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.

The new cabinet has been in place for some time now, there is an ambitious coalition agreement on the table, and the new ministers have settled in reasonably well. This is noticeable in The Hague. Officials are busy writing policy plans and the Lower House is also regularly debating. A good time to briefly take you through the most important events and developments of the past few weeks.

EU proposal platform work

It is clear that Brussels is becoming more and more explicitly involved in national affairs and issues. Not entirely surprisingly, last December the European Commission came up with a proposal to better protect platform workers. Patience with Uber and Deliveroo has been running out in Brussels for quite some time, and in the new directive, the European Commission demands that platform workers be given the same rights and obligations as employees. Since the issue of platform work plays out in several European countries, Brussels is now picking up the gauntlet to come up with clear guidelines and criteria to clarify the qualification of the employment relationship.
The proposal sets out five criteria for determining whether an employee is an employee or a self-employed person. These are as follows:
1. The platform determines the remuneration of the worker;
2. The platform sets requirements for the appearance of the worker (for example, he must wear a uniform); 3;
3. The platform monitors the worker's performance through digital means;
4. The platform determines working hours;
5. The platform limits the worker's ability to work for others.

Should it remain in practice that there are two or more criteria, it will be up to the platform to prove that there is still a zzp'er rather than an employee. According to European Union calculations, this will have a major impact on the Dutch treasury, as billions in tax revenue and social security contributions can be benefited.

Now, there are some fundamental questions that need to be asked about this proposal and the whole discussion about platform work. For what exactly is the definition of a platform? And is this proposal only about tackling false self-employment among platform workers, or is this proposal about the mediation and classification of self-employed workers in general? In any case, last weeks it became clear that all political parties agree that this proposal is going to have an effect on the self-employment issue in the Netherlands. The discussion about when a self-employed person is really self-employed has been going on in the Netherlands for a long time and many attempts to clarify this have failed and have been put on ice. This fatigue is an extra reason to be alert, because The Hague should not accept this proposal too easily and should clearly guard the line between vulnerable platform workers and true self-employed workers. It is likely that public bodies such as the Tax Office and the Labor Inspectorate will be allowed to use these criteria to test and enforce the presumption of employment. This immediately indicates that the proposal is not only aimed at protecting the vulnerable platform worker, but that it also gives public law bodies tools to start enforcement. We will therefore need to monitor developments closely and inform Chamber members of our interests and concerns as early as possible.

Mainline debate Social Affairs and Employment

On Thursday, February 17, the Parliamentary Committee on Social Affairs and Employment debated the plans in the coalition agreement with the new ministers of Social Affairs and Employment. Various themes were addressed in the debate and with 19 political groups, it went in all directions at times. Fortunately, the debate also focused on topics that are important to us, such as the web module, the enforcement moratorium and clarity regarding the hiring of the self-employed.

Prior to the debate, we as HeadFirst Group provided input and asked several members of parliament to provide more clarity on the further development of the web module and enforcement of the DBA law. It was good to see that parties returned to this during the debate. The market is yearning for clear and enforceable rules after all these years.

Although the minister did not answer our questions directly, there were certainly some bright spots. For example, the minister himself indicated that only a small percentage of workers on the labor market are 'vulnerable self-employed' and that we should focus on those sectors where the chance of false self-employment is greatest. This interfaces with the Belgian model that we previously wrote a report about with ZiPconomy and ONL, and we have also been advocating sectoral enforcement for some time. The minister has also promised to come up with a "broad plan" on labor market reform before the summer and to outline this in a letter and share it with the House of Representatives.

Wednesday, December 15, 2021, the long-awaited coalition agreement "Looking out for each other, looking forward to the future" was presented. For the labor market, the new administration has an important goal: reform to reduce burdens, improve social security and combat poverty. 'So that working pays, being an employer and entrepreneur remains attractive, our well-being increases and staff shortages in vital sectors can be met.' Han Kolff, CEO HeadFirst Group, responds to the proposed plans.

Rutte IV wants to invest €500 million annually to implement "a number of major reforms," guided by the principles of the Borstlap Commission and the MLT advice of the SER. Solid reports and largely good plans, but now the hard part begins: implementation. This also applies to the premise 'genuine self-employed people are supported and entrepreneurship is stimulated', which has not been further elaborated. I underscore the point of view wholeheartedly, but it depends on making the right choices. Translating words into action requires manpower, knowledge and a clear vision.

The current tightness in the labor market only compounds this challenge. Hastily implementing generic and ill-considered plans can have fatal consequences. We saw this with the introduction of the DBA law, when many independent professionals (zp'ers) experienced loss of income due to reluctant clients. Indeed, many self-employed people are still experiencing inconvenience: the lack of clarity has meant that more than half have found it more difficult to find a suitable assignment. This is on top of the self-employed, nearly 40 percent, whose assignments have been terminated prematurely by clients in recent years due to concerns and lack of clarity around legislation. We absolutely cannot use any further increase. We desperately need every professional group, in whatever form of contract, in the coming years.

Further development of web module
Despite criticism of the web module from industry associations and zzp-interest groups, the focus for the replacement of the DBA law is mainly on the further development of this questionnaire. To create both political and social support, a crucial step is for the Lower House to hold a substantive debate with Karien van Gennip and Marnix van Rij - ministers of Social Affairs and Finance and key players in this discussion - on the pilot results of the web module. The web module can provide certainty in advance, but it is essential that relevant officials at the department restart the conversation with field parties to critically review the underlying system of questions and make fundamental adjustments.

The outcome must not lead to reduced hiring of the self-employed, who are not in need of help and do not need protection against false self-employment. I emphasize this emphatically, because clients and intermediaries do not benefit from unrest and uncertainty either. For situations of intermediation, the web module is not ready, nor has there been a pilot phase. The intermediary industry is happy to help with the further development of a workable web module, so that we can prevent unrest and demand drop-out from self-employed workers.

Enforcement on employment relationships
To "combat false self-employment, there will be better public enforcement in the case of suspected employment". As we discussed in a roundtable discussion with FNV Zelfstandigen, ONL voor Ondernemers and TNO, enforcement on labor relations can have an important function for the balance on the labor market. Important to protect vulnerable and forced self-employed workers and offer security, at the same time we must keep an eye on the diversity of the self-employed population and give conscious self-employed entrepreneurs in the higher segment the freedom to do business. Start enforcement step by step in the sectors, where we know there are many vulnerable self-employed workers working at lower hourly rates. The SER opinion provides guidance for this and keeps the labor market above €35 open and workable.

Stay in conversation with field parties
I advise politicians to stay in conversation with industry associations, intermediaries and self-employed advocates. These are the specialists when it comes to connecting supply and demand in the fragmented and very tight labor market. As one of the parties guiding people from work to work and contributing to the sustainable employability of employed people, we are happy to do our part. In the coming years, we are happy to work and - more importantly - implement the plans to make serious work of the labor market of tomorrow.

Monday, October 28, Minister Koolmees of Social Affairs and Employment, State Secretary Snel of Finance and State Secretary Keijzer of Economic Affairs and Climate announced an internet consultation. It concerns two parts of the proposals announced by the Cabinet to replace the DBA Act; the minimum rate of self-employed workers and the self-employment declaration.

Measures as of Jan. 1, 2021

The first measure relates to the lower end of the market and means that self-employed workers must earn a minimum of €16 per hour. This minimum rate applies to all the hours a self-employed person spends on an assignment. This takes into account spending on other work, such as administration. Direct costs, such as materials, are excluded. Zzp-ers who earn less than the minimum rate are not considered self-employed, but as employees of the client.

The second measure is the self-employment declaration. This is intended for self-employed people with a rate of at least €75. It allows them to agree in advance with the client that they are self-employed. Registration with the Chamber of Commerce is required to use the self-employment declaration. If the conditions are met, the self-employed and clients run no risk of having payroll tax and social premiums withheld for up to one year. In addition, they get as much certainty as possible about labor law consequences.

Web module not included

The web module, which self-employed people can start using in other cases, is not mentioned in this draft bill. In fact, no legislative amendment is needed for that. However, the questions from the web module have been tested with clients and trade organizations. Because the draft version received a lot of criticism, the effective date of January 1, 2020 has been postponed. Processing the feedback not only takes a lot of time, but makes the development of the web module an even more complicated puzzle.

Internet consultation

The Internet consultation means that the draft bill will be open for feedback for six weeks - until Monday, Dec. 9. Based on this feedback, the bill can be prepared for advice from the Council of State and then for submission to the House of Representatives. The Internet consultation can be found here.

The failure to tailor laws and regulations hinders the labor market. For example, the DBA law is still causing anti-zzp policies among various clients. This is problematic for the self-employed, but in view of the extreme scarcity in the labor market certainly also for clients. According to Han Kolff, CEO of HeadFirst Group, this requires decisiveness from politicians in The Hague and from clients.

Market maximally oversupplied
It is becoming increasingly complicated for organizations to find talent. Record after record is being broken of the number of open vacancies, and since the CBS measured the tension in the labor market, the number of vacancies has never before exceeded the number of unemployed. The limits of the flexible labor market have also almost been reached. HeadFirst Group and Intelligence Group showed in the recently released Talent Monitor that the (active) supply of independent professionals (zp'ers) is drying up and the benches at secondment agencies are emptying.

'Anti-zzp policy' still in play
In a time of extreme scarcity, all available talent is needed to keep the economy running. Despite this, various clients still too often exclude an important target group with valuable knowledge: independent professionals. This is the result of the DBA law and the "assessment of the relationship of authority" directive, which still causes nerves.

Since it is not always clear whether there is a relationship of authority between client and contractor - and the Tax Office only assesses afterwards - there is a fear among clients of possible retrospective levies. The Cabinet's earlier decision to suspend enforcement on this as of October 1, 2021, until more is clear about replacement legislation, is a wise choice. It was expected that this would create calm among principals. Unfortunately, little has changed among most clients when it comes to looking at self-employed workers in hiring applications or tenders, as we saw recently at the Municipality of The Hague.

The self-employed are hindered by this, although this is currently disguised by the fact that there is sufficient work for clients who are open to self-employed workers. It is most problematic for clients, who in the war for talent need every target group on the labor market, and certainly the knowledge-intensive group of hundreds of thousands of self-employed in the Netherlands.

Appeal to clients and politicians in The Hague
That principals are looking critically at hiring zp'ers for roles where perhaps someone in permanent employment would make more sense is good. But let go of the widespread fear of hiring self-employed workers. Within the frameworks of the DBA Act, more is possible than is currently happening at various clients. With a clear assignment description with defined results, good guidance for hiring managers on how to avoid a relationship of authority and a critical look at extremely long assignment periods, the expertise that self-employed people have can be used.

In addition, a call to a next cabinet, in line with earlier noises from professors, industry associations and self-employed organizations: get to work quickly on serious labor market reforms. Hold existing rules up to the light and engage in discussions with a broad representation of stakeholders. The pilot of the web module has shown that in certain sectors - such as transport, construction and hospitality - the risk of abuse with zzp constructions is highest. Vulnerable self-employed workers in these sectors deserve protection and benefit from effective enforcement. The €35 guideline in the SER opinion provides guidance for this. Only that removes the tension of the term "authority relationship" at the upper end of the market. That need has only increased with the current scarce labor market.

The European Commission wants the Netherlands to further cut tax credits for self-employed workers. It would be one of the two conditions to claim coronasteun from Brussels, mentioned the FD. This once again makes zzp'ers the subject of the political-social discussion about the labor market.

Politicians in The Hague see creating a more level playing field, including by phasing out the self-employed deduction, as one of the solutions to the proliferation of self-employed workers. We embrace the creation of a more level playing field. After all, every individual in the Netherlands - regardless of the form of work and employment relationship - is entitled to protection and security.

However, a helping hand from politicians is desperately needed for the self-employed with lower hourly rates and small financial buffers. This group benefits from protection, for example against the consequences of disability and unemployment. Nevertheless, due to the fixed amount of the self-employment deduction, self-employed people with lower incomes are hit harder.

Only 7 percent self-employed call themselves forced self-employed
A growing group of employed people - in their search for autonomy and challenge - are making the move to self-employment. Only just under 7 percent of the self-employed population call themselves forced self-employed. It is high time for a solution that supports needy self-employed people, but leaves the larger group of conscious self-employed people free to do business.

However, this must go hand in hand with collectivity, social security and modern solidarity. A basic social system is needed for all workers, regardless of their contract or legal form, with securities that move with the changes in their working lives. A substantial change from the current system, but much needed to future-proof the labor market.

To take the debate on the labor market to a higher level, facts and figures of self-employed people are needed. On Monday, November 8, ZiPconomy, ONL and HeadFirst Group will present a report with the aim: to map the diversity and heterogeneity of this group and contribute to a rational and factual debate.

Last Monday, outgoing Minister Koolmees of Social Affairs and Employment informed the Lower House by means of the seventh progress letter 'Working as a self-employed person'. In this letter special attention was given to the pilot results of the web module, the online tool with which clients can determine whether they can hire a self-employed person for a specific assignment. Within a short period of time, industry associations, zzp-interest groups and trade unions criticized the results. For further decision-making and possible continuation of the web module, the ball is in the new cabinet's court.

HeadFirst Group believes it is unwise to further develop the web module. In an earlier phase of the web module, legal experts already criticized the tool. Now the evaluation of the pilot shows that in 28.4% of the cases the web module cannot give an opinion on the nature of the working relationship. "Unfortunately, the web module does not provide the clarity and clarity that clients and self-employed workers have been asking for for years. A new cabinet would be wise not to further develop the web module. Implement real reforms instead of just sticking band-aids," said Han Kolff.

Current web module not suitable for intervention
In the letter, Koolmees announces that the questionnaire specifically intended for intermediary situations has not yet been completed. This means that the web module is not suitable for self-employed people who work through an intermediary. The most recent Self-Employed Labor Survey shows that about 8% of the self-employed category have assignments or clients through an intermediary. Should the web module actually be introduced, agreement on the content and form of a questionnaire for intermediary situations must first be found in proper consultation with intermediaries and industry associations. The Bovib, the branch organization for intermediaries and brokers to which HeadFirst Group is also affiliated, reports on its own website that the talks with the Ministry of Social Affairs and Employment are proceeding with difficulty.

Time for serious reforms
A new administration must get serious about labor market issues and challenges. "The web module should not create regulatory pressure and uncertainty. The upper end of the flex market, consisting of conscious and autonomous independent entrepreneurs, functions much better if laws and regulations really give room to do business. This group satisfactorily makes clear agreements with clients and intermediaries."

The evaluation of the pilot shows that in certain sectors, such as the hospitality, transport and construction industries, the likelihood of an "indicative employment" outcome is highest. These sectors employ relatively more vulnerable self-employed workers with lower hourly rates. "The SER's advice to enforce hiring agreements below €35 per hour more strictly is a good starting point. Supervision and enforcement should focus on sectors where abusive zzp constructions are used. Trust that at the top of the market there is professional and good cooperation between clients and independent professionals, where intermediaries play a role to work in accordance with laws and regulations."

Finally, Kolff argues for a broad coalition of societal parties to discuss and think about a basic social system for all working people, for example for the consequences of disability. Earlier research by HeadFirst Group has shown support for such a system among independent professionals. "We still embrace the idea of a basic social system for all employed people in the field of disability, as proposed by the Borstlap Commission and the Social Agreement of ONL, VZN and AVV. If we create certainties around the individual rather than the form of contract, then the 'pressure' on the qualification question will decrease." To create a more level playing field between employees and the self-employed, the government has already begun by further and accelerated phasing out the self-employment deduction.