The hot topic: employee unless...

On Thursday, June 30, the Social Affairs and Employment Committee will debate the zzp dossier. Ahead of this debate, ZiPconomy published the report 'Employee, unless ... 8 variants for the replacement of the DBA law' this morning. Packed with interesting insights and a clear overview of the different variants on the table. "We hope that based on the contents of this report a substantive and qualitative debate will be held," said Marion van Happen, CEO of HeadFirst Group.

Different schools of thought brought together
The role and position of the self-employed on the labor market has long been the subject of debate in the Netherlands. The issue: when is someone who performs work for pay an employee or a self-employed person? Previous cabinets have failed to clarify this and several plans have failed for various reasons. In addition, several reports have been published with proposals to move the discussion forward. Ranging from enforcement of existing rules to sweeping legislative changes.

"This report offers a clear overview of all the different proposals made in recent years to replace the DBA law. More importantly, the advantages, disadvantages and consequences for the self-employed and clients are detailed. By combining these insights with the correct facts and figures about the self-employed, politicians in The Hague can come to a well-considered decision."

Take labor market situation into account
Two elaborated variants, including the Borstlap Commission's proposal to make "embedding in the organization" leading in the distinction between employee and self-employment and the ABC test from California, have heavy impact on the freedom of self-employed workers and clients. Given the current tight labor market, it is important not to underestimate these impacts. Employers and clients are crying out for talent and are pulling out all the stops to retain the current population. "That there should be clear rules and frameworks when someone can be hired as a self-employed person, I completely agree. On the other hand, too rigid rules are not desirable, because practice shows that the form of contract is becoming less and less decisive. It is therefore important to deal carefully with laws and regulations concerning work and not to restrict workers too much in their choices," says Van Happen.

Belgian model good alternative
The report also highlights the Belgian model with the Labor Relations Act. This model - also described in the report 'Independence, flexibility and social security. A look across the border.' - has many advantages. Van Happen says: "In Belgium, the issue of false self-employment is effectively combated by (1) having a clear set of criteria as to whether a person may perform an assignment as a self-employed person, (2) looking more at the aspects of entrepreneurship and (3) having stricter rules in sectors where the risk of underpayment or vulnerable workers is high. That combination of factors works well in Belgium, so it is interesting to investigate whether we can adopt the positive aspects and improve the less good aspects in the Netherlands."

The legislation in Belgium has now also been noticed in Dutch politics. During the debate on labor market policy on April 13, Minister Karien van Gennip explicitly referred to the situation in the South's neighbors, and MPs Smals (VVD) and Palland (CDA) earlier also called attention to it.

And now?
For now, it is not clear what the next step will be from Minister Van Gennip. Last Thursday, Parliamentary questions about enforcement of the DBA law were answered by the minister. Before the summer there will be an outline letter to the Lower House about the elaboration of the labor market package. Finally, there will be a response to the report of the Court of Audit before the ZZP debate on June 30. HeadFirst Group follows the developments closely and stays in close contact with MPs and policy staff.

The full report is available for free download here.

Zzp'ers working as store salesmen, childcare workers, teaching assistants, waiters or bartenders work in the Netherlands on average at the lowest hourly rates. They also have a relatively low scarcity indication, which predicts that the prospect of rate increases is limited. On the other hand, relatively few self-employed workers are active in these occupational groups, compared to the total of nearly 1.2 million. These insights were published in the Talent Monitor by HR service provider HeadFirst Group and labor market data specialist Intelligence Group.

Focus on labor market base

Enforcement of the DBA law recently received attention due to a report by the Court of Audit. The conclusion: the tax authorities are unable to combat false self-employment effectively. Marion van Happen, CEO HeadFirst Group: "The most acute problems with false self-employment occur at the base of the labor market, where hourly rates are low. We therefore look with interest at the MLT advice of the SER, which proposes to apply a 'legal presumption of employment' at a rate below the maximum daily wage (30,- to 35,- euros per hour)."

The Talent Monitor zooms in on this group of self-employed workers. It shows that painters and cleaners of construction works and construction workers of structural work have an average hourly rate of €30 or higher and are very scarce. They therefore have a rosy financial perspective in the labor market. Creative and performing artists are also scarce, although their average hourly rate is much lower at €23. Occupations that have a harder time include waiters and bar staff, domestic helpers and cleaners, childcare and teaching assistants and salespeople in stores. They work for an average hourly rate of €20 or less and the scarcity indicator is low. Relatively few self-employed workers are active in these occupational groups, totaling only a few tens of thousands. Hairdressers are an exception: we have more than 25,000 freelance hairdressers in the Netherlands, albeit working at an average hourly rate of €23.

Let entrepreneurs do business freely

In addition, the report shows that self-employed professionals with an hourly rate of €70 or higher are overrepresented in professional groups such as software and application developers and analysts, lawyers and doctors. Specialists in sports & fitness and traditional & alternative medicine are largely found in the €35 to €70 rate group. All are (very) scarce professions, which is generally reflected in rising rates.

Van Happen: "More than half of all self-employed people in the Netherlands have an hourly rate of €35 or higher. This large group of self-employed people who consciously choose to do business in freedom, have a strong negotiating position and are very satisfied with their working conditions should not be ignored. If the new cabinet focuses on appropriate measures for occupations with lower hourly rates, we can successfully move toward clarity for all self-employed workers and their clients."

The Talent Monitor "Zzp'ers: protect or set free?" is available for free download here.

Tomorrow afternoon, the Labor Market Policy Committee debate is scheduled. With 36 topics on the agenda, I expect a scattered debate, with a different focus for each party. Leading up to it, I am happy to share some insights regarding the zzp dossier and the current state of affairs.

For a long time it was quiet around the DBA law, but last week the corresponding enforcement moratorium received the necessary attention again due to a report by the Court of Audit. The conclusion was clear: the Tax Administration is currently unable to effectively combat false self-employment. The much-discussed outcome is expected to come up during the debate, in part because the PvdA earlier requested that State Secretary for Taxation and Fiscal Affairs Van Rij join the debate. The request could not count on a majority, but that the report is on the minds of politicians is clear.

Wet DBA affects the employment of professionals
Despite the continuing uncertainty regarding enforcement, replacement of the DBA Act and the further development of the web module, we see that the number of highly skilled zzp'ers (independent professionals) continues to increase. Professionals who consciously choose entrepreneurship and are usually hired by one client for a longer period of time (14 months on average) because of their knowledge and expertise. Detailed information that we have previously set out in the report 'De zzp'er bestaat wél wel', a must-read for politicians and policy makers concerned with the zzp-dossier.

At the same time, we observe a striking development among clients who hire independent professionals. They more often commit themselves - usually in good cooperation with intermediaries - to a maximum deployment period of two years, whether or not laid down in their hiring policy. Although the DBA law is not (yet) being enforced and there is as yet no clarity on an alternative plan, it can be said that the "law" is having an impact.

Focus enforcement on specific sectors
Enforcement of the DBA law in the higher segment of the labor market is undesirable. I therefore recommend focusing on sectors, where the percentage of vulnerable zzp'ers is high. Zzp'ers who work at low hourly rates, struggle to build up financial buffers and forced zzp-ship is more widespread. Although only 7% categorize themselves as "forced self-employment" (+/- 80,000 workers in the labor market), it is important that we fight this together and protect vulnerable workers.

Results of the web module pilot previously showed that in sectors such as construction, hospitality and transportation, the likelihood of "indication in employment" is highest. This sectoral approach is in line with the Belgian model with its Labor Relations Act. In our neighbors to the South, false self-employment is effectively combated by (1) clearer distinctions between employees and the self-employed and (2) stricter enforcement in sectors where the risk of underpayment and financial vulnerability is greatest.

The MLT opinion of the SER also provides more clarity regarding enforcement. A concrete example from this advice is the "legal presumption of employment" under the maximum daily wage of €30 to €35 per hour. This directive will promote enforceability and is also aimed at sectors where vulnerable self-employed workers would benefit from greater protection and certainty. The limited quantitative and qualitative capacity of the Tax and Customs Administration, as concluded in the report of the Court of Audit, can then be optimally utilized.

Nuance in the discussion
In summary, this report is yet another page in the self-employed chapter and so far it remains unclear what the next step is going to be in this dossier. I miss the nuance in the political-social debate about self-employed workers at the base of the labor market. The lion's share of the self-employed population consciously choose entrepreneurship and are very satisfied with their working conditions. Let's be mindful of this development, because we incredibly need all workers in times of tightness. HeadFirst Group is happy to think along with the next step.