Dutch employment law is based on a premise of inequality of bargaining power between the employer and the employee. Therefore the law provides protection to employees against dismissal but also in the form of, for example, minimum wage requirements, limited probationary periods, mandatory number of holidays, holiday allowance and a continued payment of wages during the first two years of illness.
Due to employee protection (and the level of social security premiums) employers may be exposed to costs and risks. Employers therefore look for alternative, more flexible, ways to get the work done, for example through a service agreement with an independent (self-employed) worker. Independent workers who perform work on the basis of a service agreement are, in principle, not protected by Dutch employment law and, for example, not entitled to dismissal protection, leave entitlements or continued payment of wages during (the first two years of) illness. The number of independent workers in the Netherlands has increased during the last couple of years and there are currently 1.3 million independent workers (as against seven million employees) working in the Netherlands. The increase of independent workers is particularly visible in the construction, care and ICT sectors.
It seems in practice difficult to make a clear distinction between "real" independent workers and "more involuntary" independent workers. If parties are in disagreement about whether the relationship should qualify as an employment relationship, they can request the court to assess the nature of the agreement. The agreement should qualify as an employment agreement if the following – by Dutch law prescribed criteria – are met:
- The work is carried out personally by the employee (the employee cannot decide to provide a replacement worker to his employer);
- There is an authority relationship between the employer and employee (the employer is entitled to give mandatory instructions about the performance, timing, location, method and execution of the work);
- The employee receives remuneration for the work performed.
Whilst assessing whether the criteria are met, the court will take into account the parties intentions (what is written down in the agreement), but also all the other circumstances around the actual execution of the agreement (including but not limited to the social and economic position of the worker, the entrepreneurial risk, the options for replacement and the freedom of the worker in the execution of the work). Substance prevails over form.
Interesting Dutch case law indicates that it inevitably depends on all the circumstances of the case whether the service agreement of an independent worker should be (re)qualified as an employee agreement. This became clearly evident when nine parcel deliverers who were working for the same delivery company, under similar circumstances, argued that their service agreement should be (re)qualified as an employment agreement. Different courts ruled that the working relationship of three of the nine deliverers must be (re)qualified as an employment agreement, whilst the relationship of the other six deliverers was qualified as a service agreement. The criterion that the work should be carried out personally seemed decisive in the rulings, because the six "independent" workers had themselves sometimes been replaced by others to deliver the packages.
In comparison to employees, independent workers receive less protection. This seems no real problem when independent workers are actually entrepreneurs who perform their duties in freedom enjoying the fiscal advantages of the "free" status. However, the lack of protection seems to cause problems when independent workers perform low-skilled work, where it is questionable whether they have full freedom in the performance of the activities and can negotiate their remuneration. In this case the independent worker can ask a court to determine that the agreement should (with retroactive effect) be reclassified as an employment agreement invoking the corresponding protection.