VBAR Act against bogus self-employment: How can companies prepare and is franchising a solution?

The Act Clarifying Assessment of Employment Relationships and Presumption (VBAR) is on the horizon and is expected to come into effect in 2026. This law is intended to provide more clarity on the status of self-employed professionals (freelancers) and employees, and to tackle pseudo self-employment. But what does this mean for organizations that work with freelancers? And can franchising be a viable solution to the challenges posed by this law?

Why the VBAR Act?

The VBAR Act has been 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 self-employed person. This often led to situations of pseudo self-employment, where workers formally worked as freelancers but were, in fact, operating under employment conditions. The new law aims to end this and should give both freelancers and employers more clarity about their legal position.

Additionally, the government wants to ease the pressure on the social system. When a large part of the workforce works as self-employed, they contribute less to social provisions such as pensions and disability insurance. By tackling pseudo self-employment, the system is protected, and fair employment relationships are promoted.

Key changes under the VBAR Act

The VBAR Act brings several key 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 minimum hourly rate for self-employed individuals. If a freelancer charges an hourly rate below €33, it is assumed that there is an employment relationship. This presumption of employment means that employers are required to pay social contributions and taxes, similar to employees in permanent positions.
2. Authority criterion and embedding in the organization: An important element of the VBAR Act is the clarified authority criterion. This determines whether a freelancer is truly independent or if the work relationship effectively falls under the authority of the client. If the freelancer performs tasks essential to the core activities of the company and works under supervision, 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 risk. A self-employed individual 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.

VBAR Act reviewed by the council of state

The VBAR Act was recently 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 assesses the bill on legal quality, enforceability, social 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 negatively on this bill. In the opinion of the Council of State, the government's proposals fall short in fundamental reforms. There is criticism that the permanent contract is not being adjusted and that coherent reforms in areas such as social security and taxation are missing. The Council's advice includes:

• The proposed measures are expected to have only limited effects.
• More attention is needed for justifying differences in treatment and managing risks in the requalification of employment relationships.

What this concretely means for companies is that the law is not yet final. Adjustments can still be made based on the Council of State's advice. However, the expectation is that the core of the law, such as the criteria for self-employment and pseudo self-employment, will be maintained. After the Council of State's review, the law will be further discussed in the House of Representatives, where it may be further adjusted before it is finally adopted.

This means companies still have some time to prepare, but from January 1, 2025, the Tax Authority will start actively enforcing pseudo self-employment again under the current rules. Therefore, it is essential for companies to review their freelancer contracts and work relationships now to avoid future fines and additional assessments.

Impact on companies: more risks and administrative burdens

For companies heavily reliant on freelancers, the VBAR Act brings significant risks. If an employment relationship is not correctly assessed, it can lead to substantial financial and legal consequences. The Tax Authority will start enforcing more actively from 2025, and companies that wrongly hire freelancers as independent contractors risk fines and retroactive social contributions and taxes.

Additionally, the introduction of the VBAR Act results in more administrative burdens. Companies will need to meticulously document why they consider a particular work relationship to be an independent one, and they will have to regularly review contracts to ensure compliance with the new criteria. This not only requires more time and costs but also increases legal risks.

Is franchising a solution for the consequences of the VBAR Act?

For companies accustomed to working with many independents, franchising might be an attractive solution. In a franchise model, independent entrepreneurs work under a company's brand but remain formally legally independent. This provides a clear separation between the franchisor and the franchisee, reducing the risk of pseudo self-employment.

In a franchise agreement, it's much clearer to the Tax Authority that the work relationship is based on true independence. Franchisees bear entrepreneurial risks, invest in their own business, and have full responsibility for their operations. This makes franchising a solution that meets the criteria of the VBAR Act better, such as bearing financial risks and independence in business operations.

Benefits of franchising:

• Clear legal separation: The franchisee is an independent entrepreneur with full responsibility for their own business.
• Less risk of pseudo self-employment: Franchisees are more likely to meet the requirements of the VBAR Act, as they are responsible for their own investments and bear entrepreneurial risks.
• Flexibility: Companies can still use independents without the risk of fines and additional assessments due to pseudo self-employment.

How can companies prepare for the VBAR Act?

Although the VBAR Act will only take effect in 2026, it is wise to take measures now to be prepared for the changes. Companies working with freelancers should evaluate their current contracts and ensure they comply with the new VBAR Act criteria.

Review existing contracts: Make sure that contracts with independents meet the new criteria for independence, 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 updated on developments: The VBAR Act is not yet final, but enforcement of pseudo self-employment will become stricter in the future. Ensure you stay up-to-date with the latest developments in legislation.

Stay informed and take action in time

Curious about what the VBAR Act specifically means for your organization? Fill out the form on this page to stay informed about the latest developments or contact us for a non-binding consultation.

Together we will look at how you can optimize your current situation and whether franchising is a suitable solution for your company.