BenefitsBit: New legislation for self-employed workers postponed
On 26 November 2018, the Minister for Social Affairs and Employment, Mr. W. Koolmees, presented a Letter to Parliament about the state of affairs concerning the Dutch Assessment of Employment Relationships Deregulation Act (the DBA Act).
The intended entry into force of the successor of the DBA Act will be postponed until 1 January 2021. In the coalition agreement at the end of 2017, plans were announced to replace the DBA act. The government considers it necessary to take new measures aimed at countering false self-employment and clarifying current regulations for companies that conclude contracts with self-employed workers. In the letter to the House of Representatives of 26 November 2018, the minister discusses the progress made. It concerns the following four measures, in order of expected entry into force:
Clarification of the authority requirement (1 January 2019)
The cabinet wants to provide companies with more insight on how to determine whether there is an authoritative relationship between a company and a contractor or not. This element is one of the greatest obstacles for companies and contractors when determining whether there is a relationship of employment or not. To that extent, the cabinet has published explanatory notes, which will be added as an addendum to the Tax and Customs Administration’s manual for payroll taxes on 1 January 2019 at the latest. The explanation is based on the current legislation and the current status of case law. Thus the explanation does not contain any new legislation, but it provides companies that work with contractors more clarification of the current rules. It is important for companies to have their affairs in order, despite the suspension of the enforcement of the current DBA Act. As we informed you in one of our newsletters, the enforcement is not suspended for parties with malicious intent, and since 1 July 2018 the scope of enforcement has been enlarged to include all parties with a malicious intent. In its letter to the House of Representatives earlier this week, the minister of Social Affairs wrote that the Tax and Customs Administration has already started their announced visits to businesses that work with contractors, i.e. commissioning parties. Besides these visits, this issue is also checked during the Tax and Customs Administration’s regular payroll taxes inspections, or it can come up during the Inspectorate SZW’s supervision of compliance with employment laws.
Declaration (at the end of 2019)
The government is currently working on a web module that will provide employers to obtain a declaration, if it appears that an employer-employee relationship doesn’t exist, based on their answers. This declaration provides for security for the indemnity of income tax, employee insurance contributions and the income-related healthcare insurance contribution. The foregoing doesn’t apply if in actual practice work is being carried out contrary to the provisions indicated earlier in the web module. In that case, an employment contract may exist, with all the associated employment law and tax consequences. Furthermore, the government specifies that the web module will not produce a declaration in cases no conclusions can be drawn from the survey, and to hold preliminary consultations with the Tax and Customs Administration will remain possible. The government intends to finish the web module at the end of 2019. An update on the progress is expected during summer 2019.
Opt-out for high-rated self-employed workers (1 January 2021)
At the top end of the labour market, an opt-out of the tax and employee insurance premiums is to be introduced. This provides security for businesses that they won’t be confronted with retrospective demands. The opt-out settlement is currently being worked out, see the Annex to the Letter to Parliament and the SEO-investigation, which is also added. It seems that the opt-out possibility will apply to self-employed workers with an hourly rate of EUR 75 or higher. It is intended that this legislation will have effect as from 1 January 2021.
Measures to protect self-employed workers at the lower end of the labour market (1 January 2021)
Measures designed to ensure the protection of the lower end of the ‘self-employed workers’ haven’t been well clarified yet. The government wants to render lengthy hiring (more than 3 months) of self-employed workers with low wages impossible. Thereto, the government proposed to convert the contract for services into an employment contract after three months, in situations in which the self-employed person is actually considered to be an employee. However, according to the European Commission, this is in not in accordance with EU law. Therefore, the government will look for alternatives, such as a minimum rate for self-employed workers.
For any advice or for further questions on this topic, please contact Edith Franssen, Ralph Ferouge or your regular Loyens & Loeff adviser.
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Edith FranssenSenior associate Attorney at law
Edith Franssen, attorney at law, is a member of the Employment & Benefits practice group in our Rotterdam office. She focuses on international mobility, especially in the maritime and transport sector.T: +31 10 224 64 53 E: firstname.lastname@example.org