Understanding the distinction between an employee and an independent contractor begins with qualifying the agreement in force between the parties. The parties who enter into an “employment agreement” are an employer and an employee. These parties are not separately defined in the Dutch Civil Code (DCC). The parties who enter into a “contract for services” are known under Dutch law as an (independent) contractor and a principal.
The question whether an agreement between two parties should be qualified as an employment agreement or as a contract for services continues to provide new case law and legal literature. The Supreme Court first ruled that there is not a decisive element for answering this qualification question1. All the elements characterizing the relationship must be taken into consideration and assessed jointly. None of these elements – which will be discussed later on – have to be decided in advance. According to the Supreme Court, the initial parties’ intention can yield for a future manner of execution. This means that for example, although parties may have labeled the agreement in force between them as an employment agreement, this (title on the agreement) is not necessarily decisive. It can be inferred from the case law from the Supreme Court; the court must first decide on the parties’ intention, as it then must determine, based on the actual manner of execution if – other than the original parties’ intention – the manner in which the agreement is executed, leads to the conclusion that there is a different kind of agreement in force between the parties.
The outcome of the qualification question is important for several reasons. One of them being: if the labour relationship is qualified as an employment relationship (eventually in court), the employer is/was responsible to withhold income taxes as well as the workers’ income contributions.