Netherlands: Deliveroo and the Dutch Supreme Court: a landmark decision on employment status and modern forms of work
The rise of the gig economy and self-employment in the Netherlands has been a topic of concern for the Dutch government in recent years. The Dutch government has been working on legislation to reduce the number of self-employed workers, citing the lack of protection for these workers in terms of incapacity for work and inadequate pensions. The Supreme Court recently followed the government’s plans in a ruling on March 24th, 2023, which is expected to lead to a wave of reclassification cases. This article provides a detailed analysis of the ruling and its implications.
Deliveroo in the Netherlands; employment contracts with riders (instead of freelance contracts)
The working method of Deliveroo, i.e. hiring the riders as independent contractors instead of employees, has been a subject of controversy with labour unions arguing that the company’s contracts with riders were a way to circumvent Dutch labour laws. A dispute arose between FNV (a Dutch labour union) and Deliveroo regarding the qualification of the agreement concluded between Deliveroo and its riders. FNV requested a declaration of law in court proceedings, stating that the legal relationship between Deliveroo and its drivers should be considered as an employment contract as meant in Article 7:610 of the Dutch Civil Code, in deviation from the parties’ agreement. The subdistrict court and the court of appeal have ruled that the contract as used by Deliveroo qualifies as an employment contract (instead of a freelance contract). The Supreme Court has confirmed this judgment.
Ruling of the Dutch Supreme Court; additional criteria for qualification of employment contracts
The Supreme Court in the Netherlands has provided new criteria for determining whether a contract should be classified as an employment contract. The traditional criteria for determining an employment contract have been based on the interpretation of Article 7:610 of the Dutch Civil Code, which defines an employment contract as an agreement in which one party, the employee, undertakes to perform work for the other party, the employer, in return for payment of a wage for a certain period of time. However, in practice, it has often been difficult to determine whether a contract falls within this definition.
To address this issue, the Supreme Court has provided additional criteria that should be considered when determining whether a contract is an employment contract. These criteria take into account all relevant circumstances of the case and the relationship between the parties. Some of the key factors are:
- The nature and duration of the work performed;
- The manner in which the work and working hours are determined;
- The level of integration of the worker and their work into the organization and business operations of the employer;
- The existence of an obligation to personally perform the work;
- The method used to establish and pay the compensation for the work performed;
- The level of compensation paid to the worker;
- Whether the worker bears any commercial risk in performing the work;
- Whether the worker behaves, or can behave, like an entrepreneur in the economic traffic.
The weight given to each of these factors will depend on the specific circumstances of each case. Importantly, the Supreme Court has emphasized that there is no single decisive factor and that all factors should be considered in their totality. However, the Supreme Court has also emphasized that it does not intend to develop further general rules or principles for the classification of contracts as employment contracts or for distinguishing between employment and self-employment.
Overall, the new criteria provide a more detailed and nuanced approach to determining whether a contract should be classified as an employment contract. By considering a wider range of factors, the Supreme Court hoped to provide greater clarity and consistency in determining whether a contract qualifies as an employment contract in the sense of Article 7:610 of the Dutch Civil Code.