Legal landscape

Deregulation Assessment of Employment Relationships Act (DBA Act)

The DBA Act was introduced in 2016 to clarify the working relationship between clients and independent contractors and to address false self-employment. As from 1 January 2025, the tax authorities have started enforcing the DBA Act against false self-employment. Initially, this was only done in cases of malicious intent. 

Act Clarifying Assessment of Employment Relationships and Legal Presumption (VBAR Act)

The VBAR Act is currently pending as a legislative proposal and is proposed to replace the DBA Act. The VBAR Act introduces two main criteria:

• Legal presumption of employment contract: Individuals earning EUR 33 (reference date 1 July 2023) or less per hour (excluding VAT) are presumed to have an employment contract. This amount is adjusted every six months based on the increase in the minimum wage.
• Clarification of the authority criterion: This criterion helps determine whether there is an employment relationship or self-employment. According to the VBAR Act, it should be assessed whether:
  • The work is performed under work-related direction by the employer.
  • The work or the employee is organizationally embedded in the employer's organization.
  • The employee does not perform the work for his or her own account and risk.

If it is not possible to draw a clear conclusion based on the above initial three points, a fourth criterion is introduced: the general manifestation of the self-employed person. At this stage, rather than focusing solely on the individual employment relationship, all assignments undertaken by the worker – so including those with external parties – are considered to determine whether there is evidence of entrepreneurship, aligning with the current methodology.

The VBAR Act will not enter into force before 1 January 2026.

Criteria Supreme Court

In a previous landmark case, the Supreme Court formulated nine criteria to assess whether an agreement should be classified as an employment contract. These criteria are not exhaustive and must be considered in conjunction. The main criteria can be summarized as follows:

• The nature and duration of the work: This concerns the core activities of the company and whether the work has a structural character.
• Embedding in the organization: Whether the work is embedded in the organization of the employer, such as the workplace and working hours.
• Authority relationship: Whether there is an authority relationship where the employer can give instructions on how the work should be performed.
• Entrepreneurship: Whether the person performing the work behaves or can behave as an entrepreneur in the economic market, for example, in terms of reputation building, acquisition, tax treatment, and the number of clients.

In a recent ruling on this topic, the Supreme Court provided further clarification regarding the criterion of 'entrepreneurship'. It confirmed that there is no hierarchy in the nine criteria previously formulated by the Supreme Court. Thus, the circumstance of 'entrepreneurship' is no less important than the other circumstances. The Supreme Court sees no reason for such an order of precedence now either. It cannot be ruled out that for the qualification assessment, it is decisive whether the employee acts, or can act, as an entrepreneur, even if other circumstances point to an employment contract. It may therefore be the case that the relationship in respect of the same work, performed for the same client, is not an employment contract for a worker with 'entrepreneurship' and is for a worker without 'entrepreneurship'. Also, both internal and external entrepreneurship play a role in the assessment. The assessment of whether the person performing the work behaves, or can behave, as entrepreneur in the economic market also includes circumstances not limited to the relationship governed by the agreement between the person performing the work and the client/employer.

Key takeaways from the Supreme Court's ruling are:

• The different legal relationships of employees and contractors can co-exist when it comes to the same work that is being carried out at the same client/employer.
• The assessment of whether an agreement qualifies as an employment contract is not a straightforward exercise and this requires a comprehensive and holistic approach of all circumstances at hand. 

It remains to be seen how the Supreme Court's ruling will impact the VBAR Act considering that the VBAR Act does introduce a specific hierarchy. As noted above, according to the VBAR Act, external entrepreneurship is only taken into account if the existing arrangements within the working relationship do not already indicate whether the nature of the work is self-employment or employment.

Explanatory note tax authorities

Meanwhile, the tax authorities have issued an explanatory note on the assessment of labor relations. This document provides a detailed interpretation of the nine criteria established by the Supreme Court, clarifying when facts and circumstances indicate working as an employee (and thus an employment contract) versus working as a self-employed person.

Key takeaways 

Assessing whether someone is an employee or self-employed can be challenging, especially with the constantly changing legal framework. The tax authorities are now actively targeting false self-employment. It is crucial for Dutch employers to thoroughly analyze their relationships with self-employed personnel. Properly qualifying employment relationships can mitigate tax, employment, and pension risks, so seeking integrated advice in these areas is recommended.

Key takeaways:

• Companies should review their flexible working pool to ensure compliance and a future-proof workforce.
• It is crucial to assess and address any instances of false self-employment within the organization and to take adequate actions to minimize risks by amending the working relationship or the method of hiring.
• Implementing risk mitigation measures and establishing or reviewing controls for monitoring and testing false self-employment are essential steps to adequately address enforcement changes.

If you have any questions about how these developments may affect your company, please feel free to reach out to Mirjam de Blécourt, Danielle Pinedo and Lotte Ozinga.