Will the DBA Act come into effect on January 1, 2025? What should entrepreneurs expect?

The Act on Deregulation of Employment Relationship Assessment (Wet deregulering beoordeling arbeidsrelaties — DBA) has been formally in force since May 2016. However, a moratorium has been imposed on its enforcement. The moratorium is expected to be lifted on 1 January 2025. According to this law, tax authorities will be able to establish whether a person who has issued an EMZ or ZZP is really an individual entrepreneur or whether there is fictitious entrepreneurship with real employment. This determines who and in what amounts must make payments to the budget and social funds. The opinions of individual entrepreneurs and government agencies on the lifting of the moratorium are different.

Under the DBA, the responsibility for determining whether an existing employment relationship is an employment or hiring of an entrepreneur rests with the employer and the entrepreneur. Three criteria for employment are established:

1. The employer's right to manage the work of the hired worker.
2. The contractor's obligation to provide labor.
3. Payment of remuneration for work.

Work is considered to be performed for hire if all three criteria are met. The first point causes the most disagreement in society. Many believe that it is difficult to determine whether an employer has authority. The tax authorities (Belastingdienst) believe that an employer has authority if at least one of the following conditions is met:

• The employer can determine how, when, where and with whom the employee performs the work.
• The employer sets how many hours or days a week the contractor must work on his assignment. 
• The employer has the ability to prevent the contractor from cooperating with other employers.
• The contractor performs the same work as employees working for hire, based on the same instructions and directions of the employer.

In addition to the tax authorities, the following organisations are participating in the public debate: the Association of Sole Proprietors of the Netherlands (Vereniging Zelfstandigen Nederland - VZN), the General Association of Employment Companies (Algemene Bond Uitzendondernemingen - ABU) and the Federation of Dutch Trade Unions (Federatie Nederlandse Vakbeweging - FNV). Each of these organisations has its own view on the application of the DBA Act.

VZN position

The Association of Sole Traders of the Netherlands opposes the application of the DBA Act from 1 January 2025. VZN believes that a different law is needed that will focus on the amount of remuneration when defining the relationship between employer and contractor, rather than vague legal concepts. The association proposes recognizing any employment relationship with remuneration of less than 33 euros per hour as hired work.

ABU position

The General Association of Employment Companies sees the following problems in the enforcement of the DBA Act from January 1, 2025:

• Clarity of the framework for law enforcement. The ABU insists on clarity on how the law will be enforced. Uncertainty regarding the criteria for determining fictitious entrepreneurship and the powers of state bodies is already leading to negative consequences in the area of ​​hiring individual entrepreneurs, which will lead to legal conflicts in the future.
• Shortage of staff in the health sector : Strict compliance with the DBA Act may result in a shortage of medical personnel, which threatens the health care delivery system.
• Equal playing conditions : ABU is concerned that enforcement of the law will focus mainly on large employers and intermediaries, leaving smaller agencies without adequate oversight.

The General Association of Employment Companies proposes to focus enforcement on:

• Low rates and forcing employers to register their employees as entrepreneurs. Real individual entrepreneurs should not suffer. 
• Informing employers on the proper application of the DBA Act. УHowever, many employers are now refusing to work with EMZ, fearing further legal consequences.
• Protection of individual entrepreneurs.  It is necessary to provide protective measures in case employers refuse to cooperate with EMZ. 

FNV position

The Dutch Trade Union Federation is demanding that the moratorium on the enforcement of the DBA be lifted as of 1 January 2025. The FNV believes that the failure to enforce the law undermines trust in politics and official institutions. In addition, the current state of affairs means that low-paid workers suffer from a lack of opportunities for formal employment, while highly paid professionals who have set up their own business receive tax breaks and make virtually no social security contributions.

At the same time, FNV requires that only those cases of hiring individual entrepreneurs that will take place after the moratorium is lifted be assessed. There should be no assessment of past employment relationships and no liability for violations in them. In addition, the Federation proposes to begin enforcement with the most obvious and harmful cases of fictitious self-employment (large companies in which most of the employees are listed as entrepreneurs). The FNV believes that the transition to assessing employment relationships in small companies should be gradual.

Time will tell how the discussion will end and whether the moratorium on enforcement of the DBA Act will be lifted as of January 1, 2025.

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