New Dutch act against false-self-employment: How can companies prepare and is franchising a solution?

A new Dutch Act for clarifying employment relationships and presumption of employment is on the horizon and is expected to come into effect in 2026. This law aims to provide more clarity regarding the status of self-employed professionals (freelancers) and employees, and to combat pseudo self-employment. But what does this mean for organizations working with freelancers? And could franchising be a viable solution for the challenges posed by this legislation?

What is the purpose of this new act?

The act was developed to resolve the ambiguity surrounding the distinction between self-employment and employment. Under the current legislation, such as the DBA Act, there was much uncertainty about when someone could be hired as a freelancer. This often led to situations of pseudo self-employment where workers were formally working as freelancers but were actually operating under the conditions of an employment contract. The new law aims to put an end to this and to provide more clarity to both freelancers and employers about their legal position.

Additionally, the government wants to alleviate pressure on the social system. When a large portion of workers operate as freelancers, they contribute less to social benefits such as pensions and disability insurance. By combating pseudo self-employment, the system will be protected, and fair labor relations will be promoted.

Key changes under this act

The act introduces several significant changes that will directly impact how companies can hire freelancers. Here are the main changes:

1. Rate Thresholds and Presumption of Employment: The law introduces a lower limit for the hourly rate of freelancers. If a freelancer charges an hourly rate below €33, it is presumed that an employment contract exists. This presumption of employment means employers are required to pay social contributions and taxes, as is the case with salaried employees.
2. Authority Criterion and Embedding in the Organization: A key element of the act is the clarified authority criterion. This determines whether a freelancer is truly independent or if the working relationship actually falls under the authority of the client. If the freelancer performs tasks essential to the company's core activities and works under direction, this is seen as an employment relationship. This so-called "embedding" criterion is intended to prevent situations where freelancers perform structural work that belongs in an employment relationship.
3. Financial and Operational Independence: The law also distinguishes based on the extent to which the freelancer bears entrepreneurial risks. A self-employed person must, for example, be financially responsible for the result of their work, bring their own materials and resources, and possess specific expertise not structurally present within the client's organization.

Act reviewed by the Council of State

The act has recently been reviewed by the Council of State, the highest advisory body of the government. This is a crucial phase in the legislative process. The Council of State examines the bill in terms of legal quality, enforceability, societal impact, and financial consequences. This resulted in an advice to the Minister of Social Affairs and Employment, Eddy van Hijum, who may adjust the bill based on the Council's feedback.

The Council of State has advised against this bill. In their opinion, the government's legislation proposals fall short in fundamental reforms. There is criticism that the fixed contract is not adjusted and that coherent reforms in areas such as social security and taxation are lacking. The Council's advice states:

• The proposed measures are expected to have only limited effects.
• More attention is needed for justifying treatment differences and controlling risks when reclassifying employment relationships.

What this concretely means for companies is that the law is not yet final. There may still be adjustments based on the advice of the Council of State. However, the expectation is that the core of the law, such as the criteria for independence and pseudo self-employment, will remain intact. After the Council of State's assessment, the law will be further discussed in the House of Representatives, where it may be further modified before being definitively adopted.

This means that companies still have some time to prepare, but from January 1, 2025, the Tax Authorities will more actively enforce pseudo self-employment under the current rules. It is therefore crucial for businesses to review their freelancer contracts and working relationships now to avoid future fines and additional taxes.

Impact on companies: more risks and administrative burdens

For companies heavily relying on freelancers, the new act presents significant risks. If a working relationship is not correctly assessed, this can lead to substantial financial and legal consequences. From 2025, the Tax Authorities will enforce more actively, and companies wrongly hiring freelancers as self-employed individuals risk fines and back taxes for unpaid social contributions and taxes.

Moreover, the introduction of the act increases administrative burdens. Companies will need to meticulously document why they consider a specific working relationship as independent, and contracts will need regular reviews to ensure compliance with the new criteria. This demands not only more time and cost but also increases legal risks.

Is franchising a solution for the consequences of the act?

For businesses accustomed to working with many freelancers, franchising can be an attractive solution. In a franchise model, independent entrepreneurs operate under a company's banner but remain formally legally independent. This provides a clear separation between the franchisor and the franchisee, thus reducing the risk of pseudo self-employment.

In a franchise agreement, it is significantly more clear to the tax authorities that the working relationship is truly independent. Franchisees bear entrepreneurial risks, invest in their own business, and have full responsibility for their business operations. This makes franchising a solution that better meets the act's criteria, such as bearing financial risks and having independence in business operations.

Advantages of franchising:

• Clear legal separation: The franchisee is an independent entrepreneur with full responsibility for their own business.
• Reduced risk of pseudo self-employment: Franchisees are more likely to meet the act's criteria, as they are responsible for their own investments and bear entrepreneurial risks.
• Flexibility: Companies can still utilize self-employed individuals without the risk of fines and penalties from pseudo self-employment.

How can companies prepare for the act?

Although the act will not come into effect until 2026, it is prudent to take measures now to prepare for the changes. Companies working with freelancers should evaluate their current contracts and ensure they meet the new act criteria.

Review existing contracts: Ensure that contracts with freelancers adhere to the new independence criteria, such as bearing financial risks and the degree of independence in executing the work.

Consider alternative structures such as franchising: Franchising offers a clearer legal structure and reduces the risk of pseudo self-employment. By working with franchisees, you can deploy flexible labor without conflicting with the new rules.

Stay informed about developments: The act is not yet final, but enforcement of pseudo self-employment will become stricter in the future. Ensure that you stay up-to-date with the latest legislative developments.

Stay informed and take timely action

Are you curious about what the act specifically means for your organization? Fill in the form on this page to stay updated on the latest developments or contact us for a no-obligation consultation.

Together, we will assess how to optimize your current situation and whether franchising is a suitable solution for your company.