Tax & Legal 16 November, 2023

Clarifying employment relationships with self-employed individuals in the Netherlands 

ZZP wet
Crowe Peak/ Knowledge Hub/ Tax & Legal/

Clarifying employment relationships with self-employed individuals in the Netherlands 

Many organizations that employ individuals in the Netherlands grapple with a delicate issue: distinguishing between contracting a self-employed individual (ZZP’er) and inadvertently establishing a Dutch law employment relationship. In response to this challenge, the Dutch cabinet Rutte IV introduced a labor market package in April 2023, aiming to clarify this distinction through legislation. The proposed law seeks to address the issue of “false self-employment” while granting more flexibility to entrepreneurs opting for self-employment.

The bill, officially titled “Verduidelijking beoordeling arbeidsrelaties en rechtsvermoeden” (Clarification of assessment of employment relations and legal presumption), entered the public consultation phase on October 6, 2023, under the guidance of Minister Van Gennip of Social Affairs and Employment. Public input is invited through this consultation, allowing citizens and stakeholders to provide feedback on the proposed legislation. As this bill progresses through the consultation process, it represents a crucial step toward providing much-needed clarity for both employers and self-employed individuals in the Netherlands. If your organization requires guidance on employment contracts and agreements with self-employed individuals, Crowe Peak’s labor and employment law experts are happy to assist you. Feel free to contact us for advice. 

Proposed legislation

The bill mentioned above aims to clarify the regulations governing the engagement of employees and self-employed individuals. This is prompted by the frequent occurrence, within the existing Dutch legal framework, of situations where an individual contracted as a “self-employed person” based on their contract title is still considered an employee in a legal context. This disparity between the contractual agreement and the actual legal status can have significant (financial) implications for both the employer and the employee, particularly in areas such as social security, disability to work, and dismissal. 

As per existing laws and judicial precedents, the determination of whether an individual qualifies as an “employee” (indicating an employment relationship rather than a legal relationship as a self-employed person) in the Netherlands primarily hinges on whether there are indications in the actual relationship between the employer and the individual that point toward an employment status. However, this approach can lead to undesirable outcomes for both parties. The proposed law seeks to rectify this by incorporating indicators favoring self-employment in the assessment of the (employment) relationship. 

According to the Dutch government, this bill aims to restore equilibrium between engagements with self-employed individuals and those with employees. Also, the law continues to assist workers with limited bargaining power in asserting their employment contract rights based on the actual relationship with the employer. If you are uncertain whether your organization engages entrepreneurs who may qualify as employees, seek advice. Schedule an appointment here. 

Enhancement of the ‘Working in the service of’ criterion 

If the bill is enacted, a revised assessment framework will be implemented to determine the nature of the working relationship—whether it constitutes traditional employment or involves a legal arrangement with a self-employed individual/entrepreneur. This framework will encompass the following key elements: 

A. Work-related Management 

  • Examines how the individual is supervised and whether there is a directive authority. 
  • Evaluates the degree of autonomy the individual enjoys or if they operate under the guidance of another. 

B. Organizational Embedding 

  • Assesses whether the assigned work aligns with the organization’s core activities. 
  • Explores whether the individual performs tasks integral to the organization on a consistent basis. 
  • Considers whether the individual engages in similar work as regular employees. 

C. Working at Own Account and Risk 

  • Investigates the individual’s independence and assumption of responsibility. 
  • Scrutinizes if the individual is accountable for tools/resources. 
  • Considers whether the individual works autonomously and if the engagement is project-based or limited to specific weekly hours. 

C+. External Entrepreneurship 

  • Becomes a decisive factor if elements A, B, or C do not provide a conclusive answer. 
  • Examines whether the individual serves multiple clients annually. 
  • Considers if the individual invests time/money in building a reputation and acquiring new clients. 
  • Evaluates if there are substantial business investments. 
  • Considers whether the individual adheres to administrative practices typical of an independent entrepreneur. 

During the application of this updated assessment framework, the initial determination involves establishing the presence of elements A, B, and/or C. The presence of A and/or B suggests an employment contract, while C serves as a counterindication (indicating a contract with a self-employed individual). Subsequently, a weighing process occurs. In cases of inconclusive assessments, the decisive factor becomes element C+. 

Introduction of legal presumption for the existence of an employment contract 

In tandem with the evaluation framework outlined above, the bill introduces a novel concept—the “legal presumption.” This legal presumption entails a legal inference drawn from factual circumstances, where the law assumes a statement to be true unless evidence to the contrary is presented. According to the provisions of the present bill, if an employee substantiates that the hourly rate falls below €32.34, an employment contract is presumed. In the event an employer asserts the status of self-employment, the burden of proof shifts to the employer to substantiate this claim. 

Next steps in the legislative process 

As of November 10, 2023, the online consultation phase is concluded, and then the Dutch Cabinet will determine the manner and, if necessary, the adjusted format in which the bill will be presented to the House of Representatives (Tweede Kamer). Crowe Peak is ready to provide guidance on engaging with self-employed individuals. Interested in learning more? Reach out to one of our specialists. 

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