Booking.com is a travel agency and is therefore required to join the Dutch multi-sector scheme PGB, a court of second instance in The Hague has ruled.
The ruling, follows a 2021 judgement by the Dutch High Court that Booking.com indeed is a travel agency, in a case initiated by Reiswerk, the Dutch pension fund for the travel sector, which joined multi-sector scheme PGB, with €28bn in assets under management, in 2022. Since then, all companies active in the travel sector are required to accrue pensions at PGB.
The court then had to address the question whether Booking.com was also ‘principally’ engaged in the activity of concluding travel arrangements. As it has now confirmed this, Booking.com is legally required to join PGB and pay any outstanding pension contributions for all its current and former workers.
Booking.com estimated the maximum cost of this at more than €405m at the end of the third quarter of 2023, according to a filing at the US stock market regulator Securities and Exchange Commission.
Booking.com had argued that 80% of its employees were IT workers who were not directly involved in concluding travel arrangements. But according to the court, IT workers also contribute to the creation of travel contracts as these include, for example, technology that makes the booking process easier, speeds up payments and currency conversions, arranges financing for hotels using the platform, and so on.
The court also considered activities other than hotel bookings, such as bookings of rental cars, airline tickets or concert tickets, as “travel agreements in the broadest sense of the word”.
It is not yet entirely clear how things will proceed next. Booking.com could not say yesterday whether it would bring the case to the High Court again. The company said it was considering “possible next steps”.
In principle, all employees who worked at Booking.com since 1999 must now receive pension rights with PGB, and contributions must be paid for that. Booking.com has over four thousand employees, and many more former employees.
The comapny argued at the hearing that it had no data about the whereabouts of former employees, stating that turnover at the firm was high and that many former employees were abroad, which made them hard to find. The judge declined to consider these matters in the ruling.
It’s not clear how the pension assets accrued in Booking.com’s own defined contribution (DC) pension plan with BeFrank are to be dealt with. Booking.com workers have accrued pensions with the company since 2015.
The BeFrank arrangement was cheaper for Booking.com, the ruling showed, because the firm has many young employees for whom it pays relatively low contributions.
This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra