Employment Status in the Gig Economy Global 2020 NRF Publication – The Netherlands

What is the state of law on the status of gig workers today?

The percentage of the Dutch working population active in the gig economy ranges - dependent on the definition used –to a range between 0.4% and 10.6%.

In the Netherlands, workers are either employees or self-employed persons. To qualify as an employment agreement under Dutch law, the following three key criteria need to be met: 

1. The employer is entitled to give instructions as to how the work is to be carried out (relationship of authority);
2. The work is to be carried out personally (exclusively) by the worker; and
3. the worker receives remuneration (wages) for his work from the employer.

If these key criteria are met, then, notwithstanding any agreement between parties to the contrary, the agreement is classified as an employment contract (substance over form). Factual elements taken into consideration are, for example, the freedom of the worker regarding the organization of his work, the freedom to substitute, and whether the worker is paid during holiday and illness.

In recent years, discussions have taken place in the Netherlands regarding the future of the employment contract. Concerns have been raised about the steady decline of permanent employment contracts and the increase in other forms of employment relationships such as self employment, gig economy work, freelance work and other forms of flexible working arrangements. This trend is widely seen as an increasingly urgent social problem and an undermining of the Dutch social security system.

In 2018 a government committee was established to investigate the labour market in the Netherlands and advise on regulating the employment relationship. In January 2020, it published its report. One of its recommendations was to create a clear and fair distinction between employees and self-employed persons. This could be achieved by bringing the definition in line with European jurisprudence, which sets out that consideration of the worker’s integration in the organisation and the nature of the work should be key criteria in establishing an employment relationship.

What are the grey areas in the law?

The main difficulty regarding the test for establishing employment status is that the test is a factual one and as such is determined on a case-by-case basis. The result depends on the facts and circumstances of the specific case.

Further, with the rise of digital platforms, the level of control over the worker (authority) and how this can be established is under scrutiny. For example, do algorithms result in such a degree of control that these amount to an employer giving instructions? The control requirement is now interpreted differently, especially in lower tribunals.

However, the central discussions seems to be the social and political issues around platform workers being classified as self-employed workers and so enjoying less protection than standard employees.

Finally, there is also a lack of clarity from a tax perspective. From 1 May 2016, the Deregulation Assessment of Employment Relations Act (DBA Act) applies. The DBA Act provides for the use of model agreements when contracting with self-employed persons. However, soon after the introduction of the DBA Act enforcement was largely frozen, as it did not provide the clarity envisaged.

What legal developments are expected in the future?

According to the latest update from the Ministry of Social Affairs, the following steps will be taken in the coming months:

• Legal presumption: the government will consider a presumption of an employment relationship for gig economy workers. The government recognizes that the test for establishing employment status lacks clarity. A legal presumption can be a useful aid to strengthen the legal position of vulnerable workers in certain sectors, professions or positions. The explanatory notes set out how it is possible to refute the legal presumption.
• Web-based module: the web-based module allows contracting parties to determine whether a person should be categorised as self-employed or as an employee according to the criteria applied by the tax authorities. A pilot starts in January 2021 and will last for six months.
• Broad social conversation/investigation: The government considers it important to hold a broad social discussion about the way work is carried out and to what extent certain working methods are desirable. The aim of the conversation is to gain insight into any bottlenecks resulting from the legal framework, and into social views on rules regarding the classification of the employment relationship.