VBAR: arguments for and against

Bogus self-employment - as we have been reading in the media for some time now - is an increasing phenomenon in the Dutch labour market. Everyone agrees that this is a problem. But opinions are divided on a solution. After all, how do you define self-employment in a way that excludes false self-employment, but does not undermine real self-employment? The law that regulated this – the DBA – turns out to be too vague. A new law, the VBAR, should provide more clarity. The proposal for the VBAR is now before the Council of State for approval and is under considerable discussion.

Saving on personnel costs

Hiring staff on a self employed basis to fill positions that where previously filled by employees, can be an attractive proposition for both employer and employee. For the employee this can mean considerably fewer legal and tax obligations. Unfortunately it could also mean the loss of many of their rights, such as a permanent contract, unemployment benefit, minimum working hours, financial security, notice period and pension accrual. This obviously puts a person working in disguised employment in a vulnerable position, whereas the employer only stands to gain financially. Disguised employment then, entails many risks for the self employed and the State Treasury.

VBAR

The VBAR bill (Clarification of Assessment of Employment Relations and Legal Presumption) was submitted to the Council of State in June 2024 by Minister Van Gennip of Social Affairs and Employment. This proposal should provide clear and unambiguous guidelines for determining whether a person is truly self-employed. The VBAR bill is therefore intended to create a fairer and more transparent working environment. The new law will most likely take effect on 1st January 2026 and is intended to have a preventive effect: when entering into an employment relationship, it will be the standard used to determine objectively whether persons have genuine independence. From 1st January up until the VBAR comes into force, the Tax and Customs Administration will actively enforce the regulations for false self-employment in accordance with the predecessor of the VBAR, the DBA Act. According to what criteria remains to be seen.

Is independence evidenced by a working relationship or by entrepreneurship?

The VBAR bill defines entrepreneurship according to various criteria, such as the degree of independence, the nature of the work, and the mutual relationship between client and contractor. The question is how these assessment guidelines will be described in the final law.

Legal case: FNV vs. Uber

Exemplary in the positions on this is the lawsuit between Uber and FNV, in which the FNV sued Uber (on appeal) for false self-employment of their self-employed workers. Uber argued for the criterion of entrepreneurship, which the self-employed people met. FNV argued that when looking at the working relationship, there was no question of independence. On appeal, the FNV was successful in September 2024.

Focus on the working relationship

The advice to the Supreme Court was not to focus on the entrepreneurial criterion: the question of whether the self-employed person has multiple clients and makes investments in business assets, for example, should weigh less heavily, when compared to the nature of the working relationship. For example, is there a relationship of authority? Does the presumed self employed person participate in the daily workflow or work on a project basis? Should be the deciding factors. It is expected that the advice to the Supreme Court will be followed. In that case, the nature of the working relationship will be the more weighty assessment criterion. In the VBAR proposal, the types of assignment and cooperation with the employer are the primary means of assessment used to determine whether a self employed person has real independence. Characteristics of entrepreneurship will be secondary, and used where doubt still remains.

Pros

In addition to support from the majority of the House of Representatives, various organizations are applauding the coming of the VBAR Act. FNV states that it is wise for the tax authorities to begin auditing again from 1st January 2025 and applauds the recognition of the  centrality of the working relationship. Employers deprive false self-employed workers "of pension accrual, insurance, paid leave days and holiday allowance" and this could easily be prevented with VBAR. Almost all parties involved agree that a clarification of the criteria from the DBA will lead to more stable, fairer and more manageable employment relationships.

Cons

There is also serious criticism: while enforcement has already been implemented by the Tax and Customs Administration since 1st January, the guidelines are still too vague, according to employers' organisations. Ambiguity and uncertainty in the market will be an inevitable consequence. In doing so, Actual self-employed persons could be wrongly classified as falsely self-employed and self-employment discouraged. The law would also not do justice to the increased variety of employment relationships and a non-distinction between employer and employee that is too black and white and therefore not representative.

Find out more

Lupacompany is following the discussion closely, and will keep you informed of new developments regarding the VBAR. Are you unsure whether your employment relationships comply with the rules of the upcoming VBAR? Make sure you stay up to date! Zipconomy  published a detailed explanation of the (new) criteria for the VBAR in September 2024 here.  Would like to prepare for the VBAR as a self-employed person? Read here how. Employers and DGAs who hire self-employed workers can learn more about  the possible consequences of the VBAR bill here .