a. Laws and Guiding Principles
The employment contract has been defined in Article 7:610 of the Dutch Civil Code and the contract for services has been defined in Article 7:400 of the Dutch Civil Code. The legal criteria and guiding principles on the basis of which the type of contract is determined have been explained above in part one.
b. The Legal Consequences of a Re-Characterisation
If a labour relationship is qualified as an employment contract, the employee is protected by Dutch employment law, e.g. regarding minimum wages, holidays, sickness, termination, pensions rights, collective bargaining agreement. Please see part one for a short overview of the most important differences in benefit entitlements and other rights and obligations between an employee and an independent contractor.
Furthermore, the employer will be responsible for withholding income tax and national insurance contributions from the employee’s salaries. The Tax Authorities can claim payment of income tax and national insurance contributions due by the employee from the employer.
c. Judicial Remedies Available to Persons Seeking ‘Employee’ Status
If a person is of the opinion that his or her labour relationship meets the criteria for an employment relationship, this person could request a declaratory decision from the courts about the qualification of the employment contract.
d. Legal or Administrative Penalties or Damages for the Employers in the Event of Re-Characterisation
The employer may be confronted with employee benefits in arrears such as outstanding holiday payments, salary entitlements during sickness and/or pension entitlements. The employer could also be imposed fines by the Tax Authorities for not complying with the obligation to withhold income tax and national insurance contributions.