Deliveroo delivered

On Friday, March 24, 2023, the Supreme Court ruled in a long-awaited judgment on the question of whether Deliveroo’s delivery drivers were working on the basis of an employment contract (employee) or contract of assignment (self-employed). In this ruling, the Supreme Court confirmed the earlier judgment of the Amsterdam Court of Appeal: the Deliveroo deliverymen were employees and not self-employed.

The qualification of the employment relationship is important. Not only for Deliveroo, but also for other companies that (want to) work with freelancers. If the employment relationship qualifies as an employment contract, the consequence is that the client has to withhold and pay payroll taxes and that there is labor law protection in case of illness and dismissal. Another far-reaching and costly consequence (often not considered) is the possible retroactive payment of pension contributions.

What are the implications of this ruling for practice? That is a question that organizations working with self-employed persons – and perhaps these self-employed persons themselves – will have. Answering that question requires a little more legal depth.

Determining whether an employment contract exists

The Supreme Court emphasizes that the question of whether there is an employment contract as referred to in Section 7:610 of the Dutch Civil Code must be answered on the basis of all the circumstances of the case. How heavily do those circumstances that may be of importance weigh in relation to each other? The Supreme Court (unfortunately) does not comment on that. And that makes it difficult, even after this judgment, to determine in advance whether an agreement is an employment contract.

In the ruling, the Supreme Court confirmed that the elements in the legal definition of an employment contract must still be assessed based on the rights and obligations agreed between the parties. These are: ’employment’, ‘wages’, ’employed’ and ‘for a certain time’. In doing so, one should not only look at what is written on paper, but precisely what the employment relationship looks like in practice. Irrelevant is whether the parties intended the contract to be (not) subject to the legal regulation of the employment contract.

Often, determining whether an employment contract exists involves, in particular, whether a person “works in the service of. In the literature and case law, this is referred to as the “authority criterion. To answer that question, therefore, all the circumstances of the case must be considered together. In the judgment, the Supreme Court appointed that, among other things, the following circumstances may be relevant in this regard:

• the nature of the work;
• the duration of the work;
• how the work is determined;
• The manner in which working hours are determined;
• the embedding of the work and the person performing the work in the organization and business operations of the person for whom the work is performed;
• The existence or absence of an obligation to perform the work personally;
• How the contractual arrangement of the parties’ relationship was established;
• The manner in which pay is determined;
• The manner in which remuneration is paid;
• The amount of the reward(s);
• whether the person doing the work incurs a commercial risk in doing so;
• Whether the person performing the work behaves or can behave as an entrepreneur in economic life (e.g., in gaining a reputation, in acquisition, in terms of tax treatment, the number of clients for whom he works or has worked, and the length of time for which he usually commits himself to a particular client).

Most of these circumstances enumerated by the Supreme Court are not new. Nevertheless, two of the enumerated circumstances stand out (additionally).

The embedding of the work

It is striking that the Supreme Court explicitly named “the embedding of the work” as well as “the entrepreneurship of the worker” as circumstances that are important to assess whether there is an employment contract. Indeed, these circumstances are also explicitly named in the progress letter on working with and as a self-employed person(s). of Minister Van Gennip dated December 16, 2022. In this letter, she identifies a number of intended measures to reduce the gray area (between employees and the self-employed) and the scope for deliberately seeking ambiguity. Because this issue already has the attention of Dutch and European legislators, the Supreme Court deliberately does not comment on the gray area in the judgment. Indeed, in the ruling, the Supreme Court indicates that for this reason it does not see any reason for legal development at this time regarding the circumstances that determine qualification as an employment contract.

Free replacement

Also notable: the Supreme Court considers in the ruling that the freedom to appear at work/accept assignments or not, does not in principle prevent the existence of an employment contract. By doing so, the Supreme Court makes it clear, on the one hand, that employers have a certain amount of room to make agreements with employees regarding the flexibility desired by certain “self-employed workers,” for example, in the healthcare industry. On the other hand, the Supreme Court thereby indicates that the mere contractual agreement that the contractor is free to be replaced does not automatically mean that there is no employment contract. According to the Supreme Court, if this contractual provision is of minor significance to the contractor – as was the case for Deliveroo’s deliverymen – then even the occasional use of that possibility is not incompatible with the existence of an employment contract.