New ZZP Legislation Aims to Clarify Self-Employment and Combat False Self-Employment

For years, the position of self-employed contractors (ZZP'ers) in the Dutch labour market has been the subject of debate. Companies, contractors and advisors often struggle with the question of when a working relationship qualifies as genuine entrepreneurship and when it should instead be regarded as employment.

To provide greater legal certainty, the Dutch Minister of Social Affairs and Employment has announced a new legislative proposal intended to clarify the distinction between independent contractors and employees, while also addressing the issue of false self-employment.

Three Criteria for Genuine Entrepreneurship

Under the proposed legislation, a self-employed contractor would generally be considered a genuine entrepreneur if the following three conditions are met.

1. Multiple Substantial Assignments

A contractor must have completed at least three substantial assignments over a two-year period. The assignments should be meaningful engagements of sufficient size and significance. The purpose of this requirement is to ensure that a contractor operates independently in the market rather than effectively working for a single client under the guise of self-employment.

2. Freedom in Time and Place of Work

The contractor must have a significant degree of freedom to determine when and where the work is performed. If a client dictates working hours, workplace location and day-to-day activities to a large extent, this may indicate an employment relationship rather than genuine self-employment.

3. Entrepreneurial Risk and Business Protections

A genuine entrepreneur is expected to bear entrepreneurial risks and arrange essential business protections independently. These may include:

• Disability insurance;

• Pension arrangements;

• Professional or business liability insurance; and

• Other common business expenses and entrepreneurial risks.

By assuming these responsibilities, the contractor distinguishes himself or herself from an employee whose social protections are typically arranged through the employer.

Greater Certainty for Businesses and Contractors

If all three criteria are satisfied, the contractor would, under the proposal, generally be regarded as a genuine independent entrepreneur rather than a disguised employee.

For businesses, this could provide greater certainty when engaging independent contractors. For self-employed professionals, it may offer clearer guidance on the requirements necessary to maintain their independent status.

Not Yet Law

It is important to note that this is currently only a legislative proposal. The proposal must still go through the legislative process, and it remains uncertain whether it will be adopted in its current form or when any new rules may enter into force.

Until then, the existing legal framework continues to apply. As a result, whether a working relationship is classified as self-employment or employment will remain dependent on the facts and circumstances of each individual case, as interpreted under current legislation and case law.

What Does This Mean for Your Business?

Although the proposal has not yet become law, it provides a clear indication of the direction in which Dutch policymakers are moving. Businesses that regularly engage independent contractors would be well advised to review their current arrangements and assess whether those arrangements contain sufficient characteristics of genuine entrepreneurship.

Likewise, self-employed professionals should consider whether their working practices adequately demonstrate independence, entrepreneurial freedom and business risk.

As legislative developments continue, both companies and contractors should remain alert to potential changes and seek legal advice where necessary to minimise the risks associated with false self-employment.

We will continue to monitor developments closely and provide further updates as more details become available.If you have questions about this topic or have doubts regarding your current independent contractor, please contact your relationship manager at A&T Partners.