Many organisations work with self-employed workers. Whether they are called self-employed without staff, consultants or freelancers: for most organisations, it is important that these self-employed workers cannot be seen as employees. Only then Dutch dismissal law and continued payment during illness will not apply and the employer avoids additional tax assessments from the tax authorities.
Supreme Court ruling Deliveroo
Already quite some case law is available on the difference between an employee and self-employed workers. On 24 March this year an important ruling was added to this by the Supreme Court in the case of Deliveroo’s meal deliverers. In this ruling, the Supreme Court came to the same conclusion as earlier the Court of Appeal in Amsterdam, namely that the Deliveroo deliverers are working as employees and not as self-employed workers. The ruling provides good guidance on how to assess whether there is an employment contract or a contract with a self-employed worker.
Legal definition of employment contract
The Supreme Court assesses whether the Deliveroo deliverers are employed or self-employed based on the elements of an employment contract. These elements are:
(1) perform labour for a certain period of time
(2) against pay
(3) where a relationship of authority is present
If the aforementioned elements are met, there is an employment contract: whether the parties actually intended to enter into an employment contract is irrelevant for the assessment.
Circumstances relevant for the qualification
In order to assess whether a contract should be classified as an employment contract, all the circumstances taken together are important, such as:
(1) the nature and duration of the work,
(2) the way the work and working hours are determined,
(3) the embedding of the work and the person performing the work in the organisation and business operations for whom the work is performed,
(4) whether or not there is an obligation to perform the work personally,
(5) the manner in which the contractual arrangement of the parties’ relationship was established,
(6) the manner in which remuneration is determined and paid,
(7) the level of these rewards,
(8) whether the person carrying out the work is at commercial risk in doing so.
(9) It may also be of relevance whether the person carrying out the work behaves or is able to behave as an entrepreneur, e.g. in gaining a reputation, in acquisition, in terms of tax treatment, and considering the number of clients for whom he works or has worked and the duration for which he usually commits himself to a particular client.
The weight accorded to an agreement in the contract between the parties also depends on the extent to which that agreement has actual significance for the party doing the work.
Outcome of the Supreme Court Ruling
According to the Supreme Court, the freedom of Deliveroo deliverers to show up if and when they want and to refuse assignments does not prevent them from having an employment contract in this case. It is more of importance what applies when the person concerned does show up and accepts an assignment to work, with what frequency that usually happens and for how long.
The Supreme Court further ruled that also the freedom to be replaced is not in itself incompatible with the existence of an employment contract. This is partly because, in the case of Deliveroo, it did not appear that a deliverer frequently will be replaced by someone else (without Deliveroo’s consent). Nor does it seem possible for a deliverer to contract with Deliveroo and then have his work performed by all kinds of other substitutes at the same time, making this a revenue model.
Like the Court of Appeal, the Supreme Court then concluded that the Deliveroo delivery drivers were not self-employed workers but employees.
It could be inferred from the ruling that modern forms of employment, such as working through a platform (where you can also indicate whether or not you want to take on the assignment), does not necessarily seem to be given much leeway. Also, the element of entrepreneurship seems to gain importance (as a contraindication) as the Supreme Court elaborates this element more than before.
The amount of the remuneration and whether or not the work is embedded in the organisation (in other words, is the work a core activity of an organisation) can play a role in assessing the type of agreement between the parties. As the legislator is in the process of developing more concrete standards in this area, the Supreme Court chose not to elaborate on this more specifically in the ruling. In this regard, the Supreme Court’s ruling refers to the legislator being in the process of developing more concrete standards for the qualification of agreements between parties. In this context, reference is made to, among others: https://open.overheid.nl/documenten/ronl-f98f32872a47dfb3ee3d073cf1273827fdffe0de/pdf (Progress Letter Minister of Social Affairs and Employment and State Secretary of Finance, 16 December 2022, 2022-0000292130).
It reports that efforts should be made to create a more level playing field between the self-employed and the employee and to provide more clarity on when to work as an employee and when to be self-employed. Finally, it calls for more enforcement.
It is the legislator’s intention to give more concrete substance to the element of the relationship of authority. Specific attention will be paid to giving instructions and supervision, whether the work is organisationally embedded (is it a core activity of the organisation?) and whether the contractor is self-employed (the latter being a contraindication for the existence of an employment contract). Also, a legal presumption of the existence of an employment contract will be introduced linked to an hourly rate. When work is done under that rate, it is up to the employer to prove that there is no employment contract after all.
When exactly these concrete standards will be developed and will actually be translated into law is unfortunately still unclear at this moment. Naturally, we will be happy to keep you informed of further developments on this subject. In the meantime, we recommend continuing to pay attention to the correct wording of the agreement with a self-employed worker. The actual performance of the activities should be in line with that agreement.