Legislation & politics

Are you already familiar with the three tracks that the government has devised to restore balance to the current labor market? What plans and proposals are there for the future of working as and with freelancers? Public Affairs Officer Sem Overduin and Business Development Director Paul Oldenburg gave all the ins & outs on this during a webinar. From the many questions asked during the session, it became clear how much the subject is of interest to self-employed people and clients. We share the most common ones below.

1. How will the self-employment deduction continue to be phased out?

In the Coalition Agreement 2021-2025 it was agreed to accelerate the reduction of the self-employed deduction. This scheme will be reduced to €1,200 in 2026 and further reduced to €900 in 2027. The self-employed deduction for starters, the starter's deduction, will remain unchanged. However, self-employed people will be compensated during this cabinet period with an increase in the labor discount. With this measure, the cabinet wants to reduce the differences in tax treatment between employees and the self-employed. More information about the self-employed deduction and the steps that will be taken in the coming years can be found here.

2. Why is the Fiscal Old Age Reserve (FOR) being abolished?

Since Jan. 1, 2023, you can no longer build up a retirement reserve. The government abolished it to prevent entrepreneurs from using the fiscal old-age reserve to obtain tax deferral. The old-age reserve built up until December 31, 2022, can still be settled according to the current rules. This means that it can remain on the company's balance sheet and can be used in the future to negotiate a qualifying annuity, or it must be settled no later than when the company ceases operations. Also with these measures, the government wants to ensure more equal taxation between employees, self-employed persons and shareholders.

3. How is the element of "self-employment" further implemented?

Current case law looks at contraindications to the existence of an employment contract. Some of these are included in the Payroll Tax Handbook. Some examples are (1) the performance of work on the basis of a result obligation, (2) specific knowledge and expertise of the worker that employees within the organization do not have, and (3) that the worker receives substantially higher remuneration than employees doing similar work in salaried employment. In the coming period, it will be worked out with social partners, experts and stakeholders which facts and circumstances indicate self-employment and how these contraindications can be given weight in assessing the employment relationship.

4. What is the current status of the enforcement moratorium?

In the period January through October 2022, 275 company visits and 200 book audits were conducted on the qualification of the employment relationship. Partly because of the limited quantitative capacity and the complexity of assessing the employment relationship, it is complicated for the Tax and Customs Administration to take effective action on false self-employment. On the other hand, additional staff have been trained and the Tax and Customs Administration currently has 80 FTE for enforcement.

5. What plans does the Cabinet have for the enforcement moratorium?

In the Cabinet' s response to the reports issued by the Netherlands Court of Audit and the National Audit Authority, the Cabinet expressed its ambition to improve this enforcement in the short term and to lift the enforcement moratorium entirely by January 1, 2025 at the latest. In the run-up to January 1, 2025, the Tax and Customs Administration will devote extra attention to communication about enforcement. This will include the consequences for principals and contractors of the intended abolition and the (financial) risks they run.

6. What if an audit reveals (fictitious) employment but no malice?

Then the Internal Revenue Service will issue directions that you can work on. Client and contractor are usually given three months to follow the directions. If this is not sufficiently followed, the Tax Office will impose correction obligations and additional tax assessments.

The Netherlands currently has more than 1.6 million zzp'ers. It is the fastest growing group of workers in the Dutch labor market, accounting for over 17% of the Dutch working population. Driven by scarcity in the labor market, the call - from the younger generation in particular - for freedom and flexibility, and supported by platform technology, this development only seems to be accelerating. The proposed plans of Karien van Gennip, Minister of Social Affairs and Employment, seem diametrically opposed to this. How will they affect the (flexible) labor market in 2023? Sem Overduin, Public Affairs Officer HeadFirst Group, ventured a prediction at ZiPconomy.

"Until March 15, people in political The Hague will be busy with the Provincial Council elections. Logically, this will be an important moment for the mutual balance of power in The Hague. The CDA that may be decimated and a coalition that has even fewer seats in the Senate? This will have serious consequences for the strength of the current cabinet.

Regardless of the election results, the December 16, 2022 House of Representatives letter created movement. In 2023, there will be a lot of negotiation and debate about how all these plans will be worked out. Bovib needs to be at the right tables to provide input.

Clients will be scratching their heads and wondering what is and especially what is not allowed with regard to hiring self-employed workers. Our members will therefore receive many questions. The Bovib must constantly make the translation between the reality in The Hague and the reality on the work floor. An opportunity for the intermediary branch to develop further and act as a professional interlocutor towards The Hague and our clients."

Are you already familiar with the 3 tracks to restore balance in the current labor market? What do the developments surrounding the zzp dossier mean for you as a client? During the Webinar Week - an initiative of Werf& and ZiPconomy - Business Development Director Paul Oldenburg and Public Affairs Officer Sem Overduin will give a behind-the-scenes look at the House of Representatives and offer insight into what opportunities this leaves for your organization to work successfully and compliantly with freelancers. Sign up here to listen in on Tuesday, February 7 at 11:15 am.

On Friday, Dec. 16, Minister Van Gennip (SZW) and State Secretary Van Rij (Taxation and Customs Administration) presented the "Progress Letter on Working with and as Self-Employed(s)" to the Lower House. Numerous topics are discussed in the letter, such as a legal presumption of employment below a certain hourly rate, the enforcement moratorium of the DBA law and the clarification of the authority criterion. Much remains to be worked out in the coming period, but in response to the proposed plans for the zzp dossier, I am happy to respond.

Recognition of self-employment
In the first pages of the letter, the importance of self-employment for the Dutch labor market is highlighted. I am pleased that the Cabinet recognizes the position and added value of the self-employed. With their knowledge and expertise, self-employed people make an important contribution to solving problems at numerous organizations. It is impossible to imagine our labor market without the self-employed IT professional or project manager. Time and again, research shows that the majority of the self-employed population is very satisfied with their working conditions, salary and sense of autonomy. This is a development we should cherish.

The search for the right balance of elements
At the same time, I am critical of some plans. For example, the cabinet plans to clarify the authority criterion by more explicitly embedding the criterion of 'embedding in the organization' when assessing the employment relationship. In an earlier column, I hinted that the clarification of the authority criterion remains a hot topic of discussion. I remain of the opinion that it becomes very complex to clearly define embeddedness in the organization. When is a worker "embedded in the organization"? And what tasks belong to "the regular work of an organization"? This discussion has been had before and was not settled at the time. Many freelancers work in IT, HR or project management and are more or less embedded in the organization. Will this soon no longer be possible? It is undoubtedly going to cause unrest among clients, intermediaries and zzp'ers. Given the shortage of - and at the same time the high demand for - specialist personnel, this unrest seems highly undesirable to me. What we need right now are rules that encourage and facilitate mobility in the labor market and self-employment. I therefore remain strongly in favor of a pluralistic labor market with different forms of contracts. A labor market where people are given the space to organize their work themselves. I am convinced that this will have a positive effect on the productivity and job happiness of workers and will result in a more innovative and better functioning labor market.

Another element that will receive more attention in determining the employment relationship is the self-employment of the worker. I read in the parliamentary letter that embedding in the organization does not necessarily mean an employment contract. That the government is seeking balance in determining the employment relationship is positive to me. In my opinion, we need to look not only at the task being performed, but also at the individual. Clear entrepreneurial criteria, such as the amount of the rate and specialized knowledge are pre-eminent criteria to include in the assessment of the employment relationship. By assessing the correct facts and circumstances, the distinction between employee and self-employed will automatically become clearer. Clear entrepreneurial criteria will also help the Inland Revenue to enforce effectively.

Opportunities for the intermediary industry
In the coming months the plans will be further elaborated in consultation with stakeholders, experts and social partners. I am pleased with the outstretched hand of the cabinet to take this up together with market parties. A strong coalition of industry associations (ABU, NBBU, I-ZO, VvDN, RIM and Bovib) seems to me to be a pleasant and expert discussion partner for the Cabinet, the Tax Administration and policy makers. By bringing daily practice to The Hague, clear and verifiable entrepreneurial criteria can be drawn up. The members of these industry associations are pre-eminently the specialists when it comes to organizing external hiring and contracting of zzp'ers. Therefore, use their knowledge and expertise!

There is also a great opportunity for intermediaries. The changes that lie ahead offer the opportunity to further professionalize the relationship with contractors, suppliers and clients. By advising and supporting both the supply and demand sides of the labor market in complying with changing laws and regulations. By helping them draft or further develop their hiring policies. At HeadFirst Group, we are aware of the challenges ahead. At the same time, this makes us indispensable in a dynamic, multiform and rapidly changing labor market. New rules force us to adapt. The trick is to successfully bring our relations along with us.

Karien van Gennip, Minister of Social Affairs and Employment, released on December 16, 2022 the 'Progress letter working with and as self-employed(s).' shared with the House of Representatives. The letter builds on the outline letter labor market of July 5, 2022. The minister sets out all plans along three lines: a more level playing field, clarification of the assessment of employment relationships, and improvement of enforcement on false self-employment.

The labor market is in need of maintenance. The group of self-employed workers has grown in recent years and this growth is expected to continue. The government signals that this leads to limited protection against disability, less control over working conditions and inadequate supplementary pensions. Especially among vulnerable self-employed people. In addition, there is much uncertainty about the applicable rules. Therefore, the government wants to address the problem with measures along three lines:

1. A more level playing field - Targets all forms of contract with respect to social security and taxation. To achieve this, the self-employed deduction will be accelerated, from €6,310 in 2022 to €900 in 2027. In addition, the minister proposes to phase out the fiscal old-age reserve (FOR). The fiscal reserve does not provide the certainty of actually enjoying one's retirement income. Phasing out also prevents the use of the FOR for tax deferral and forces the self-employed to place real old-age provisions outside their company. If it is up to the cabinet, there will also be mandatory disability insurance (AOV) for the self-employed. More information on this will follow in the first quarter of 2023.
2. Clarifying the assessment of employment relationships - The clarification of the assessment should make it easier to agree on the correct legal form of an employment relationship right from the start. The Cabinet therefore wants to give substance to the open norm of "working in the service of" (Art. 7:610 BW). The emphasis is on the classic elements of subordination, such as giving instructions and supervising. The Cabinet adds that 'working in the service of' is also at issue if the work is organizationally embedded in the employer's company. In addition, whether there is self-employment becomes important. The element of self-employment may be an important contraindication to the existence of an employment contract. These three main elements and their interrelationships will be further elaborated in the coming period.Furthermore, a rebuttable legal presumption of an employment contract must be established to support the bargaining position of employed persons. The civil law presumption of employment will be based on an hourly rate to be determined. It will be up to the worker to prove that there is no employment contract. If the worker and employer cannot agree, the worker can go to court. Also, the web module labor relations assessment will be further developed to comply with the new laws and regulations.
3. Improve enforcement on false self-employment - On January 1, 2025 at the latest, the enforcement moratorium must be lifted. The Cabinet considers enforcement necessary for a future-proof labor market and a sustainable tax and social security system. The central premise of the Tax and Customs Administration's strategy will be that citizens and businesses "comply with rules of their own accord as much as possible, without compelling and costly actions on the part of the Tax and Customs Administration." In this regard, the Tax Administration considers good cooperation between the market and the Service to be of great importance. An important part of the new approach is the streamlining of internal and external communication regarding enforcement. In addition, the possibility of organizing preliminary consultations at branch level is being explored, so that the situation becomes workable for the branches and the Service.

Details will be worked out in the coming months. In doing so, there will be room for the social partners and the market to contribute ideas. The plan is to schedule a debate on this parliamentary letter in the first quarter of 2023. Then a draft bill will be presented to the market through an Internet consultation. After the summer, the minister plans to send it to the Council of State so that the final proposal can be presented to the House in early 2024. The aim is to publish the legislation by January 1, 2025. This fits well with the lifting of the enforcement moratorium on the same date.

Wednesday, Dec. 7, during the Committee on Disability debate, mandatory disability insurance (AOV) was discussed. Plans that only a third of the highly educated self-employed support. However, almost half are in favor if self-insurance is allowed as an alternative. HeadFirst Group supports the principle of an AOV for all self-employed, but choice is a crucial success factor.

AOV with proper choices important
By Jan. 1, 2025, there must be a law for self-employed persons to be compulsorily insured against disability. A simple AOV can be implemented by 2027, more customization means postponement to 2029. Minister Karien van Gennip of Social Affairs and Employment is investigating customization in the form of an opt-out scheme.

Mandatory AOV is significant to protect vulnerable self-employed workers and provide security. At the same time, we must keep an eye on the diversity of the self-employed population with different assignments, starting motives and hourly rates. The option for self-insurance, at least equal in content to the public AOV, can count on support because it fits well with the different wishes and needs of this group of workers.y

Half of self-employed people have nothing arranged yet
Currently, just under half of self-employed people have covered the risks of occupational disability themselves - for example, through a private party or a mutual fund. The most important reasons for highly educated self-employed workers to take out insurance is that they are unwilling (58 percent) or unable (17 percent) to bear the financial risk themselves. Another 11 percent cannot fall back on their partner's income.

Of the self-employed who have not taken out disability insurance, 31 percent say they can bear the financial risk. Furthermore, over a quarter feel the costs do not outweigh the benefits and 15 percent consider the risk of disability low.

For self-employed people who have not yet arranged anything if they become disabled, HeadFirst Group has a low-threshold provision: Select iCommunity Crowdsurance (SiCC). This is a provision based on a donation circle. This also matches the desire of self-employed workers to bridge the 52-week own risk period with a bread fund - desired by 12 percent of research participants - or to shorten the waiting period (35 percent).

Documents:
InfographicOpinionMonitorAOV2022.pdf

Note to editors:
The results of the 'AOV Opinion Monitor 2022' have been compiled in an infographic, which is attached. For more information, contact Natasja Spooren, Teamlead Communications at HeadFirst Group, reachable on 06 - 151 924 85 or natasja.spooren-wassenaar@headfirst.nl.

A third of highly educated self-employed support plans for mandatory disability insurance (AOV). However, almost half are in favor if self-insurance is allowed as an alternative. So says research by HR-tech service provider HeadFirst Group among more than 1,400 participants. CEO Marion van Happen shares the opinion about this opt-out: "We support the principle of an AOV for all self-employed people, but choices are a crucial success factor in this."

Opt-out scheme
By January 1, 2025, there should be a law to make it mandatory for self-employed workers to have insurance against disability. With the aim of preventing large income risks for individuals and countering unfair competition on working conditions. The rules and conditions of the intended law were recently discussed again during the Labor Market Policy Committee debate. In it it was announced that a simple AOV can be implemented by 2027, more customization means postponement to 2029. Minister Karien van Gennip of Social Affairs and Employment is investigating customization in the form of an opt-out arrangement.

Van Happen - along with the SER - stresses the importance of introducing an AOV with the right choices. "Mandatory disability insurance is important to protect vulnerable self-employed people and offer security. At the same time, we must keep in mind the diversity of the self-employed population with different assignments, starting motives and hourly rates. The option for self-pay insurance, which is at least equal in content to the public AOV, can count on support because it fits well with the different wishes and needs of this group of workers," Van Happen said.

Half of self-employed have nothing arranged
Last year HeadFirst Group also surveyed the opinion of self-employed people in the field of AOV. The results are virtually unchanged. Currently just under half of the self-employed have covered the risks of disability themselves - for example through a private party or a mutual fund. The most important reasons for highly educated self-employed workers to take out insurance is that they are unwilling (58 percent) or unable (17 percent) to bear the financial risk themselves. Another 11 percent cannot fall back on their partner's income. Of the self-employed who have not taken out disability insurance, 31 percent say they can bear the financial risk. Furthermore, over a quarter feel the costs do not outweigh the benefits and 15 percent consider the risk of disability low.

For self-employed people who have not yet made any arrangements should they become disabled, HeadFirst Group offers a low-threshold provision: Select iCommunity Crowdsurance (SiCC). This is an endowment-based provision. It is a net benefit for up to two years. In line with the need for an affordable, flexible solution that does not pay out until retirement age, but for a framed period. This provision also matches the desire of self-employed workers to bridge the 52-week self-risk period with a bread fund - desired by 12 percent of research participants - or to shorten the waiting period (35 percent).

Check out the survey results in this infographic.

The Labor Market Policy Committee debate took place last Thursday. The Parliamentary Committee on Social Affairs and Employment spoke with Minister Van Gennip (SZW) about the announced plans to reform the labor market. In the debate, she indicated that she was committed to clarifying the authority criterion to determine whether an employee or self-employed person is involved. That the Cabinet recognizes this and is working toward replacing it is crucial.

Embedding in the organization
The Borstlap Commission proposes to modernize the authority criterion by making "embeddedness in the organization" more central to the assessment of the employment relationship. I am not in favor of giving this criterion more weight, because there is already enough debate about the interpretation of when authority exists. When is a worker "embedded in the organization"? And what tasks are part of "the regular work of an organization"?

In practice, we see just the opposite happening. Hybrid teams with different specialists working on a project basis on solutions and issues of importance to the organization at that time. These are often teams where there are different forms of contracts. The results of the recently published CBS survey support this picture: employers consider the "type of contract" much less important than previously thought. Factors such as knowledge, expertise and work experience are much more important. Will this soon no longer be possible if we deal too rigidly with authority and embedding in the organization?

Great diversity zzp population
In addition, I question the modernization of one general authority criterion. After all, in the Netherlands we are dealing with a very diverse self-employed population. This group of workers has diverse assignments, works for different hourly rates and the duration of assignments is also very different. One authority criterion for this entire target group will therefore not work. We need more customization.

What next?
Currently, the minister is working with the social partners to further develop the proposals. She aims to have the next letters ready before Christmas so that they can be shared with the House of Representatives in January. These letters will clarify how the minister intends to further clarify the authority criterion and form the basis for the debate in February 2023, after which the bills can be shared with the market through an Internet consultation in the summer of 2023.
All in all, it is clear that all parties feel the urgency to tackle false self-employment quickly and keep up the pace. As the largest HR-tech service provider, we will of course remain in dialogue with our stakeholders in The Hague and will act together with our partners.

Note to editors:
For more information: Natasja Spooren, PR & Content Specialist at HeadFirst Group, reachable at 06 - 151 924 85 or natasja.spooren-wassenaar@headfirst.nl.