Working with (False ?) self-employed workers

In the fight against social fraud also the phenomenon of the false self-employed workers is particularly aimed at. In a number of professions co-operation on a self-employed basis is widely spread. But, are they really “self-employed workers” ? Cooperating with a would-be independent worker may turn out to be an expensive exercise for the disguised employer in case of a requalification (possibly at the initiative of the National Social Security Office). Paying attention about how the co-operation is structured is therefore essential, right as from the beginning!

Who is a false self-employed worker ?

A false self-employed worker is a person who is reported as performing his professional activities as an independent worker, but who is really working as an employee. 

In principle, the parties themselves decide on the way they want to work together, be it as employer / employee – the employer exercising in that case authority over the employee – or in the framework of an independent cooperation structure. That is the principle: the parties’ will is law (but the parties’ will can of course not undo statutory irrefutable presumptions). That principle – the parties’ will is law – is laid down in the work relations act and corresponds to the latest decisions of the Supreme Court.

So, the joint will of the parties is important (the necessary starting point), but not always decisive: in accordance with the decisions of the Supreme Court, the work relations act holds explicitly that, in the case of a contradiction between the qualification made by the parties, on the one hand, and the qualification, resulting from the way the parties work together in practice, on the other hand, the latter qualification prevails. In other words, it is not because the parties have explicitly provided that the performer of an assignment will be working as an independent, that the coast is clear. The performer of the assignment must also effectively work as an independent.

How is a false self-employed worker detected ?

In order to determine whether the parties’ will really corresponds to the way the parties work together in practice, three elements are important according to the work relations act (the three general criterions):

-   the performer of the assignment is freely organizing the working time;

-   the performer of the assignment organizes the work itself as it pleases him; and

-   the contractor does not have the right to exercise hierarchic control: a clear reference to the traditional distinction between an independent cooperation structure and an employment relationship: the right of one party (the employer) to exercise authority over the other party (the employee).

Who has the burden of proof and of what ?

In principle, the party who asserts something, must also submit evidence thereof. Things are different if a (rebuttable or irrebuttable) presumption is created by (or on the basis of) a statute: as a typical example of such a rebuttable presumption, reference can be made to the commercial representative: the person, who performs work as a commercial representative, is legally presumed to be an employee, unless the contrary has been established.

The use of this technic of the rebuttable presumption is largely introduced by the work relations act for the fight against would-be independents: criteria may be established by royal decree for sectors, professions, professional categories or professional activities; if the cooperation structure, set up as a self-employed structure, does not meet (a number of) these criteria, it is presumed to be an employment relationship, unless a(the) party(ies) submit(s) sufficient evidence to the contrary: this is a flexible system allowing the determination of specific criteria in consideration of the sector, the profession, the professional category, or the professional activities.

Since August 2012, the work relations act itself has established such criteria (nine in total) for four sectors:

-   the construction sector and related sectors, such as delivery and installation of central heating, electricity, wall hanging, floor covering;

-   the cleaning sector;

-   surveillance services for the account of third persons; and

-   transportation of goods or persons for the account of a third person (except ambulance services and the transportation of handicapped persons).

If it results from an analysis that a co-operation structure, set up as a self-employed one, meets more than half these criteria, a rebuttable presumption applies that the co-operation structure constitutes an employment relationship. 

The work relations act also provides for the possibility to determine special criteria by Royal Decree for other sectors, professions, professional categories or professional activities. So far, a number of Royal Decrees have been published accordingly in the Belgian State Gazette.

Calling on the “Administrative commission for qualifying a working relationship” (hereafter “the Working relationship commission”)

Clearly, parties setting up a self-employed co-operation structure may have doubts about the fact that the “self-employed” co-operation structure will effectively survive a thorough analysis and will not end up in being qualified as an employer-employee relationship.

The parties may obtain more reassurance concerning same by calling on the Working relationship commission, established by the work relations act. One party (or both) may do so prior to effectively starting up the co-operation or within one year following the start-up of the co-operation.

The Dutch speaking Chamber and the French speaking Chamber decide on the issue whether a co-operation structure is either a self-employed type one or an employer-employee relationship. Against the decision of the Working relationship commission an appeal can be filed before the employment tribunal within a month following the decision. The decision is valid for a period of three years and is binding for the social security authorities. It is not binding for the employment judiciary.

The Working relationship commission decides on the basis of the documents and information submitted by the parties, as the case may be, completed by supplemental documents and information as may be requested by the Working relationship commission and the information submitted by the parties during a hearing.

At the moment of the drafting of this newsletter, the Working relationship commission rendered a decision in almost 200 cases. Some frequently occurring cases learn the following:

-   the fact that both parties are married to each other, does not exclude an employer-employee relationship; so, the spouse, who is (part-time) performing secretarial work for her husband-dentist (or vice versa), may do so as an employee;

-   the fact that a person is shareholder of the company-contractor, does not exclude the possibility that this person is an employee of that company provided this person does not own a controlling number of shares in the company;

-   the fact that the performer of the assignment is working through a management-company, serving as a buffer between both parties, does not exclude the possibility that he qualifies as an employee, if it appears that in reality the personal co-operation of the performer of the assignment is aimed at.

The unmasked employer pays the bill

When a self-employed cooperation structure is requalified as an employment relationship, the contractor (employer) will have to bear the consequences, while the performer of the assignment (the employee) will not be affected: the newly qualified employer will have to pay the social security contributions for a period of maximum three years. These include the employer’s contributions as well as the employee’s contributions and the employer is not allowed to claim reimbursement of the employee’s contributions from the employee. Add the lump sum increase of 10% and the interest (7% per year) and the extent of a potential catastrophe is easily assessed.  

But that is not all, because the newly qualified employee himself may also claim various amounts, such as severance pay (in the case of a termination of the cooperation structure), and amounts he is entitled to as an employee in the course of the employment relationship, such as vacation pay, the salary for bank holidays, benefits laid down in collective labour agreements, rendered compulsory by royal decree, including end of year bonus, salary adjustments on the basis of the system of linking the salaries to the cost of living index, etc. And payment of these amounts can be claimed for the entire duration of the working relationship, as from the beginning.

So, the total bill for the unmasked employer may easily end up in ten thousands, if not hundred thousands, of euros. 

So, it is worthwhile to think first before starting an independent cooperation structure, because the risk that an independent cooperation structure will be tested is not small: not only the National Social Security Office may take such initiative, but also a visit of the social inspection / labour inspection may result in a compromising investigation. In addition, institutions, in charge of paying social security allowances, may interfere. And, last but not least, also the false self-employed worker may go to court, despite the fact that he played the game all along during all these years (the number of times this occurs following the termination of the cooperation structure by the contractor is considerable).

Conclusion

Despite these risks, it appears that in practice a large number of (quasi exclusive, fulltime) service arrangements with a number of professions (accountants, IT-specialists, managers …) are set up as independent cooperation structures, quite often by using the management company of the performer of the services as a buffer between both parties. But, as mentioned above, also the use of such a buffer does not constitute a water-proof guarantee: a renowned soccer club knows all about it since the agreement with the company of its coach was requalified as an employment contract with the coach himself.

A careful drafting of such agreements remains the first condition for possible success. Considering the risks and the flexible means of fighting the phenomenon of false self-employed workers, it is more than ever essential that cooperation arrangements, as an alternative for the traditional employment relationship, are very well structured and substantiated !

Marcel HOUBEN – marcel@houben-hrlegal.eu