Qualifying employment contract: employee or not after all?
With the Deliveroo judgment of March 2023, the Supreme Court has once again given the practice more clarity on the qualification of the employment contract. Since that ruling, of course, various case law has again been rendered on whether there is an employment contract or yet another type of contract.
This article explains when there is an employment contract and, on the basis of two examples, further clarifies the qualification of employment relationships in order to get a better idea of when you are dealing with an employee or still with a ZZP or intern.
When is there an employment contract?
First of all, just the basics. We speak of an employment contract only when the following cumulative requirements of Article 7:610 of the Civil Code (BW) are met:
- labor;
- pay;
- authority (employed);
- for a certain amount of time.
These elements are left to be fleshed out by case law.
Viewpoints assessment employment relationship
In the Deliveroo ruling, the Supreme Court provided points of view that answer the question of whether an agreement should be classified as an employment contract. The points of view are as follows:
- The nature and duration of the work;
- The manner in which work and working hours are determined;
- the embedding of the work and the person performing the work in the organization and business operations of the person for whom the work is performed;
- The existence or absence of an obligation to perform the work personally;
- How the contractual arrangement of the parties’ relationship was established;
- The manner in which remuneration is determined and paid;
- the amount of these rewards;
- whether the person doing the work is at commercial risk in doing so;
- Also of importance may be whether the person performing the work behaves or can behave as an entrepreneur in economic life, for example, in acquiring a reputation, in acquisition, in terms of tax treatment, and considering the number of clients for whom he works or has worked and the length of time for which he usually behaves.
It also follows from the ruling that only provisions that actually have meaning for the parties are relevant in the assessment.
Then to the examples.
Security guard is self-employed and has no employment contract
The East Brabant District Court ruled that a security guard did not have an employment contract, but performed his work as a ZZP’er. Various elements in the employment relationship pointed to an assignment contract. The security guard had a lot of freedom. He had no obligation to work a minimum number of hours, he himself determined which days and times he worked, and he had no maximum number of vacations.
Furthermore, the court found it significant that although security work was the core business of the work provider, the security guard was not embedded in the organization. In addition, his fee was substantially higher than the salary of the employee with similar work and the security guard was at commercial risk because he had no claim to a fixed number of hours.
Finally, the court concluded that the security guard could conduct himself as an entrepreneur in the course of business by being allowed to work for other clients.
Internship agreement qualifies as employment contract
The Central Netherlands District Court ruled that, an employee whose last employment contract was not renewed was already in permanent employment. The first “internship agreement” qualified as an employment contract. In fact, after that first agreement, the employee had received three more temporary employment contracts and the last extension automatically resulted in an indefinite contract.
The agreement was qualified as an employment contract because the employee’s work during the internship agreement was not substantially relevant to the employee’s training. From the outset, the employee performed much of the work that was part of the position of entry-level production manager. Study was not a primary concern. There was no plan and the employer had no knowledge of the training requirements. Thus there was employment within the meaning of Section 7:610 of the Civil Code. Thus, the employer still had to pay the minimum wage over the internship agreement, because only an internship allowance had been paid.
Clarifying assessment of employment relationships and legal presumption
The legislature is also not sitting still in this area and aims to give more interpretation to the concept of “employed” (relationship of authority) in Article 7:610 of the Civil Code. The legislator proposes the following interpretation of the term:
- he who performs the work under work-related direction from the employer; or
- he or labor that is organizationally embedded in the employer’s organization; and
- he who does not perform the labor for his own account and risk.
The bill also introduces a new legal presumption. Anyone who performs work for remuneration not exceeding €32.24 per hour will be presumed to be working on the basis of an employment contract under a new Section 7:610aa of the Civil Code to be introduced.
Seek advice qualifying employment relationship?
In doubt about the qualification of an agreement? Contact Lisa Kloot of LVH Advocaten in Rotterdam. Lisa Kloot is an Employment Lawyer and regularly advises entrepreneurs on labor relations and employment contracts.
