Geen onderdeel van een categorie Enforcement DBA Act postponed: what does that mean?

State Secretary Wiebes informed the Lower House of the Dutch parliament on 18 November 2016 that the implementation period of the Wet deregulering beoordeling arbeidsrelaties (DBA Act; Assessment of Employment Relationships (Deregulation) Act) will be extended in any event until 1 January 2018. What will this mean in the near future? Can the model agreements be assigned to the wastepaper basket and will the VAR (Declaration of Independent Contractor Status) be reintroduced? The answer to both questions is “no”. The enforcement of the Act has been postponed, but not withdrawn.

In his Second Progress Report the State Secretary explained that the present situation is one of unrest and uncertainty. Principals are wary of hiring self-employed persons, who in their turn are afraid of losing assignments. He wishes to remove that uncertainty to the extent possible. His prime concern is to ensure that truly self-employed persons can continue to do business. He has therefore postponed the implementation of the Act until the problems are solved.

What will happen in the near future?

• • Until 1 January 2018 no fines or additional tax assessments will be imposed on contractors or principals. The Tax Administration will play a different role and will be coaching beforehand rather than later imposing fines. It should be noted that “ill-intentioned parties” may still be fined. According to the State Secretary, an ill-intentioned party is “a principal or contractor who intentionally allows an obvious pseudo self-employment status to arise or to continue while he knows (or could have known) that an employment relationship in fact exists (and in doing so obtains unjustified financial benefits or creates an unlevel playing field).” Unfortunately, that question is of course still debatable in practice. On Friday 25 November 2016 the State Secretary has added that only in exceptional circumstances the Tax Administration will enforce the new rules.
    Independent contractors whose working relationship is not entirely clear, do not have to fear fines or additional tax assessments.

• In the meantime the government will determine how the terms “subordination” and “free substitutability” can be brought in line with generally accepted views on employment relationships. Many people fail to see why it is relatively easy to work (at the lower end of the job market) as an independent contractor provided that the “substitution allowed” criterion is met, while (usually at the higher end of the job market) an employment contract is deemed to exist in the case of an authority relationship. The latter case relates to a self-employed professional who is hired for a specific project whereby the principal’s objective must be achieved but the manner in which that is done is left entirely to the professional. When does an authority relationship exist in that case? Since this uncertainty cannot be resolved at present, the State Secretary has promised not to take enforcement measures against this group until 1 January 2018. Those professionals can therefore rest assured that they will not be faced with any fines or additional tax assessments before that time. The enforcement may be changed when new definitions are in place.

• The State Secretary has promised to clarify the question when the use of a model agreement is truly necessary, but in particular when it is unnecessary.In many situations there is no doubt that an employment relationship (or a fictitious employment relationship) does not exist, but he will nevertheless not refuse to give principals and contractors certainty in that regard if they request it. It would therefore appear that agreements may be submitted to the Tax Administration for its approval also in the future.

• The State Secretary also commented on the ketenregeling (a maximum of three successive fixed‑term employment contracts over a period of two years) in sectors in which temporary assignments are customary. The parties to a collective agreement may now already request the Minister of Social Affairs and Employment to designate certain positions in a sector for which more fixed-term employment contract may be entered into under a collective agreement (a maximum of six over a period of four years). That is possible if that is “established practice” for those positions and if the “intrinsic nature of the operations” necessitates the use of fixed-term employment contracts. He stated that the Minister is open to requests from social partners to take appropriate measures if necessary, for instance in the broadcasting sector, the media and arts and culture.

Conclusion

The postponement of enforcement until 1 January 2018 has somewhat reduced the uncertainty surrounding the Act. But measures will still be taken against pseudo self-employment and “ill-intentioned parties”. It is therefore still necessary to have sound services agreements in place and to operate in accordance with those agreements in practice. In April 2017 the State Secretary (or possible his replacement by then) will decide whether further a extension of the implementation period after 1 January 2018 is desirable.

Please contact our office via info@boontje.nl if you require any further reassurance.

This blog was written by Anneke Meulenveld.