Is a pancake a cake? That is the question posed in a Rotterdam District Court resolves a dispute over compulsory membership of a pension fund. The significance for the entrepreneur involved in the proceedings: no less than well over €8.5 million in respect of (allegedly outstanding) pension contributions.
Compulsory participation
Businesses in the confectionery industry – just like those in many other sectors – are obliged to enrol their employees in the collective pension scheme, which is administered in this sector by the Sectoral Pension Fund (Bpf) for the Confectionery Industry. This is a legal obligation under the Compulsory Membership of an Industry-Wide Pension Fund Act 2000.
The logical consequence is that pension contributions must be paid to the Bpf. The Bpf Zoetwaren demands these contributions with effect from 30 March 1995, plus statutory commercial interest. This results in the total claim of €8.5 million mentioned above.
Many pension funds are actively seeking out employers who have wrongly failed to enrol with them. They do this because employees who are subject to the compulsory scheme can always claim their pension. It is irrelevant whether their employer has actually paid pension contributions on their behalf.
Confectionery
A business in the confectionery industry is a business in the Netherlands which, exclusively or principally: “processes factory-produced flour and/or other raw materials into rusks, toast, crispbread, biscuit figures, biscuits, confectionery, cakes and waffles, of any kind;” or that“manufactures products on an industrial scale which are comparable in terms of the nature of the raw materials used and/or the method of processing”.
The judge must therefore answer two questions:
- Is a pancake a cake?
- Is a pancake comparable to a biscuit in terms of the raw materials used and/or the method of preparation?
The judge concludes that there are such clear differences that, according to social conventions, pancakes (and poffertjes) are not regarded as biscuits. These differences lie in their use, appearance, texture, taste, composition and method of preparation. For example, pancakes are eaten for lunch or dinner, whilst biscuits are eaten as a snack or for breakfast. Pancakes are kitchen or restaurant products, available in restaurants, whilst cakes are bakery or confectionery products, available in bakeries.
With regard to the second question, it is established that the main ingredient of pancakes is milk (59%), to which flour (25%) and egg (13%) are added. The main ingredients of biscuits are flour (42%), fat (26%) and sugar (23.5%).
A pancake isn’t a biscuit!
The court recognises further factors that distinguish pancakes from biscuits. The conclusion is therefore that the business owner is not subject to the Bpf’s mandatory scheme for confectionery. The debate may seem somewhat nit-picky, but for the business owner, it does involve a cost of over €8.5 million. Business owners would therefore be well advised to keep an eye on – or ensure that someone else monitors – whether they fall under the mandatory pension fund scheme.