New legislation regarding self-employed persons
In October 2023, the draft bill ‘Clarification Assessment of Employment Relationships and Legal Presumption’ was submitted for internet consultation. The bill aims, among other things, to combat false self-employment. In addition, the bill introduces a legal presumption of employment through which, in principle, an employment relationship exists when the remuneration for work performed does not exceed €32.24 per hour.
Clarification of definition of employment contract
The purpose of the bill is firstly to combat false self-employment. The government hopes that the bill will make it easier for vulnerable workers to claim their legal status and thus take advantage of the rights and protection they are entitled to. Whether there is employer’s authority, one of the conditions for the existence of an employment contract, will be tested on the basis of the following criteria:
A. Criterion: is there work-related management?
This is the case if the employer is authorized to give directions and instructions about how the worker must carry out the work and the worker must also follow these directions and instructions. There is also work-related management if the employer has the opportunity to monitor the worker and is authorized to intervene.
B. Criterion: is there organizational embedding?
To determine whether there is organizational embedding, a number of elements are examined. Indications are whether the work is performed within the organizational framework of the organization, belongs to the core activity of the organization, has a structural character and whether it is performed side-by-side with employees who perform similar work.
If there is a main element A and/or B, the next step is to test against the C criterion. If A and B outweigh C, there is an employment contract. If C weighs more heavily than A and B, then there is no employment contract.
C. Criterion: is work performed at own expense and risk?
According to the legislator, work is performed at one’s own expense and risk if the worker bears the financial risks, the worker is responsible for the tools and aids, the worker possesses specific knowledge not yet available within the organization, the worker acts independently and, finally, whether there is a short duration of the assignment or a limited scope of work.
If the weighting between A/B and C does not provide sufficient clarity, the C+ criterion can still be tested. This involves looking at how the worker generally expresses himself in economic life. For example, importance is attributed to the fact that the worker has more clients or not.
Our expectation is that many self-employed people will qualify as employees as a result of these proposed changes. The question is whether this consequence is intended by the government since there are approximately 1.2 million self-employed people in the Netherlands.
Legal presumption
In addition to the above, the bill introduces a legal presumption that there is in any case an employment relationship when the compensation for work performed does not exceed € 32.24 (the amount as at 1 July 2023) per hour. It is then up to the employer to refute this.
Finally
The intended effective date is 1 July 2025. We will closely monitor the progress of this bill. If you would like further information on the details mentioned above or would like to know how this bill may affect your specific circumstances, please do not hesitate to contact us.
