Does the Prohibition for Temporary Employment Agencies to Prevent Temporary Employees from Entering into the Employment of the Hirer also Apply for Self-Employed Persons?

For temporary workers, the rule applies that a temporary employment agency is prohibited to do anything that might create an obstacle for the temporary employee to work for the hiring company after the secondment period has expired. The Supreme Court had to answer the question whether this rule also applies if the temporary agency worker is not an employee but a self-employed person.

A small company (sole proprietor) dealing with project management and, in this context, also providing employment mediation services, had entered into assignment agreements with a public institution on the one hand and a self-employed person on the other. As a result of both contractual arrangements, the self-employed person started working for the public institution as a licensing authority. The agreement with the self-employed person included a prohibition for the self-employed person to work for the hirer at the same workplace and in the same project within six months after expiration of the agreement. The agreement with the public institution included a prohibition for the public institution to use the services of the self-employed person within twelve months after expiration of the agreement.

After the agreement had expired, the self-employed person wanted to continue working for the public institution. Then a dispute arose between the mediation company and the self-employed person about the prohibition in the non-solicitation clause to work for the public institution. The self-employed person then asked the Court to rule that the non-solicitation clause was not legally valid and that the company had wrongly told the self-employed person to abide by it. The Court rejected the claim, but on appeal the Court of Appeal decided that the non-solicitation clause was null and void because the law prohibits the ones providing temporary labour to create obstacles to the realization of an employment relationship with the hirer after expiration of the secondment.
After the mediation company had lodged an appeal in cassation with the Supreme Court, the Supreme Court had to rule on the scope of this legislative prohibition. The legislative prohibition had been included in the law following the European Temporary Agency Workers Directive. This directive obliges the Member States of the European Union to settle in national law that provisions that prohibit or prevent the creation of an employment contract or an employment relationship between the hiring company and the temporary agency worker after expiration of the temporary employment relationship will be null and void or can be declared null and void.
It follows from case law of the Court of Justice of the European Union that this so-called “prohibition of obstacles” not exclusively applies to employees who entered into an employment contract with a temporary employment agency, but also in a more general sense to temporary workers who have an employment relationship with a temporary employment agency.

The Supreme Court noted that the intention of the Dutch legislator was, when introducing the prohibition of obstacles into Dutch legislation, to regulate no more than what would arise from the Temporary Employment Agency Workers Directive. Therefore, the Supreme Court had to determine the purpose of the Temporary Employment Agency Workers Directive. Under the Directive, any person who is protected under the national labour law is considered to be an employee. According to case law of the European Court, it is irrelevant whether the contract under national law should also be regarded as an employment contract. According to the Supreme Court, the prohibition of obstacles shall apply to every person with an employment contract or an employment relationship with a temporary employment agency, which implies that such a person:
• Has to personally carry-out the work and therefore has to perform for and under the supervision of the temporary employment agency for a certain period of time and receive compensation from the temporary employment agency in return; and
• Is protected in the relevant member state on the basis of the work he/she performs.
Since the Court of Appeal had simply assumed that the prohibition of obstacles applies if an employment agency supplies a self-employed person to a hiring company to perform temporary work under the direction and supervision of the hiring company, the Supreme Court annulled the judgment of the Court of Appeal and it referred the case to another Court in order to find out whether the conditions stated by the Supreme Court had also been met.

Of course it is very important for the revenue model of a temporary employment agency that a temporary worker and his/her hirer cannot ipso facto directly do business with each other after the temporary employment agency has brought the two together. One way to prevent this is by agreeing a minimum period for the posting. During this period, the temporary employment agency can make the temporary worker available to the hirer at a rate that also includes a profit surcharge for the temporary employment agency. In the event that the hirer wishes to enter into an agreement with the temporary worker directly after the secondment, the prohibition of obstacles only allows the temporary employment agency to stipulate that the hirer owes a reasonable compensation for the costs of recruiting, training and for making the worker available. As soon as the temporary employment period has expired, however, not more may be charged than the actual costs incurred for recruiting the temporary agency worker, plus a reasonable profit margin.
Earlier, the Supreme Court had ruled that the prohibition of obstacles also applies if an employee wishes to work for the hirer as a self-employed person once the hiring period has expired. Now that a growing number of workers chooses for working self-employed, and thus not as an employee, temporary employment agencies increasingly take-up a mediating role to post self-employed persons. Therefore it was an important question for them whether the prohibition of obstacles also applies to them. According to the Supreme Court, this depends on whether the self-employed person receives protection under Dutch law on the basis of the work he/she performs. This is what another Court will have to investigate now.
Under Dutch law and under certain conditions, casual workers (persons who do not work under an employment agreement nor as self-employed) are entitled to a minimum wage. Parts of the Working Hours Act and the Working Conditions Act also apply to casual workers. With respect to casual workers an employer may also be liable for any damage that is the result of insecurity in the workplace. The question that remains is what protection applies to the worker in the above case and how much protection is needed in order to be regarded as an employee within the meaning of the Temporary Employment Agency Workers Directive.