The Employee whose Work was Taken over by Freelancers was Justifiably Dismissed.

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Court of Appeal, The Hague, August 13, 2019, ECLI:NL:GHDHA:2019:2183


An employer who had dismissed his employee because his job would cease to exist had done so on good grounds, despite the fact that the employee’s work was taken over by freelancers, because these freelancers were "genuinely self-employed".

A regional news magazines publisher employed twelve employees, including an editor who had been employed since 1998. The publisher had terminated the employment contract with the editor as of 1 May 2018 because the job would cease to exist. The UWV had given permission for this termination, because they considered it to be demonstrated that more efficient business operations would be created if the publisher would start making greater use of freelancers. It would ensure more flexibility, more expertise, a broader network and more business continuity. Using their own network the freelancers could actively gather news, thus also enabling publishing information that would not have been revealed otherwise. In addition, the UWV considered adequately shown that the freelancers were genuine self-employed.
At the editor's request, however, the Sub-district Court had subsequently rectified the employment contract with retrospective effect to 1 May 2018, whereby the publisher was ordered to continue payment of the wage from the date on which the employment contract had been terminated earlier. The employer challenged this decision of the Sub-district Court before the Court of Appeal.
The Court of Appeal took the view that it should assess whether the requirements that the law has set regarding a dismissal due to a job to be cut were met at the time of the UWV assessment. Later circumstances might still be taken into account, according to the Court, but only if they could be an indication of what could be expected at the time of the assessment.
The Court of Appeal considered furthermore that the employer’s decision to have the job expired should be assessed with some caution, because the guiding principle was that the employer should be able to make decisions aimed at the company’s continued existence in the longer term. According to the Court of Appeal, it is not coherent with this principle that it is retrospectively tested who wrote the articles that were published in the newspapers after the dismissal. For the Court of Appeal It was sufficient that the publisher had demonstrated its intention to collaborate with so-called "genuine" self-employed persons, so the work would be carried out by persons who perform their duties in the independent practice of their profession or business and who have been listed in the Trade Register.
Since the law prohibits a judge from dissolving a contract of employment with retroactive effect, the Court of Appeal determined the time when the employment contract (that was rectified by the Sub-district Court) would expire on September 1, 2019. Therefore, the publisher had to continue to pay the editor's salary from May 1, 2018 to September 1, 2019. The fact that the editor had actually not worked during this period did not preclude the editor's wage claim, because it was a circumstance under the employer's control in the given situation.


The decision of the Court of Appeal is interesting, since, after the introduction of the Balanced Labour Market Act, employers may want to consider working with self-employed persons instead of with on-call employees. The Balanced Labour Market Act will make working with on-call employees considerably more expensive and less attractive as from 1 January 2020.
Since legislative measures, aimed at combating sham self-employment, will take at least until January 1, 2021, and since the government has put maintenance of the legislative measures in place on the back burner following criticisms directing at the effects of the Assessment of Employment Relationships (Deregulation) Act (‘Deregulation Act’ or ‘DBA Act), it seems that working with self-employed persons will be the only direction for the time being.
For employers considering this, there are bumps on the road ahead and a catch as well.
The bump is the fact that the UWV will not grant a dismissal permit for existing employees, unless it has been demonstrated that working with self-employed persons is an economically sound decision, and that the self-employed are so-called "genuine" self-employed.
Besides an entry in the Trade Register, a requirement is that the employer can demonstrate that the self-employed would perform their duties in the independent practice of their profession or business. This means that the tax authorities would fiscally characterize the income from these activities as Business Profits. In the present case, the Court of Appeal considered this requirement to be demonstrated by means of the model agreements, approved by the tax authorities that the publisher had submitted.
The fact that, subsequently, the employer won the case, but still had to continue wage payment for a long period, is a nasty consequence of the Work and Social Security Act that was introduced on 1 July 2015.
An interesting question is whether the State can be held responsible for this, because the damage results from a wrong judgment of the Sub-district Court.

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