The so-called Deregulation Employment Relationship Assessment Act (DBA) has been introduced as a replacement for the old VAR declaration (Declaration of Independent Contractor Status). The soap opera with the model agreements that followed, did not deserve the beauty prize. At the end of 2017, it was agreed in the coalition agreement that the DBA Act would be replaced by new legislation. This is expected to be implemented with effect from 1 January 2021. To this end, the government has recently introduced two proposed measures in internet consultations. Stakeholders can respond to the plans until 9 December next. The most important measures are explained below.
Minimum rate for the self-employed
The previously proposed measure, the compulsory employment contract at a low rate, does not appear to be feasible under European law. A minimum rate of € 16 per hour will apply to both self-employed persons without personnel with business clients and private clients. This rate will apply to the hours spent on an assignment and is exclusive of direct costs. If it turns out afterwards that more direct costs and/or hours have been incurred, as a result of which the rate would be below the minimum rate, then the business client will be obliged to pay an additional fee. The minimum rate of € 16 per hour is intended to prevent the self-employed from working for a rate they cannot afford or with which they do not earn enough to insure themselves or to save for bad times.
Self-employed persons declaration
Self-employed persons without personnel with a rate above € 75 per hour can, under certain conditions, opt for a self-employed person’s declaration. This can be used to obtain assurance in advance that payroll taxes will not be withheld and employer’s obligations, including pension rights, which are part of an employment contract, will not have be granted, even if it turns out afterwards that the employee was in fact employed. The conditions that must be met in order to be able to make use of the self-employed person’s declaration are:
- the agreement states that the parties have the intention that the conditions of an employment contract will not be met;
- the employment remuneration amounts to at least € 75 per hour (price level 2019) and is paid on time;
- the activities are not entered into for longer than a period of no more than one year;
- the contractor must be registered with the Chamber of Commerce;
- the employer and the contractor both sign the declaration of self-employment prior to commencement of the work;
In addition, the parties must comply with a number of administrative conditions.
The introduction of the self-employed persons’ declaration is reminiscent of the revival of the former VAR declaration; in our opinion an important step in the right direction.
Do you have any questions about these proposals? Please feel free to contact us.