Avoiding false self-employment? Here's what to look out for
October 2023 - Bogus self-employment is subject to severe penalties. Do you work exclusively for one client? Then you better play it safe. In this article, we point out some red flags.
Sham self-employment is prohibited to protect the self-employed person from being abused by a principal and to avoid social fraud. Indeed, in this way, the client avoids social security contributions due in the context of salaried employment. Moreover, the contract with a (bogus) self-employed person can be terminated at any time without notice or compensation. In case of illness or temporary incapacity for work, the self-employed person is also not entitled to a guaranteed income.
How to avoid false self-employment
The Employment Relations Act 2006 lays down four criteria that determine whether someone is self-employed or simply an employee.
The will of both parties to work together on a self-employed basis: the social status of the self-employed person must be clearly described in the contract.
The freedom of working hours: as a self-employed person, you are free to plan working hours and/or holidays as you wish.
The freedom of organisation of work: the self-employed person is free to decide how to carry out the assignment.
Systematic and extensive monitoring of the progress of the work implies employer authority and is therefore and may indicate an employment relationship.
In some sectors, such as agriculture, horticulture, cleaning, construction, security and transport, false self-employment is a major problem. Labour courts therefore apply stricter rules for these sectors.
Establish a clear cooperation contract
So to rule out false self-employment, it is better to draw up a clear cooperation contract with the client. Regardless of whether you act as a company or as a one-man business. That cooperation contract will invariably contain the following:
The parties, including company form and address
Description of the expected services (without going into detail)
Remuneration for services rendered (do not speak of wages but of 'fee' or 'honorarium')
Duration of the cooperation
Termination options
An exclusivity clause is out of the question, but a non-competition clause is possible
Do not mention any agreements on holidays, illness, evaluations
Penalties and sanctions
Sham self-employment is social fraud and is severely punished. The cooperation agreement is then reclassified from self-employed to employee. In this case, the employer may be obliged to repay employer and employee contributions up to seven years back. Negligence interest, a one-off lump sum assessment of 10 per cent and/or a fine are also not excluded.
