, the Supreme Court ruled in its April 9, 2021 ruling that Booking.com is an online travel agent as referred to in PGB’s Ministerial Decree. The case was then referred by the Supreme Court to the Court of Appeal of The Hague to hear and decide Booking.com’s remaining defenses.
Court of Appeal of The Hague
The defenses of Booking.com concerned the admissibility of PGB, estoppel, representativeness and the so called main business criterion. This last point in particular is relevant to practice. Not only in the question of whether a company falls within the scope of a particular industry-wide pension fund but also in the applicability of collective bargaining agreements that have been declared generally binding. The question is always what the main (principal) activity of a particular company is.
Among other things, Booking argued that it does not primarily (i.e., 50% of its payroll) conduct the business of a travel agent but would perform all kinds of other activities such as maintaining, renewing and expanding the reservation platform and developing new (technical or other) products. In other words, more technical (IT) activities. According to Booking.com, only the so-called activities related to maintaining and keeping the reservation platform up and running can be attributed to Booking.com’s performance of the business of travel agent. Booking.com calls these activities “Keeping The Lights On” (KTLO activities).
The court ruled that Booking.com’s main business activities is to broker the (online) booking of accommodations through its reservation platform. The fact that in an online company, many of the employees have technical training does not detract from this. All these supporting activities can be attributed to Booking.com’s exercise of the business of travel agent and not only the KTLO-activities. According to the Court of Appeal, the core and focus of Booking.com’s business activities is the brokerage of the (online) booking of accommodations.
Booking.com must now register with PGB as of January 1, 1999. In practice this will most likely mean that Booking.com will have to retroactively make its own pension scheme equivalent to that of PGB. Moreover, Booking.com can still appeal to the Court of Appeal.
Platform economy
This case touches on the issue of scope provisions of industry-wide pension funds and collective bargaining agreements that sometimes clash with social and technological changes. This regularly leads to litigation. Think of Picnic disputing the applicability of the collective bargaining agreement for supermarkets and Deliveroo denying it had to participate in the industry-wide pension fund for the transport sector. The trend seems to be that judges often rule against these platform companies.
