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21 Nov 2023 New legislation on the way: self-employment. When self-employed, when employed?

In October 2023, an internet consultation was launched regarding a bill on working with self-employed persons. The aim of this proposal is to provide more certainty for both clients and contractors and combat false self-employment.

When self-employed, when employee?

A client may choose to have certain work performed by a self-employed person. When, in practice, the relationship between the client and the self-employed person meets all the requirements set by law for the existence of an employment contract, there is 'false self-employment'. This is the case when the worker 'performs labour in the service of the other party, for pay for a certain period of time'. The 'employed by' requirement expresses the existence of a relationship of authority between the employer and employee.

It is not always easy for the client to determine whether there is a relationship of authority. The bill contains a further elaboration and definition of this concept.

Criteria

The bill provides for an addition to Section 610 of Book 7 of the Civil Code (BW) based on existing case law. According to the proposed provision, the relationship will first have to be assessed by testing whether there is 'work-related direction' or 'embedding in the organisation'. These two elements indicate the existence of an employer-employee relationship. When neither element is present, there is also no employment contract and work can be done on the basis of an assignment contract.

When at least one of these elements is present, the third element, 'entrepreneurship', is tested. When the employee 'works for his own account and risk', this counts as a contraindication for the existence of an employment contract. Each case will have to be assessed on its merits. It is important here that the contraindication (working on one's own account and at one's own risk) is in principle only assessed 'within the employment relationship in question'. Only when insufficient clarity is obtained on this basis, the way in which the employee presents himself more generally in economic life will be included in the assessment.

An Order in Council will lay down further rules on the interpretation of the above-mentioned elements. This decree should also provide more clarity for the situation where there is a similar degree of both work-related management by the employer or embedding in the organisation and the performance of work at one's own expense and risk.

Hourly rate decisive

In addition to the framing of the concept 'employed by', the proposal introduces a legal presumption based on hourly rate. When work is performed for an amount not exceeding €32.24 per hour, an employment contract is presumed. It is then up to the employer to prove that there is no employment contract. This amount is periodically adjusted by the percentage increase in the minimum wage.

What does this mean?

The introduction of a legal presumption based on the hourly rate may have far-reaching consequences for practice. After all, many self-employed persons are currently likely to be working on the basis of a lower rate. The introduction of a presumption is expected to have a major preventive effect. The further framing of the employer-employee relationship may be less drastic as the (contra-)indications are based on already existing case law. An important difference with current practice, however, is that under the bill, the entrepreneurship of the self-employed worker will initially be assessed only within the relevant employment relationship. This means that, in principle, whether and for how many other clients are worked is not taken into account. However, this is currently a relevant circumstance that is directly taken into account.

Incidentally, the intended date of entry into force of the new legislation is 1 July 2025. No transitional law has been provided for the time being.

Before the bill can enter into force, it will have to be approved by the Senate and the House of Representatives after the internet consultation.

Conclusion

It is wise to be well informed about your rights, obligations and possibilities. This applies to both clients and contractors. Having a good written agreement drawn up is also very important. The lawyers at SPEE advocaten & mediation will be happy to assist you.

SPEE advocaten & mediation Maastricht

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