In its judgment of November 6, 2020 (“Municipality of Amsterdam/X”), the Supreme Court states that the intention of the parties plays no significant role in the classification of the employment contract. What is this classification? It is the assessment of whether there is an employment contract (Article 7:610 of the Dutch Civil Code)
1) obligation to perform the work personally;
2) obligation to pay wages;
3) in the service of the employer = authority relationship.
This classification is particularly important in demarcating it from engagement agreements. Since the Groen/Schroevers judgment, the intention of the parties did play a role (Supreme Court, November 14, 1997, ECLI:NL:HR:1997:ZC2495). Until November 2020, the question of what the parties “intended” to agree to was routinely considered in the “holistic” assessment of whether there was an engagement agreement.
The (undesirable?) consequence was that many employers/clients thought they could manipulate the situation and thus the agreement to their advantage. By declaring in the agreement that the parties do not intend to enter into an employment contract, they thought they could circumvent the mandatory employment law regime. Hiring self-employed professionals means lower costs and no dismissal protection. This, and a favorable tax regime for self-employed professionals, has undoubtedly contributed to the enormous surge in flexible working and the number of self-employed professionals in the Netherlands. This group is about twice as large as in other surrounding countries. A growing proportion of the working population does not have a permanent employment contract, which means they cannot make use of the social safety net in the event of illness or unemployment, and they also do not accrue old-age provisions.
The Supreme Court changed course in November 2020, and the rapid growth of self-employed professionals undoubtedly played a role in this. The intention of the parties may not play any role in the classification phase of the employment contract, according to the Supreme Court. Only in the preceding phase, in which the agreements made by the parties are examined, does the intention of the parties play a role. This is according to the Haviltex standard, a general standard for the interpretation of contracts.
The consequences for practice are significant. Employers/clients can no longer “create” an engagement agreement simply because they prefer a (more flexible, cheaper) engagement agreement. They no longer have that in their own hands. It depends on the agreed rights and obligations whether there is an employment contract. If these contain the elements of wages, work and authority relationship, then it is an employment contract according to the law. For example, platform “employers” can no longer easily evade their obligations. They still often take the position that they only bring supply and “self-employed professionals” together. However, the algorithm that regulates this, with the built-in positive and negative incentives, the requirements of availability, have such an influence on the “self-employed” that it can be argued that this is a modern form of authority relationship.
It was not only the Supreme Court that considered it important to draw a line. There is a lot of movement. The wish of many labor lawyers is that labor law undergoes a thorough renovation. An expert group from the VAAN has written the “Code of Work 2025.” They advocate equal legal status and fiscal treatment for all “workers,” and, among other things, a reduction in employer risks. The Borstlap Commission has also made interesting proposals on this. The ball is now in the court of politics; hopefully, decisions can finally be made after the elections.
In our view, it is desirable that only traditional independent entrepreneurs, who are hired for specific expertise on the basis of an engagement agreement, can be hired. This concerns self-employed professionals who (i) are able to negotiate a good hourly rate themselves, (ii) have multiple clients, and (iii) have sufficient income to take out insurance, build up a pension, and invest in themselves. The current development that self-employed professionals are working at the bottom of the labor market, but now even in healthcare and education, is undesirable – not only from an economic point of view, but it also comes at the expense of social cohesion within a company, innovation (the preservation and development of know-how), and leads to even less clarity as to who bears the ultimate responsibility (accountability). If employers want to hire workers on a flexible basis, they can still do so through employment agencies where equal pay, a social safety net, and protection are properly arranged.
See for the entire judgment of the Supreme Court of November 6, 2020: http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:HR:2020:1746)
Code of Work: https://www.wetboekvanwerk.nl/home
Borstlap Commission “In what kind of country do we want to work?”: https://www.rijksoverheid.nl/documenten/rapporten/2020/01/23/rapport-in-wat-voor-land-willen-wij-werken
Conclusion A-G de Bock: http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:PHR:2020:698
