Payrolling and temporary agency contracts before 1 January 2020

Until the entry into force of the Wab, payrolling and temporary agency contracts were the same in the legal sense. Both employment relationships were legally qualified as temporary agency contracts. This also meant that, until recently, the legal status and terms of employment of payroll employees and temporary agency workers were in principle the same.

Secondment after 1 January 2020: payrolling or temporary agency contracts?

A secondment agreement may be qualified as both payrolling and temporary agency contracts. Since 4 November 2016 temporary employment contracts are covered by the temporary employment regime if the requirements of Section 7:690 of the Dutch Civil Code are met. It is therefore quite possible that a seconded employee is working on the basis of a temporary agency contract, but is not aware of this. However, it is also possible that a temporary agency contract should be regarded as payrolling. Payrolling is said to exist if (i) the employer has not fulfilled an ‘allocation function’ (meaning that there was no role in the bringing together of offer and demand for temporary employment) and (ii) the employee is assigned exclusively to the hirer. Since the entry into force of the Wab seconded employees whose contracts meet the characteristics of payrolling, fall within the scope of the payrolling measures in this Act. In the event of payrolling, the employee is entitled to equal terms and conditions of employment and an equal position as applies to employees in comparable positions with the hirer. In such (payroll)relationships, temporary employment agency provisions may not (any longer) be used. Therefore, this relationship cannot simply be converted to or classified as a temporary employment relationship.

Unilateral amendment of the agreement

An employer is not entitled to unilaterally change an agreement with his employees. If an employee is offered a change to his contract, he does not necessarily have to agree to this. If, however, an employee’s contract is incorrectly converted into or classified as a temporary employment contract, the employee can turn to the subdistrict court to demand equal terms and conditions of employment and an equal position as applies to employees in comparable positions with the hirer.

Guide to contracting, placement or payrolling

The above once again shows the importance to clearly point out the distinction between different forms of employment relationships. It is important to make a conscious choice and apply the right rules. The Ministery of Social Affairs and Employment recently published a guide in which it considers the distinction between contracting and the provision of manpower such as secondment and payrolling. The guide can be consulted here, but is available in Dutch only.