Developments in Employment law

Internet consultation on the Act Clarifying the Assessment of Employment Relationships and Legal Presumption of Employment Contract

On 6 October 2023, the internet consultation on the Act Clarifying the Assessment of Employment Relationships and Legal Presumption of Employment Contract (Wet verduidelijking beoordeling arbeidsrelaties en rechtsvermoeden) was launched. The aim is to clarify the rules for working with employees and self-employed persons. As a result, it will be easier for workers and parties issuing work to know whether certain work may be performed by a self-employed person or needs to be performed by an employee (based on an employment contract).

For certain contracts, it is difficult to determine how work is to be performed. This grey area is partly due to the open-ended manner in which the legislation is formulated. Over the years, the open-ended legislation has been given further substance by case law and, in some cases, it provides a large body of relevant facts and circumstances that could potentially be relevant to the outcome. In addition, people work differently today than they did a few years ago, for instance by working from home or by working through a platform or app (Deliveroo). The government therefore sees reason to amend the law to reflect these changes.

Among other things, the law requires for employment contracts that an employee performs work while employed by an employer.

The legislative proposal clarifies when someone is “employed by”: there must be (1) work-related direction or (2) organisational embedding. If any one of these elements are not present, then there is no question of being “employed by”. If any one of these elements is present, then it should be considered whether the worker works (3) at their own risk and expense. If the latter is the case, it means that there is no relationship of authority and there is no question of an employment contract. The legislative proposal clarifies the foregoing elements as follows.

There is work-related direction if:

1. The party issuing work is authorised to give directions and instructions on how the worker should perform the work and the worker is required to follow these directions and instructions;
2. The party issuing work has the ability to monitor the work performed by the worker and is authorised to intervene on that basis.

There is organisational embedding if:

1. The work is performed within the organisational framework of the organisation of the party issuing work.
2. The work is part of the organisation's core business;
3. The work is of a structural nature within the organisation;
4. Work is performed side-by-side with employees performing similar work.

The work is performed at the worker's own risk and expense if:

1. The worker bears the financial risks of the work and enjoys the financial rewards thereof;
2. When performing the work, the worker themself is responsible for tools, equipment and materials;
3. The worker possesses a specific education, work experience, knowledge or skills not structurally present within the organisation of the party issuing work;
4. The worker is acting independently during the performance of the work;
5. The contract has a short duration and/or involves a limited number of hours per week.

In addition, a legal presumption of the existence of an employment contract is proposed. This means that an employment contract is presumed to exist if a worker is hired at an hourly rate lower than EUR 32,24. The party issuing work will then need to prove that, in spite of the legal presumption, no employment contract exists.

This proposal is one of the measures through which the government wants to combat false self-employment and wants to provide more space for actual economic operators. This is only an internet consultation, which means that amendments can still be made to the legislative proposal.

We will, of course, keep you updated on the developments!

"Work Where You Want" Act rejected

The legislative proposal for the “Work Where You Want” Act (Wet Werken waar je wilt) was rejected by the Dutch Senate on 26 September 2023.

This legislative proposal was to amend the Flexible Working Act (Wet flexibel werken (Wfw)) and was aimed at giving the employee the right to request to work from home (residence) or from another location of the employer (within the EU). The employer would be able to reject such a request only on the basis of a weighing of interests based on the principles of reasonableness and fairness. The legislative proposal would give the employee a stronger position from a legal point of view, while the employer would retain its freedom in terms of customisation.

During the debate on 12 September 2023, most political groups seemed to be sympathetic to the legislative proposal, although some spokespersons did question its use and need (many employers have already made agreements on working from home and this usually proves to work well in practice). There were, however, concerns about the regulatory burden for employers and about workers in border regions (in terms of social security and taxation, despite the Framework Agreement on Cross-Border Workers (Kaderovereenkomst grenswerkers) signed by the Netherlands regarding social security).

In short, the legislative proposal was rejected, abandoning the “Work Where You Want" Act for good.

Approval of “free substitution” model agreements withdrawn

The Tax and Customs Administration will withdraw its approval of model agreements based on free substitution effective 1 January 2024. An approval model agreement is a document assessed by the Tax and Customs Administration. It contains agreements that clarify the employment relationship between a contractor and a client. If they work according to an approved model agreement, their relationship will not be deemed to constitute an employer-employee relationship.

These agreements are based on the assumption that, among other things, the contractor is an independent contractor if the agreement stipulates that they can be substituted freely. Because the Supreme Court, in its recent ruling in the case between trade union FNV and Deliveroo, held that free substitution may also be at hand in the case of an employment contract, these model contracts are no longer tenable. The withdrawal takes effect on 1 January 2024 in order to allow the client and contractor to reassess the employment relationship.

Should the Tax and Customs Administration conduct an investigation at the client that reveals that there is an employment relationship between the client and the contractor, this will not immediately lead to corrections and additional tax assessments for the time being (except in the case of malicious intent). In those situations, an instruction to the client to adjust the employment relationship will be issued first. Once the enforcement moratorium is lifted (the ambition is to do this by no later than 1 January 2025), corrections and additional tax assessments at the client will be possible.

In our latest Liber Dock Talks, Linda Brouwer and Heleen Foesenek will update you on inappropriate behaviour in the workplace. Among other things, they discuss what things you need to put in place as an employer and what online and offline tools are useful in that regard. We also discuss the things that we regularly see going wrong in practice and provide tips and tricks that can help you out when receiving a report of inappropriate behaviour.

Click on the link below to watch the video: Liber Dock Talks

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