Employment contract or contract for services?
Both the Subdistrict Court of Rotterdam and the Subdistrict Court of East Brabant [1] were faced with this question in two different cases. In both matters, freelancers with short-term assignments argued that they in fact had an employment contract. The Rotterdam court concluded that there was indeed an employment contract, while the East Brabant court considered the situation to be a contract for services. How did the courts arrive at such different conclusions? Below, we will explain their reasoning and provide some guidance on how to deal with the difference between freelancers and employees.
Legal framework
Article 7:610 of the Dutch Civil Code describes an employment contract as an agreement whereby one party, the employee, undertakes to perform work in the service of the other party, the employer, for a certain period of time in return for pay.
In recent years, the Supreme Court has ruled on this qualification question several times. In the X/Amsterdam judgment, the Court ruled that an agreement must be regarded as an employment contract if its content meets the statutory definition. To assess this, one must first establish the parties’ agreed rights and obligations, if necessary using the Haviltex standard. Once these are established, it must be tested against the statutory definition of an employment contract in Article 7:610 Dutch Civil Code.
In the Deliveroo judgment, the Supreme Court listed nine factors that may be relevant in this assessment. Using these, and following the Rotterdam court’s approach of grouping them under the four elements of an employment contract plus a residual category, I will set out below the courts’ reasoning in the two cases, and illustrate the rather abstract assessment with practical examples.
The two judgments
First, a brief outline of the cases. In the Rotterdam case, two brothers were working for construction company EAG under an oral agreement. At some point, EAG terminated the agreement with immediate effect, (allegedly) due to lack of work.
In the East Brabant case, a freelancer carried out security work via his sole proprietorship under contract with the client. After five and a half months, the client also terminated the contract with immediate effect.
Although the cases show similarities, the courts reached different outcomes. Below is a schematic overview of the Supreme Court’s criteria, and how the Rotterdam and East Brabant courts applied them. As mentioned, the Rotterdam court concluded there was in fact an employment contract, whereas the East Brabant case involved a ‘genuine’ freelancer.
Overview
| |
Subdistrict Court Rotterdam |
Subdistrict Court East Brabant |
| Work |
|
|
| How work and hours were determined |
Workers were required to pick up colleagues at 7 a.m. and return them home after work. |
Freelancer set own hours, was scheduled by roster-maker, but could still cancel. |
| Obligation to carry out the work personally |
No practical possibility of substitution; employer insisted they perform the work themselves. |
Substitution allowed from a pool of 16 workers. |
| Pay |
|
|
| How payment was arranged |
No Chamber of Commerce registration; workers submitted hours by WhatsApp; client transferred payment to one brother’s account. |
Invoicing via freelancer’s sole proprietorship registered with Chamber of Commerce. |
| Level of pay |
€15 per hour – not market rate and insufficient to cover entrepreneurial risks. |
Fee (not specified) deemed substantially higher than wages of comparable employees. |
| Authority |
|
|
| Integration of work into organisation |
Work formed part of the company’s core activities, so embedded in the organisation. |
Same – work formed part of core activities. |
| Integration of worker into organisation |
Workers were embedded: EAG provided addresses, assignments, van, tools, building materials; carried out inspections; workers required to collect and return colleagues. |
Not embedded: company rules (e.g. leave) did not apply; no company equipment except jacket/shirt; not obliged to attend training; no performance reviews. |
| Certain period of time |
|
|
| Nature and duration of work |
Short contract of four months, but full working weeks of 5–6 days, 8 a.m.–6 p.m. with one-hour break. |
Short contract of 5.5 months; freelancer free to set working hours. |
| Other factors |
|
|
| How the contractual relationship arose
|
Not relevant – workers were Ukrainian refugees without knowledge of Dutch (employment) law. |
Not established. |
| Commercial risk
|
No entrepreneurial risk – complaints handled by client; €15 rate too low to cover risks. |
Entrepreneurial risk – earnings depended on hours worked; required to take out liability insurance. |
| Behaviour in economic traffic as entrepreneur |
No other clients, impossible with 44-hour weeks; not registered in Chamber of Commerce. |
No other clients yet (new in industry), but registered sole proprietorship. |
Conclusion
Although at first glance the two rulings show strong similarities, applying the Deliveroo and X/Amsterdam criteria reveals why the different outcomes were justified. If you wish to engage a freelancer, be aware that depending on the actual circumstances, an employment contract may still arise. We can help you review or draft a contract for services in advance, and provide practical guidance on how to structure the relationship to minimise the risk of it being reclassified as an employment contract.
More information
Would you like a contract drafted, or do you have questions following this article? Please feel free to contact us.
[1] Rb. Rotterdam 22 juli 2024, ECLI:NL:RBROT:2024:6750 en Rb. Oost-Brabant 8 augustus 2024, ECLI:NL:RBOBR:2024:3456