Big changes for the self-employed? - by Geke Brokkelkamp
The Dutch Supreme Court is expected to issue its long-awaited ruling in the Deliveroo case in late March. The Government is likewise dealing with the issue of (false) self-employed workers in the employment market. Years of growing numbers of self-employed workers has its benefits but also puts pressure on solidarity within the social and tax systems. What is more, many self-employed workers are not really that self-employed. The Government is therefore preparing several measures for those working as or with self-employed workers by means of a progress letter. The main points are:
- achieving a more level playing field for contract types in terms of employment law, social security and taxation;
- greater clarity in assessing employment relationships and supporting workers in claiming their legal status; and
- improving regulation and enforcement in relation to false self-employment.
1. Working like an employee but as a self-employed worker
The first point involves extending certain measures that apply to employees to the self-employed. This will create a more level playing field. For example, employee income is now taxed more heavily than the income of the self-employed. This means that hiring self-employed workers is cheaper than hiring employees while self-employed workers are actually generating a higher net income.
The self-employment deduction will therefore be phased out more rapidly, as will the tax-deferred retirement reserve for the self-employed (FOR). Other measures include mandatory disability for work insurance for the self-employed (AOV), the introduction of collective bargaining for the self-employed, and strengthening the position of the self-employed within the Social and Economic Council (SER).
2. Employee or self-employed?
The Government also recognises the differences between employees and the self-employed. This is why it wants to clarify the regulations on assessing employment relationships to reduce the grey area between employees and the self-employed. Most strikingly, the Government wants to clarify the authority criterion (working in the employment of), a requirement for the existence of an employment contract. In assessing the authority criterion, the Government recognises three elements which are in line with existing case law:
- material authority (providing instructions and supervising);
- the work being embedded in the employer’s company; and
- self-employment (an important antithesis to the existence of an employment contract).
It is noteworthy that the Government has not waited for the Deliveroo ruling, given that this is expected to clarify what embedding work in the company means. According to AG De Bock, embedding will easily be assumed “if the work is an essential part of the business“. That would make hiring self-employed workers more difficult.
The Government is also working on a legal presumption based on hourly rates. This would allow a worker, if he or she is working on the basis of a maximum rate yet to be determined, to claim that he or she is working on the basis of an employment contract. The employer can rebut this legal presumption.
It should be noted that this legal presumption would only apply between the employer and employee and would not extend to tax and social security laws.
The Government plans to submit a bill to the Dutch House of Representatives in early 2024 with 1 January 2025 as the intended effective date.
3. Enforcement against false self-employment
The final point is strengthening and improving enforcement against false self-employment. The aim is to lift the current enforcement moratorium by 1 January 2025. This means that until that date, enforcement will be confined to cases involving bad faith or failure to follow instructions from the Dutch Tax and Customs Administration.
The Government still has much work to do before these changes are a reality, but it is clear that the situation of those working as and with self-employed workers will change considerably. Employers would do well to consider now what impact this may have on their business operations and whether they should prepare for the change in work processes for which they employ self-employed workers.