Quarter of zzp'ers are already missing out on orders due to approaching enforcement of false self-employment
Highly educated self-employed people expect it to become increasingly difficult to find assignments and already experience that they miss out on assignments due to the approaching enforcement on false self-employment. This is evident from research by HR-tech service provider HeadFirst Group, to which 1,187 self-employed workers shared their experiences and opinions. On Thursday, September 12, a zzp-debate is planned in the Lower House, in which enforcement on false self-employment is an important item on the agenda.
The Cabinet sent a letter to the House of Representatives on Friday, Sept. 6, announcing, among other things, that it intends not to impose penalty fines on principals for the first year. Marion van Happen, CEO of HeadFirst Group, calls this a small step in the right direction: "Just like us, the government notices that clients - both in the profit and non-profit sector - are becoming more cautious in hiring self-employed workers and is taking the first measures to that end. It is positive that they are picking up these signals, taking them seriously and taking action on them, but this is still insufficient to restore and maintain peace in the labor market. We therefore recommend retaining the instrument 'indications' after January 1, 2025, so that client and contractor have time to adjust the employment relationship after advice from the Tax Office."
Reticence among clients
The survey found that about 25 percent of highly educated self-employed workers lost one or more assignments in the run-up to the lifting of the enforcement moratorium. In addition, 57 percent expect it to become more difficult to find assignments in the future due to stricter enforcement.
Van Happen says: "This confirms that clients are becoming more cautious in hiring self-employed workers. We experience in practice that clients have difficulty in properly assessing when a self-employed person may be hired. This leads to risk-averse behavior and fewer assignments for self-employed workers. That should not be the side effect of enforcement on false self-employment."
Awareness and need for greater clarity
The survey also shows that the 65 percent of respondents are (very) aware of the lifting of the enforcement moratorium. At the same time, in their open-ended responses, hundreds of respondents expressed a need for more consistent and specific information that would help them properly prepare for these changes. "It is now up to the parties involved to provide clear information and properly inform both principals and self-employed workers. Fortunately, the September 6 parliamentary letter shows that the cabinet recognizes the importance of clear communication and that a government-wide public campaign is in preparation, to be launched at the end of September. As a leading market party, we will also take our role in communication," Van Happen concludes.
Mandatory disability insurance for self-employed workers
The Internet consultation on the bill Basic Disability Insurance for the Self-employed (BAZ) generated a flood of responses. What should you know about the plans to introduce compulsory disability insurance for self-employed workers?
Why will there be a mandatory AOV?
The introduction of a mandatory AOV for self-employed workers stems from a proposal by the Labor Foundation. In fact, in June 2019, an agreement was reached between trade unions, employer organizations and the Cabinet. Part of this agreement was the introduction of a compulsory AOV for self-employed workers. i The purpose of this scheme is to protect self-employed workers against loss of income in case of disability. What many people do not know is that compulsory AOV is a prerequisite for receiving financial resources from the European corona recovery fund. The legislation must be passed by 2025, but implementation is not expected until between 2027 and 2029.
What does mandatory AOV entail?
The mandatory AOV is likely to have the following features:
- The compulsory AOV will cost a maximum of €195 per month; One year waiting period before benefits start100% of the legal minimum wage in case of full disability, with a maximum of 70% of last earned income or profit.
- Until state pension age for permanent disability.
- A stability contribution will be collected from private insurers (solidarity premium)
- Disability is assessed based on residual earning capacity in all occupations, not just one's own.
For whom will the AOV become mandatory?
The mandatory AOV will apply to all entrepreneurs who pay income tax, also known as IB entrepreneurs, including collaborating partners. Exceptions are likely for director-major shareholders (DGAs) and part-time entrepreneurs who work as self-employed workers in addition to salaried employment. Having employees or sufficient assets are not reasons not to participate in mandatory AOV.
What if the self-employed person already has an AOV or prefers to take out one himself?
There have been long discussions in the polder about an "opt-out arrangement" for self-employed persons who prefer to take out their own private insurance. The bill includes this possibility, but under the condition that the private insurance has at least the same conditions as the compulsory public insurance. Other provisions such as endowment circles or Brood Funds will not be sufficient to obtain exemption from compulsory AOV.
"Put entrepreneurship and desire of self-employed and client central"
What the Netherlands can learn from other countries about zzp legislation
The distinction between a zzp'er and an employee is not only an issue for the Netherlands, the discussion also plays out in other countries. In a new report, HR-tech service provider HeadFirst Group, ONL for Entrepreneurs and independent platform ZiPconomy present valuable lessons that the new cabinet and Dutch politicians can learn from other Western countries. "There are countries where the 'will of the parties' plays an important role and where entrepreneurial criteria outweigh circumstances during the assignment. It is a missed opportunity for the Netherlands if we do not value these factors," said Marion van Happen, CEO at HeadFirst Group.
Developing new laws and regulations around self-employment in the Netherlands is an urgent task for Eddy van Hijum, the new Minister of Social Affairs and Employment (SZW). When are organizations allowed to hire self-employed workers and when must they offer an employment contract? This question occupies policymakers and governments worldwide. The research report 'International perspective on zzp legislation. What the Netherlands can learn from other countries' offers in-depth insight into the solutions and approaches used in other countries.
Greater focus on entrepreneurial criteria and the individual
The Netherlands can learn a lot from the experiences of countries such as Belgium, Germany, Canada and the United States (US). "As an international HR-tech service provider, we are confronted daily with a variety of laws and regulations," says Marion van Happen, CEO of HeadFirst Group. "These experiences offer the Netherlands valuable insights. In Belgium and Germany, for example, the focus is first on entrepreneurial criteria and the identity of the worker. That is a fundamentally different approach than the one we know in the Netherlands."
No one-size-fits-all
"The report shows that there is no one-size-fits-all solution," said Erik Ziengs, president of ONL for Entrepreneurs. "It is important to learn from the experiences and solutions in other countries. This report invites a robust political-social discussion about the role of the self-employed in the labor market and our perception of this group of workers."
In doing so, there must be sufficient room for the wishes of the workers themselves, according to Ziengs and Van Happen. After all, several studies show that the vast majority of self-employed people consciously choose entrepreneurship, driven by autonomy and control over their own working day. Van Happen: "In Canada and Belgium, the 'will of the parties' plays an important role in assessing the employment relationship. It would be a missed opportunity if we do not value this factor in the Netherlands."
Ziengs adds: "If self-employed people charge a solid hourly rate, keep good financial records and proactively recruit new business, they deserve the freedom that entrepreneurship offers."
The new report can be downloaded here.
From VAR, through DBA to VBAR: what clients need to know in 2025
As a client, do you hire self-employed workers? Then pay attention! As of 2025 something is going to change: the so-called enforcement moratorium will expire on January 1, 2025. What does this mean? From that moment on, the Tax Authorities will enforce more stringently on false self-employment. It is also possible for the tax authorities to immediately impose additional taxes and corrections on both client and self-employed person in case of false self-employment. But why is the enforcement moratorium coming to an end? And after the abolition of the VAR and DBA, how did we get to this point?
What was the Declaration of Employment Relationship (VAR) again?
The VAR was established in 2005 to exempt organizations that hire self-employed workers from employer obligations, such as withholding payroll taxes and paying employer contributions. Until 2016, the VAR was widely used by clients and self-employed workers. The continuing growth in the number of self-employed workers caused a discussion about the increase in the number of bogus self-employed workers. This led to the abolition of the VAR and the creation of the DBA law.
The DBA law
With the advent of the law Deregulation Assessment Labor Relations (DBA) The VAR has been abolished. The law was introduced to create clarity about the employment relationship between a client and contractor on the one hand, and to tackle false self-employment on the other. Under the DBA law, client and contractor are jointly responsible for the tax consequences if an employment relationship is found to exist. The DBA law did not provide the clarity and peace of mind it was supposed to bring. Therefore, an enforcement moratorium was created immediately upon its introduction. Previous cabinets have therefore decided to replace the DBA law.
The successor to the DBA law will most likely be the law Verduidelijking Beoordeling Arbeidsrelaties en Rechtsvermoeden (VBAR). This new bill should provide a better assessment framework to more clearly distinguish between employees and self-employed workers.
Why is the DBA legislation important?
The DBA legislation aims to prevent the self-employed from actually being employed, without having the corresponding rights and obligations. This means As a client, you must be able to prove that the self-employed person you hire actually works independently and is not under your direct management and supervision.
What does this mean for you as a client?
- Proper assessment of the employment relationship: every assignment requires an assessment to determine whether an employment relationship exists. Therefore, look carefully at the facts and circumstances that are relevant in assessing the employment relationship. Important factors in this include the duration of the assignment, the nature of the work, only compensation for hours actually worked, no management and supervision by the client, etc.
- Model agreements: it is advisable to use a model agreement approved by the Tax Administration. This can help clarify the employment relationship. Note: the actual situation is what is being assessed, so it is important to actually act in line with the agreements as laid down in the model agreement.
- Responsibility: as the client, you are jointly responsible (together with the self-employed person) for establishing the employment relationship and actually acting accordingly.
- Document well: make sure you have clear records that document the arrangements with the zzp'er.
- Periodic evaluation: regularly evaluate the way of working with each other to ensure that it still meets the conditions of independence.
With the Verduidelijking Beoordeling Arbeidsrelaties en Rechtsvermonden (VBAR) law, the relevant case law will be brought together and a legal assessment framework will be made from it. This should make it clearer to clients when a self-employed person can be hired. In addition, a legal presumption of employment introduced if the worker earns less than €33 per hour. This should strengthen the position of vulnerable workers at the base of the labor market.
Self-employed must remain flexible with mandatory disability insurance
On Tuesday, June 11, outgoing Minister Van Gennip (SZW) put the Basic Disability Insurance Act for the Self-employed (BAZ) online for consultation, so everyone can give their opinion on the bill. HeadFirst Group supports the idea of a disability insurance (AOV) for all self-employed people, but stresses that choices are very important in this.
The mandatory AOV for the self-employed is going to cost a maximum of 195 euros per month and offers a benefit of 70% of earnings before disability, up to a maximum of the minimum wage. This benefit continues until the state pension age. The law also offers the possibility of an opt-out, allowing the self-employed to choose to insure themselves privately, as long as that insurance meets a few minimum conditions.
Opt-out option in bill
HeadFirst Group is pleased that the bill offers this option. In previous conversations with stakeholders and in our communications, we have emphasized that self-employed people really appreciate this opt-out. Mandatory AOV is important to protect vulnerable self-employed workers and offer them security. At the same time, we should not forget the diversity of the self-employed population, with their diverse assignments, motivations and rates.
It is good to see that outgoing Minister Van Gennip and her policy staff have taken this into account. We hope that the new Minister of SZW and his team will continue in the same way. We also want to emphasize that the desire for an opt-out option among the self-employed comes from the fact that more and more self-employed (41%, ZEA 2023) have, on their own initiative, built up or invested a financial reserve for their old age. This shows that the self-employed are aware of the balance between autonomy and responsibility: they value freedom and flexibility, but also know that they need to think ahead financially.
Anyone can comment on the bill until July 23, 2024. After that, all reactions will be analyzed and adjustments will be made where necessary. The bill will then go to the Council of State and then to the House of Representatives.
Compulsory disability insurance bill in Internet consultation
Outgoing Minister Van Gennip (SZW) earlier this week launched the Basic Disability Insurance for Self-Employed Workers Act (BAZ) into Internet consultation. The BAZ originated from a proposal by the Labor Foundation and is part of a broader labor market reform package. Lengthy negotiations took place on the desirability, feasibility and criteria of this disability insurance for the self-employed. Van Gennip has now decided to take the next step in the process by putting the bill into Internet consultation so that stakeholders, market participants and self-employed organizations can provide their feedback.
The AOV is based on three principles: affordability, comprehensibility and enforceability. The law is designed as follows:
- The new insurance will be mandatory for all self-employed people who enjoy "profits from business" for income tax purposes.
- Self-employed people who have been sick for a year (called the waiting period) may be eligible for disability benefits.
- Self-employed people receive this benefit if they are no longer able to earn the minimum wage due to illness. This is different from workers' compensation insurance, which looks not only at what a person is still able to do, but also at what a person previously earned.
- The benefit amounts to 70% of earnings before disability, up to a maximum of the minimum wage. This benefit continues until the state pension age.
- Self-employed people pay about 6.5% of their business profits in premiums, with a maximum of about €195 per month, based on the 2024 minimum wage. The premium is tax deductible.
- Self-employed persons who find this safety net insufficient, prefer private insurance or already have disability insurance can opt out. The private insurance must meet a number of minimum conditions: the disability benefit may not be lower than that of the public insurance, the premium must be at least equal to that of the public insurance, and the insurance must continue until the state pension age. There will be transitional law for existing insurance.
HeadFirst Group is pleased with the possibility in the current bill to take out private insurance for themselves. In previous conversations with stakeholders and in our external communications, we have emphasized that self-employed people value this opt-out. It is positive to see that Van Gennip and her policy staff have taken this into account.
Interested parties can comment on the bill here until July 23, 2024. After that, all reactions will be analyzed and, where necessary, incorporated into adjustments. The bill will then go to the Council of State and will then be debated in the House of Representatives.
New bill introduces admissions system: what does it mean?
A new bill, the Law on the Admission of the Supply of Workers (WTTA), will begin to be debated in the House of Representatives this year. This proposal brings with it an admission system for temporary employment agencies and other companies that make workers available to a third party to work under its management and supervision. The scope of the law is thus considerably broader than just the temporary employment sector. What exactly does it entail and what impact will it have on suppliers and clients?
The new regime requires that lenders be allowed to operate in the market only if they are authorized to do so under a new regime. To be admitted, they must meet several conditions:
- The company meets the standards framework by means of an approved inspection report provided by an inspection body designated by the Minister (article 12q Waadi);
- A Certificate of Good Conduct for legal entities is provided (Article 12o Waadi);
- The company deposits a deposit of €100,000 (Article 12p Waadi).
Hirers using temporary employment, secondment or payroll agencies, the so-called lenders, may only do business with agencies that have been admitted to the system by the Minister of Social Affairs and Employment. The Dutch Labor Inspectorate will supervise whether in- and on-borrowers actually work with authorized lenders and whether the lenders are authorized. Failure to comply with applicable laws and regulations can result in hefty fines, both for hirers, and hirers.
Transitional regime
The bill also provides for transitional law to encourage hirers - in the run-up to the entry into force of the obligation of admission on January 1, 2026 - to apply for admission no later than June 30, 2025, who already possess an SNA seal of approval. Companies that already have this seal of approval will be admitted on the basis of the SNA seal of approval, even if they have not yet been actually inspected on the basis of the new standards framework.
Implications for in- and out-workers
For suppliers who engage in the provision of labor, this bill represents a significant change in the way they operate. To remain active in the market, they will have to be admitted to this public system. Lenders will be audited periodically (probably twice a year) on the standards framework. This therefore requires compliance with laws and regulations, as well as the necessary investment in time and resources to meet all requirements. In- and on-lenders will be prohibited from doing business with lenders who are not admitted to the system. There will be a public register to verify that the hirer is actually admitted to the system.
In essence, the WTTA will change the dynamics of the Dutch labor market, with the goal of improving the position of migrant workers, keeping rogue broadcasters out of the labor market, and thus ensuring a level playing field for all buyers and sellers. It is important for both suppliers and clients to be well informed about developments regarding the WTTA. Needless to say, we at HeadFirst Group are preparing in a timely and adequate manner so that we can continue to provide our services.