False self-employment legislation:
As in many other countries, the authorities are trying to reduce false self-employment. In the Netherlands new laws have been implemented to tackle the problem, but the execution and the enforcement of this legislation (Wet DBA) has been further postponed until 1 July 2018. There is still no new cabinet following the Dutch elections earlier this year, so it is unclear how this will all play out.
The new law has replaced the VAR declaration. Staffing companies supplying the services of independent contractors have updated, or to the extent they have not done so, will need to update their contracts to comply with the new law. In the interim we advise adding a clause to agreements between the staffing company and contractor indemnifying the staffing company in respect of employment claims (in particular, severance upon termination pay) and tax assessments from the tax authorities.
Social security premiums:
As of 25 May 2017 staffing companies may no longer pay social security premiums (for example, for unemployment benefits) at the relatively lower percentage applicable to relevant hirers. In the past, staffing companies could apply for this exemption if the majority of its agency workers were supplied to hirers in a particular sector. The current Government has ended this, causing much controversy. Going forward: all staffing companies will be obliged – in terms of the percentage social security premiums to be paid – to pay at the so-called ‘sector 52’ rate, which is for staffing companies exclusively. This measure may increase the costs of an agency worker by up to 10%.
This may lead to some staffing companies changing their business model to fit within a lower social security %. They might do this by reframing their supplies, so that they charge on an output basis for pre-defined deliverables. Or they might offer so-called ‘margin only’ arrangements where they merely introduce the worker, and the worker works direct for the end user.