19 Nov '24
With the Dutch Tax Authority set to enforce the law on so-called ‘false freelancers’ starting January 1, 2025, organizations are reviewing policies for working with self-employed individuals. Here's what you need to know.
The line between employees and self-employed workers has been debated in the Netherlands for years. Legally, an employment contract exists if there is work, pay, and authority - a standard set in 1907. But today, authority looks different than it did back then. For example, a modern employee working flexibly from home often operates more autonomously than a factory worker in 1907 would have done.
In 2023, the Supreme Court's Deliveroo ruling clarified this with criteria to determine if someone is truly self-employed. These include:
Ultimately, real-world practices outweigh written agreements. Even if a model contract states that parties explicitly do not want to enter into an employment agreement, courts may rule that the freelancer is in fact an employee if the practice does not match the paper.
Starting in 2025, the Dutch Tax Authority will actively enforce rules against false self-employment. Penalties may include corrective measures, extra taxes, and fines. Please note: the Tax Authority cannot impose an additional retroactive levy for the period before January 1, 2025, the period in which no enforcement took place.
Apart from this, freelancers themselves can also start civil litigation and argue that they’re employees, using the Deliveroo criteria. If the court agrees, organizations could face significant employer obligations, such as paying for sick leave or wrongful termination claims.
Organizations should review their freelance relationships to identify genuine self-employment versus potential false freelancers. If needed, they can adjust terms or offer employment contracts. Hiring freelancers is still possible, but how you work together with a freelancer in practice is something to think about carefully.
Contact Anton Avedissian, Michelle Westhoeve, or another member of our Employment Law team. We’re here to help!
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