New review framework
Is a worker an employee or a sole trader? This question is puzzling many organizations, because the Tax Administration has announced that from 1 January 2025 onwards, it will restart enforcing the law on false self-employment. The question is not so easy to answer, because there is no clear review framework. The legislator intends to change this by proposing the draft Assessment of Employment Relationships and Legal Presumption Clarification Act.
New review framework
For an employment agreement to exist, there has to be (i) labour, (ii) wages, and (iii) a relationship of authority. The relationship of authority is the most distinguishing criterion for the existence of an employment agreement. A relationship of authority usually means that there is an employment agreement. In most cases, a contract for services also involves labour and wages. The bill proposes three criteria to ascertain whether there is a relationship of authority between the worker and the provider of work:
(a) Management of work;
(b) Embedding of the work and the worker;
(c) Working for own account and risk.
Under the review framework, it must first be tested whether (a) and/or (b) are present. If they are, it must be tested whether these criteria outweigh (c). Where there is a strong presence of (a) and/or (b) but only a limited presence of (c), (a) and/or (b) will carry more weight. If that is the case, there is a relationship of authority and therefore a big chance that an employment agreement exists. However, if (c) outweighs (a) and/or (b), there is no relationship of authority and therefore probably no employment agreement.
Situations may also occur in which (a) and/or (b) carry the same weight as (c). To deal with such situations, a fourth criterion is proposed:
(c+) Course of trade
The (c+) criterion concerns the way in which the worker presents himself in the course of trade. If c+ is present, there is no relationship of authority.
The above-mentioned criteria will still be elaborated in an order in council. Several indications can already be deducted from the Explanatory Memorandum. That is why Ruud Schepers has put the above-mentioned criteria and the indications in a flow chart. In anticipation of the potential bill, this flow chart can help you assess whether a relationship of authority exists.
Please note: the draft Assessment of Employment Relationships and Legal Presumption Clarification Act is still only a bill. It may still be amended. The flow chart is not an advice.
