During the Employment Essentials webinar on 24 September, Maartje Govaert and Annette van Beers explained recent case law. They also discussed the legislative proposal Clarification of Assessment of Employment Relationships and Legal Presumption (Verduidelijking beoordeling arbeidsrelaties en rechtsvermoeden; VBAR), which aims to clarify the distinction between the self-employed and employees.
The Tax and Customs Administration (Belastingdienst) has declared that it will intensify its monitoring and enforcement of sham self-employment beginning on 1 January 2025. Over one in three self-employed individuals (36%) express concern about this initiative, and 13% anticipate being identified as falsely self-employed. Furthermore, a number of self-employed people have expressed intentions to retire earlier or potentially seek employment with foreign companies. This information comes from a Knab Survey among 3,000 self-employed individuals. Such developments could lead to a considerable loss of expertise and experience in the already strained labour market.
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#1. Case law: How to assess employment status?
How can you determine if an agreement qualifies as an employment contract? What about platform workers and directors of holding companies? Several rulings, such as the 24 March 2023 Supreme Court decision declaring Deliveroo couriers as employees, have addressed these issues. A holistic approach was adopted, considering all facts and circumstances. Besides the three main criteria - wages, (personal) work, and a relationship of authority - the indication against entrepreneurship stands out. The importance of each criterion depends on its relevance to the worker. The principle 'substance over form' applies, meaning that the agreements between parties are less significant than what happens in practice.
An interesting ruling by the District Court of Midden-Nederland on 15 March 2024 examined the Deliveroo criteria for a director of three holdings. The court determined that this professional knowingly became an entrepreneur, held a high company position, and acted independently as a general manager. Internally and externally, she operated as an entrepreneur and founder. Thus, the Deliveroo criteria, if applicable, suggest a contracting agreement rather than an employment contract.
What about the cleaners at the now-bankrupt Helpling platform? Did they work under a contract with Helpling or with the households? AG De Bock stated in her opinion on 5 July 2024 that they had an employment contract with the platform. A private household can't act as a hirer since it doesn’t involve making a temporary worker available to a business. Simply giving instructions doesn't imply supervision and authority as defined in Articles 7:690 BW and 7:610 BW.
On 10 July 2024, the District Court of Amsterdam ruled in the case of FNV and CNV against the online platform Temper. The court found that key aspects of a temporary employment contract, such as employer authority and wage payment by the agency, were not present. Additionally, the element of personally performing work was minimally met. Thus, the court did not recognise a temporary employment contract with Temper. The matter of whether there was an employment relationship with Temper's clients was declared inadmissible since they were not part of the procedure.
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#2. End of enforcement moratorium for employment relationships: full enforcement of sham self-employment from 1 January 2025
Currently, there's an enforcement moratorium on hiring self-employed individuals, with the Tax and Customs Administration only imposing corrections in bad faith cases. From 1 January 2025, this moratorium ends.
What will change for employers and workers?
- Starting in 2025, the Tax and Customs Administration can immediately enforce if an employment contract is found, without giving prior instructions.
- From 6 September 2024, new model agreements won't be assessed, and existing ones won't be renewed.
- No additional assessments will be imposed for the period during which the enforcement moratorium applied (until 1 January 2025).
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#3. Legislative proposal Clarification of assessment of employment relationships and legal presumption: ABC becomes WZOP test
In addition to strengthening and improving enforcement by the Tax and Customs Administration, the government is taking a second important measure to combat sham self-employment: the legislative proposal Clarification of Assessment of Employment Relationships and Legal Presumption (VBAR). For the first time, factors indicating self-employment will independently affect legal determinations regarding the appropriate type of contract.
The original proposal for a new assessment framework was described as an ‘abc’. Whether someone ‘works in service of’ is considered using three main elements: (A) work-related management; (B) organisational embedding; and (C) not performing the work at one's own risk and expense. The assessment starts with the test of the main elements A and B. Only if (one of) these main elements are present can there be an employment contract. This with the additional criterion of the worker's behaviour in economic traffic (C+). The proposal also introduces a ‘legal presumption’ of employment in situations where the worker's hourly rate is lower than EUR 32.24 excluding VAT (2024). The legal presumption is intended to protect the lower end of the market; only the worker can invoke it.
After the publication of the first draft proposal in October 2023, several changes have been made to the proposal. Changes have been made to the design of the assessment framework, leading to the term WZOP test. This abbreviation stands for Employee (work-related and organisational management), Self-employed (indicators pointing to self-employment) and Entrepreneurship (multiple clients, duration, time for reputation building and acquisition, and investments).
The adjusted VBAR legislative proposal was submitted to the Council of State for advice on 27 June 2024 and published on 3 July 2024. The Minister of Social Affairs and Employment must indicate how the advice will be incorporated into the legislative proposal. The proposal will then be voted on in the House of Representatives. The intended effective date is 1 January 2026. We will keep you updated on any new developments.