IRS puts an end to 'free substitution' model agreement

Earlier this week, the Internal Revenue Service shared the notice that the approval of model agreements based on free substitution will be withdrawn as of Jan. 1, 2024. This decision is in response to their interpretation of the Supreme Court's ruling in the Deliveroo case. The Supreme Court ruled that only 'free substitution' can constitute employment. Clients and contractors should reassess the employment relationship before then if model agreements based on free substitution are used.

There are different types of model agreements that have been approved by the tax authorities in recent years. The use of an (approved) model agreement is not mandatory, it gives parties a certain degree of certainty that - if parties also behave in accordance with what is agreed in the model agreement - there is no question of false self-employment.

The Inland Revenue's decision does not affect working on an assignment through any of HeadFirst Group's labels. We use approved model agreements based on intervention. The criterion 'free substitution' is part of this model agreement, but not leading.