On 6 October, an internet consultation started about a new bill for working with independent contractors. The objective of this bill is to provide workers with more security and to prevent false self-employment.
Background
A client may choose to have certain tasks carried out by an independent contractors. If in practice the relationship between a client and an independent contractors meets all legal requirements set on the existence of an employment agreement, there is ‘false self-employment.’ This is the case if the worker ‘performs work in the service of the other party, the employer, for remuneration during a given period’. The requirement of ‘in the service of’ expresses the existence of a relationship of authority between an employer and an employee.
For clients, it is not always easy to determine whether a relationship of authority exists. The bill gives a more detailed contextualisation of this concept.
Management of tasks, organisational embedding, or work for own account and risk?
The bill provides for a supplement to Section 610 of Book 7 of the Dutch Civil Code (“DCC”) on the basis of existing case law. According to the proposed provision, the relationship will have to be assessed firstly by testing whether there is ‘management of tasks’ or ‘organisational embedding’. These two elements indicate the existence of a relationship of authority. If neither element is present, there is no employment agreement, and it is possible to work under a contract for services.
If at least one of these elements is present, a test is performed against the third element, that of ‘entrepreneurship’. If the worker works ‘for his own account and risk’, this constitutes a contraindication for the existence of an employment agreement. It will have to be assessed from case to case where the focus lies. It is important that the contraindication (working for one’s own account and risk) is in principle only assessed ‘within the working relationship concerned’. Only if insufficient clarity is obtained, the way in which the worker presents himself more generally in the course of trade will be involved in the assessment.
A general administrative order will set more detailed rules about the specification of the above-mentioned elements. This decision is also meant to shed more light on situations where, to a similar extent, management of tasks by the employer or organisational embedding occur, as well as the performance of work for one’s own account and risk.
Legal presumption based on hourly rate
Besides the contextualisation of the concept of ‘in the service of’, the bill introduces a legal presumption based on hourly rate. If a person works for an hourly rate of €32.24 maximum, an employment agreement is presumed to exist. In that case, it is up to the employer to prove that there is no employment agreement. The said rate will be adjusted periodically by the percentage increase of the minimum wage.
Conclusion
The introduction of a legal presumption on the basis of hourly rates may have far-reaching consequences for practice. After all, at present many independent contractors will be working at lower rates. The presumption is expected to have a big preventive effect. The contextualisation of the relationship of authority may be less drastic, because the (contra)indications are based on existing case law. However, it is an important difference to current practice that entrepreneurship of the workers according to the bill will initially only be assessed within the working relationship concerned. This means that in principle it does not matter whether and for how many other clients the independent contractor works. Currently, this is a relevant circumstance that is directly taken into consideration.
The intended time of entry into force of the new measures is 1 July 2025. No transitional law has been provided for. Before the bill can enter into force, it will have to be approved after the internet consultation by the Senate and the (new) Lower House of Parliament of the Netherlands. Of course, we will keep you posted.
Do you have any questions? Please contact Eylard van Fenema or Marieke Opdam.
