Netherlands: Intention of the Parties is no longer relevant for the Qualification of an Employment Contract
Whether an employment contract exists between a company and a worker is not always an easy question to answer. In its judgment of 6 November 2020, the Supreme Court ruled that when answering this question, it is irrelevant whether the parties actually intended to enter into an employment contract (or not). Based on the rights and obligations agreed upon by the parties and how parties implement the agreements, the Court must assess whether the contract meets the statutory requirements for the existence of an employment contract.
This is seen as an important change compared to an earlier judgement of the Supreme Court in 1997 (Groen/Schoevers). From this judgment and subsequent judgements of the Supreme Court, it was deducted that the party’s intention was relevant to the question of whether an employment contract existed. Therefore, in many contracts for independent contractors, it is stated that the parties expressly do not have the intention to enter into an employment contract.
According to the Supreme Court in its judgement of 6 November 2020, the qualification of a contract must be distinguished from the question of which rights and obligations the parties have agreed upon. That question must be answered by means of explanation. It can then be assessed whether the contract between the parties meets the requirements for the existence of an employment contract.
This ruling may have far-reaching consequences. Many contracts for independent contractors stipulate that the parties have no intention of entering into an employment contract. The Supreme Court has now clearly considered that the parties’ intention is not relevant. As a result, the emphasis will lie even more on how the parties actually implement the contract. If the parties rely (too) much on the parties’ intent, there is a risk of the (actual) existence of an employment contract.
However, the statutory requirements for an employment contract will always have to be met and remain the same. There must be a contract in which (1) work is performed during a certain period of time; (2) wages are paid; and (3) there must be a relationship of authority. If these criteria are met – regardless of the intention of the parties – the working relationship can be qualified as an employment contract.
For more information on these articles or any other issues involving labour and employment matters in the Netherlands, please contact Christiaan Oberman (Partner) of Palthe Oberman at firstname.lastname@example.org or visit www.paltheoberman.nl.