Four risks for employers in case of incorrect self-employment qualification

It is important for employers to look closely at employment relationships with self-employed workers. Indeed, the fact that an assignment contract is entered into on paper does not mean that the actual situation cannot be an employment contract. This is evidenced by the so-called Deliveroo ruling of the Supreme Court where my office colleague, Winny van Engelenhoven, wrote an article has written about.

This covered the points of view the Supreme Court gave in its ruling for determining whether there is an employment contract or an assignment contract. In this article, I explain why it is important to have this distinction in sharp focus.

Qualification agreement

Whether there is an employment contract or an assignment contract is not determined (exclusively) by the document to which both parties have signed. Therefore, always be aware of the actual performance of the agreement.

The qualification of the agreement is important because both agreements have different consequences. These are some of the differences:

• for an employee, the compulsory national and employee insurance schemes apply; a self-employed person is free to choose whether to be insured (for example, for disability);
• an employee receives wages, so payroll tax is withheld from them; a self-employed person pays sales tax (among other things);
• an employee is usually covered by an employer’s pension plan, a self-employed worker must take care of pension accrual himself.

The correct qualification is relevant not only because of securing the correct rights, but also to avoid unforeseen costs (e.g., due to an after-tax charge). Moreover, from a social point of view, it is important that persons who are entitled to certain benefits at any time also contribute to the collective coffers. This could include benefits from the UWV or pension.

Risks associated with incorrect zzp qualification

If, in practice, a self-employed person turns out to be an employee, this can entail significant (financial) risks.

1. Payroll taxes:
   Payroll taxes must still be paid for this worker. This can result in high after-tax assessments and fines from the Internal Revenue Service.
2. Social contributions:
   Social contributions must be paid, such as contributions for the state pension or the Unemployment Act. As an employer, you must pay these premiums retroactively.
3. Working conditions:
   The labor force is entitled to various working conditions. This may lead to claims by this labor force, for example, under:
   1. (paid) leave;
   2. continued payment of wages during illness; and
   3. dismissal protection.
4. Pension:
   If a pension plan is participated in, this includes the labor force. The Pension Fund can then knock on your door to remit (overdue) pension contributions.