New rules for employees vs. self-employed workers in the Netherlands – changes ahead for 2025 and 2026

As in many countries, employees and self-employed workers are treated differently for both tax and labour law purposes in the Netherlands. While employees may benefit from various legal protections and perks such as pension contributions, self-employed workers often enjoy greater autonomy and certain tax advantages. However, distinguishing between these two categories can be complex.

The Dutch government is increasingly focused on clarifying and enforcing this distinction to ensure proper tax compliance and protect workers’ rights, particularly for those with low hourly rates. Recently, legislative efforts have intensified, such that both Dutch and foreign businesses should reassess their engagements with self-employed workers in the Netherlands.

Below, we will delve into the current state of Dutch classification of employees and self-employed workers for tax purposes and outline the changes that are set to take effect. With this overview, we want to update you on the changes that may impact your business and guide you on how to best address these. 

The Urgency: End of enforcement moratorium from 1 January 2025

The Dutch government has announced that the so-called enforcement moratorium on the qualification of labour relations will be lifted as per 1 January 2025. The aim is to restore balance in the labour market and tackle false self-employment more effectively. 

The enforcement moratorium was initially implemented in 2016 following the introduction of the Deregulation of Labour Relations Act (Wet Deregulering Beoordeling Arbeidsrelaties). This act replaced the Declaration of Independent Contractor Status (Verklaring Arbeidsrelatie) with the objective of addressing false self-employment. However, the act led to significant uncertainty in the labour market, prompting the suspension of enforcement, save for a few exceptional cases.

Currently and up until 1 January 2025, enforcement by the tax authorities is limited to situations where malicious intent is evident. This is defined as cases where a company deliberately allows a situation of apparent false self-employment to arise or persist. In such cases, the tax authorities can impose correction obligations, additional assessments, fines, and interest. If an investigation reveals an employment relationship without malicious intent, the tax authorities will provide instructions to rectify the situation. Companies usually have three months to comply with these instructions. Failure to follow these instructions adequately can result in enforcement actions.

As per 1 January 2025, the tax authorities will enforce against false self-employment more strictly. When the tax authorities determine that an employment relationship exists, they can choose to directly impose correction obligations, additional assessments, fines, and interest, without first issuing an instruction to correct the contractual relationship. However, there are concessions which provide for a soft landing. The tax authorities will not retroactively impose corrections for periods before 1 January 2025, except in cases of malicious intent or failure to comply with previous instructions. Furthermore, during a one-year transition period no punitive penalties (vergrijpboeten) will be imposed if employers can demonstrate efforts to address the occurrence of possible false self-employment. However, default penalties (verzuimboeten), for example for not paying wage tax due in time can still be imposed. 

It is important to note that the enforcement moratorium is limited to tax consequences and does not extend to labour law implications. Consequently, the existence of an employment relationship may still have labour law related repercussions for periods before 1 January 2025.

The Basics: Current criteria for employee classification

In the Netherlands, the primary legal framework for determining whether a worker is considered an employee is outlined in Article 7:610, paragraph 1 of the Dutch Civil Code. This article defines an employment agreement as an agreement in which one party, the employee, commits to performing work for a certain period in service of another party, the employer, in exchange for remuneration. This employment relationship is characterised by three essential elements: Authority, Work, and Remuneration.

In practice, the authority criterion often generates the most discussion. This authority can be either material, where the employer has the right to issue instructions and supervise the execution of work, or formal, where the employee must adhere to the organisational rules imposed by the employer.

The Dutch Supreme Court employs a holistic approach to determine whether an agreement qualifies as an employment agreement. This involves assessing all relevant facts and circumstances in their entirety, including the nature and duration of the work, the manner in which tasks and working hours are determined, and the economic risks borne by the worker.

The analysis is divided into two phases: the “explanation phase” and the “qualification phase.” In the explanation phase, the court examines the terms agreed upon by the parties and how these terms are implemented in practice. The qualification phase then assesses whether these terms and their execution meet the criteria of an employment agreement. The intention of the parties is not relevant for this qualification. Due to the holistic approach, there is often uncertainty and unpredictability in determining whether a worker classifies as an employee or a self-employed worker.

Businesses should also be aware that, in certain situations, a fictitious employment relationship can exist for Dutch wage tax purposes, even if there is no actual employment relationship.

The Change: New classification framework anticipated from 1 January 2026

A new set of rules for distinguishing between employees and self-employed workers is anticipated to come into effect on 1 January 2026. Recognising the ambiguity and practical challenges associated with the criterion of authority in employment relationships, the Dutch government aims to offer more precise criteria.

The new classification framework starts by examining the core elements that indicate an employment relationship. If these elements alone are present, it suggests that the worker is an employee. Conversely, if there are no such indicators and only elements pointing towards self-employment, the worker will be classified as self-employed. In scenarios where there are indicators of both employment and self-employment, the indicators must be weighed against each other to determine which classification the relationship leans towards. 

Up until this point, the focus of the assessment is on the relationship between the principal and the worker, without considering how the worker interacts with third parties, such as other clients. However, when the indicators for employment and self-employment are balanced, the worker’s general economic behaviour becomes a decisive factor. This stage involves assessing whether the worker operates as an independent entrepreneur in similar economic activities, i.e. when dealing with third-party clients. 

Part of the new legislation is the introduction of a legal presumption of employment based on an hourly wage threshold. Under the proposed law, if a worker earns less than EUR 33 per hour excluding VAT (amount is subject to changes), there will be a presumption that an employment relationship exists. This measure is intended to protect workers who have limited bargaining power and are at risk of false self-employment. 

If a worker earning below the hourly threshold believes they are working under an employment agreement, they can approach their employer with this claim. If the employer does not acknowledge the employment relationship, the worker can take the matter to court. When the presumption of an employment relationship is established, the burden of proof would shift to the employer, who may then provide evidence to rebut the presumption. 

The presumption applies to the relationship between the worker and the employer. Agencies such as the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen) and the tax authorities will in principle conduct their own assessments. However, these agencies may take the court’s decision into consideration. 

Please see below is an overview of the new classification framework, along with the relevant indicators:

The Debate: Advisory opinion from the Council of State on the legislative proposal

On 11 November 2024, the Advisory Division of the Council of State (Afdeling Advisering van de Raad van State) published its advisory opinion on the legislative proposal and proposed classification framework anticipated to enter into force in 2026. The review highlighted several concerns and provided feedback on the (lack of) effectiveness, and potential consequences of the proposed changes.

One of the main criticisms is that the proposed law makes only a limited contribution to addressing the issues related to false self-employment. The advisory body noted that the legislative proposal primarily codifies existing case law, which may help in raising awareness about the distinction between employees and self-employed workers, but it does not fundamentally tackle the issues prevalent in the labour market. The advisory body suggested that the lifting of the enforcement moratorium described in section 1 of this article might offer a more effective approach to combating false self-employment.

Furthermore, the advisory body raised concerns about the legal presumption of employment based on an hourly wage threshold. It pointed out that this presumption could lead to varying classifications of employment relationships, potentially resulting in inconsistencies and legal uncertainties. 

In addition, the advisory body also highlighted the potential for considerable friction in the short term due to the reclassification of many labour relationships. This could pose significant challenges, for example for backdated pension contributions.

The recommendation for the government is to make amendments to the proposal to mitigate potential negative impacts, and, importantly, to (better) address the reasons behind the growing number of self-employed workers in the Netherlands.

Given the negative tone of the advisory opinion and the dissatisfaction expressed by some stakeholders, such as employer organisations, we anticipate that the proposed law may undergo revision before it is finalised. Additionally, since the proposal was made by the previous government, which is no longer in office, the new administration may want to introduce its own changes to address the concerns raised and make changes based on its own vision for the labour market.

In Practice: Discontinuation of model agreements

In line with the broader efforts to combat false self-employment, as of 6 September 2024, the tax authorities have ceased approving new model agreements and will no longer extend existing ones. Existing model agreements will remain valid until their current respective end dates. 

These model agreements were introduced to outline the relationship between self-employed workers and clients, providing model wording that indicated there was no employment relationship. If in practice the wording was followed, the principal would not be at risk of being classified as an employer by the tax authorities. It has been decided to discontinue this practice because it has been observed that the actual execution of tasks often differed from what was outlined in the model agreements, resulting in a false sense of security for principals.

Take the initiative: Recommended action for businesses

Given the changes in the determination of employment relationships, it is crucial for businesses to reassess their current engagements with self-employed workers. This reassessment should involve a thorough review and documentation of the actual/practical execution of the tasks to ensure compliance with the current and new regulations. If (material) risks are found, it may be recommended to take action.

Options for action may include adjusting the way businesses engage with self-employed workers to ensure that the relationship clearly reflects that the worker performs the tasks at their own account and risk. If such adjustments are not feasible or if there remains a material risk of the relationship being classified as employment, other alternatives may be considered, for example, offering employment contracts to the workers concerned or using a staffing agency to manage the relationship. 

We are happy to help you (re)assess and document your relationships with self-employed workers and explore the best course of action for your business. Please feel free to contact Arnoud Knijnenburg or Ashraf Abdirizak.