An interesting new law has been created in The Netherlands which clarifies the characteristics of being genuinely self-employed vs being an employee, and presumes that anyone earning below € 32.24 per hour is an employee by default.
Assessing employment status
Self-employment will be assessed on the basis of three main elements:
- work-related management: is there a power of instruction by the engager and can the worker control the activities?
- organisational embedding: are the activities part of the core activity of the business, are they carried out side by side with employees doing similar work?
- working on own account and risk: does the worker take the financial risk for the work, is the worker responsible for providing tools/equipment, is it a temporary assignment or limited in number of hours per week?
Alongside these main elements, there are tools to quantify whether it is an employment relationship or self-employment. The overall aim is to bring about clarity and ensure that employment status is assessed consistently throughout The Netherlands.
Presumption of employment relationship
Interestingly the new law includes a presumption that a worker is an employee if they earn below € 32.24 per hour. If someone can prove that they earn below this amount, they are a de facto employee and entitled to receive all accompanying benefits and protections. The burden of proof to disprove the employment relationship then falls on the employer.
The new legal presumption will make it easier for vulnerable workers to enforce their employee status, and should ultimately eradicate false self-employment.
Will the new laws be any good?
The Dutch legislation appears to be very sensible, so it will be interesting to see how this is implemented in practice. The simplicity of assessing self-employment is appealing, particularly as this means it should be easily applied in all circumstances, and it’s a vast improvement on the UK’s IR35 and off-payroll legislation.
There is huge potential to eradicate false self-employment through the new earnings threshold and accompanying presumption of employment. It’s a fascinating idea, one that we have previously discussed with HMRC policymakers here in the UK, but they have so far been unwilling to consider it as a viable option.
So if The Netherlands can simplify employment status and eradicate false self-employment, why can’t we do the same here in the UK?