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29 Mar 2024 Management agreement assessed under Deliveroo criterion

Both on the legislative level and in case law, there is much debate about the qualification question: is an employee self-employed or still an employee? In a recent ruling by the District Court of Midden-Nederland, a management agreement is assessed based on the criteria formulated in the Deliveroo judgment of the Supreme Court. You can read more here:

What were the facts?

At issue were management agreements dated January 22, 2021, in which it was agreed that two gentlemen and a lady would perform management services for the company through their personal holdings. That, of course, is a construction the we see more often. Together they formed the management team: the first man was ceo, the second man ccso and the woman acted as cco (chief commercial officer). Long story short: the two men eventually decide that the woman should leave the company. On December 4, 2023, the woman is dismissed as statutory director by the shareholders.

But according to the woman, this cannot be done just like that: she argues that her management contract is actually to be regarded as an employment contract and not an assignment contract. In that case, her dismissal by the shareholders' meeting does not lead to the end of her employment contract.

What does the court rule?

The subdistrict court here applies the testing framework of the Supreme Court in the Deliveroo judgment. The crux of the case is: is there a relationship of authority between the company and the woman? The following points come into play:

  • The nature and duration of the work:the woman is co-founder of the company. The fact that she formed the MT of the company together with the two others, and was ultimately responsible for the sales and marketing team as cco, points towards entrepreneurship and a contract of assignment.
  • The manner of determining work and working hours:the woman was free to determine how and when she performed her work. No performance reviews were held and she received no instructions from the co-directors. The woman did not occupy a subordinate position in relation to her co-directors.
  • The embedding of the work and the person performing the work in the organization and business operations of the person for whom the work is performed:this is not sufficiently distinctive, according to the subdistrict court judge. In this case there may be an employment contract but also a contract of assignment.
  • Whether or not there was an obligation to perform the work personally:the woman was required to perform the work personally, but could be replaced under the management agreement. This did not occur. According to the subdistrict court, however, it is natural for a cco to perform her duties personally. This does not necessarily mean that there is an employment contract in this case.
  • The manner in which the contractual arrangement of the relationship between the parties came about:the woman had always presented herself as an entrepreneur and wanted to do so. Moreover, she had taken expert advice on entering into a management agreement.
  • The manner in which the remuneration was determined and paid:the woman invoiced her management fee through her holding company and charged VAT. No contributions and taxes were withheld and remitted. She arranged the remittances and pension accruals herself. This points toward an assignment agreement.
  • The amount of remuneration:the woman received a management fee of €8,000 per month, which was continued to be paid during her pregnancy. However, according to the subdistrict court, this does not point to employee status.
  • The question of whether the person performing the work was running a commercial risk:according to the woman, she was not running a commercial risk, but the subdistrict court did not agree.
  • The question of whether the person performing the work behaved or could act as an entrepreneur in the course of business:this points to a contract of assignment, since the woman was general manager and had sole and independent authority. She behaved both internally and externally as an entrepreneur and founder of the company.
    .

Conclusion

Conclusion: based on the Deliveroo criteria, the conclusion is that there is a contract of assignment and not an employment contract. The Subdistrict Court also commented:'Insofar as the Deliveroo criteria apply one-to-one in a situation like this, in which there is a professional who has deliberately become an entrepreneur and occupies a high position within the company.

You can read this ruling here.

In our opinion, this ruling gives some direction to the position of a statutory director with a management agreement. Also labor law questions? SPEE lawyers & mediation is your trusted point of contact.

SPEE advocaten & mediation Maastricht

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