Publicaties van de faculteit Rechtsgeleerdheid van de Universiteit Utrecht.
Deze publicatie is beschikbaar via de publicatiewebsite van het G.J. Wiarda Instituut, Utrechts Instituut voor Rechtswetenschappelijk onderzoek.
Quasi-employee, quasi-self-employed: more than just a name
Introduction at 27. Tagung für Rechtsvergleichung 1999
A.Ph.C.M. Jaspers
Professor of Labour Law and Social Security Law, Utrecht University
Introduction
The increasing number of self-employed in many countries of the European Community in general, and the composition of the group of new self-employed in particular, makes the subject of this meeting especially relevant. Not only from the viewpoint of labour law and social security law, but even more so from the perspective of developments in the labour market developments with regard to work patterns and, last but not least, from the perspective of the economic and social policies of the governments of the various member states and the EC. In the social and economic policy of the EC the promotion of self-employment is considered as one of the means of reducing unemployment in order to integrate or re-integrate people that is outside the work whether it is because of unemployment, partly disablement or simply because they have not entered the labour market at all. The policy of promoting work in a self-employed capacity has become rather common, in particular in the EC member states following developments in countries such as the United States. This policy seems to be directly connected to the approach of giving free rein to the free market. What makes this issue particularly interesting, from a legal and political viewpoint, is the area of tension that exists between the promotion of entrepreneurship on the one hand, and the policy of social protection on the other. Do the traditional categories of dependent workers really need the social protection the law has provided in the past? Should social protection be connected to the status of an employee? And to what extent or degree should social protection be provided? In effect, the debate on these subjects involves the changed status of traditional labour relations and the associated legal form: the employment contract as well as its function. Within the context of the legal debate, this means that we are talking about the merits of the legal concept of the employment contract and the entitlement to social security benefits.
Before dealing with these subjects in greater detail, I think it would be useful briefly describe the current situation, even if only to gain some impression of the scope of current developments in order to determine whether we are dealing with a serious phenomenon that requires our full attention. First, a few figures. In many EC member states, the numbers of self-employed are increasing, particularly in some countries. [1] Besides the increase in numbers, other phenomena are important as well.
Traditionally, most self-employed people were found in the agricultural industry, but their numbers are decreasing in both a relative and absolute sense. Given the general increase, it should not simply be assumed that a large increase is occurring in other sectors. As can be expected, the growth of the self-employed category varies from sector to sector. The number of self-employed is growing fastest in the construction industry, the hotel, restaurant and catering sector, transport, ICT, and consultancy.
Another important aspect in assessing the peculiarity of the issue discussed here, is the difference between self-employed with and self-employed without employed workers. In the context of the present discussion the latter category of self-employed without employed workers is particularly relevant, as this category is or can be assumed to be in a similar situation as the dependent employees from the viewpoint of needing social protection. What is interesting is that the increase in the numbers of 'new' self-employed is the highest in this category.
From a sociological perspective it is interesting to examine this group with regard to their 'employment origins'. A distinction must be drawn between men and women. Most of the self-employed men have a history of employment, followed by the group of men who were unemployed before taking up activities as self-employed. Relatively few men were economically inactive before becoming independent entrepreneurs. This is not the case as far as women are concerned. Firstly, it appears that the share of women in the total number of self-employed is much lower than that of men. [2]
Furthermore, the share of women with an 'economically inactive' past is much greater than that of men. Finally, from the viewpoint of social policy, in particular the need for social protection by law, a distinction should be drawn whether the activity should be regarded as an independent primary source of income or whether it should be regarded as a source of additional income.
To give you a more precise picture of the development in the Netherlands: since 1990 the number of self-employed has increased by more than 100,000 to 950,000. [3] The self-employed without employed workers have a majority share in this. In some sectors, growth has reached almost 50%. [4] It is obvious that this is a major development.
The response to this development varies greatly. In general, those who have opted for the status of self-employed have found the transition to be a positive experience. The majority of them would not go back. They claim not to need the protection they enjoyed as employees. [5] The approach of the Dutch government is promising for those who opt for self-employment. The government proposes a variety of measures, such as tax and other financial benefits [6] and less stringent requirements as to establishing businesses. [7] With regard to the last item and in terms of other fields relevant to the issue we are dealing with here, I will raise the question whether and if so, how important the role of the Community law is. Within the framework of the guarantee of free movement within the Community, being one of the fundamental principles of the European Community and recently reinforced by the establishment of the Economic and Monetary Union, the policy of the Dutch government as to the requirements for establishment is aiming at liberalisation in order to implement the Community policy. [8]
The approach adopted by the social partners is also noteworthy. The trade unions have assumed a rather ambivalent stance to this phenomenon. It is feared that the self-employed, usually described by the trade unions as quasi-self-employed when it comes to self-employed without employed personnel, are unfair competitors on the market. They can also pose a threat to the system of labour relations dominated by the CAO (collective labour agreement). As they do not wish to be blind to the phenomenon, some trade unions are offering their services in protecting the interests of these self-employed without personnel. As yet, however, this new group has not responded to their offer. On the other hand, although it is surprising but nevertheless understandable, the employers' associations are distant as well. [9] They fear a growth in the number of the self-employed persons which, due to the fact that particularly the capacity of the self-employed is attractive to young people, will affect for instance the costs of social security benefits because of a reduction of the total sum of the contributions, while the costs increase due to the health risks and the age of those who benefit from the schemes. [10]
Another objection raised by employers is the granting of tax benefits and other financial facilities to the self-employed, in particular the 'starters' among them. This results in lowering the costs of production and could therefore affect the competitiveness of other firms that do not benefit from these facilities. Moreover, the lack of any obligation for further training and retraining is seen as a threat to the quality of the employment performance and therefore as being detrimental to the sector.
As mentioned, the issue here is the people working in the twilight zone, the area between employee and 'real' self-employed. Are they quasi-employees or quasi self-employed? This question should be examined and answered not only within the legal context, or to be more precise under the viewpoint of the relationship under labour law, but also, in terms of the social policy of the respective countries and probably, nowadays, of the European Community [11]
The reason for and relevance of the difference
In a broad sense, labour law and social security law are directed at protecting those who 'work for another'. This is considered to be the general definition. In Dutch law, a distinction is drawn between three types of 'work for another'. The most common is 'working under a contract of employment', regulated by the Dutch Civil Code (Section 10, Book 7 of the Civil Code: the employment contract). The other types, regulated by the civil code as well, are: contracting and performing of services or, in terms of the current civil code: commission. The first type varies from the other two in that it is directly connected to the concept of the dependent employee who needs to be protected by law due to his or her economic situation. The second type (contracting) is more linked to the concept of the independent self-employed person. This category does not require the same (legal) protection as employees. Therefore, the civil code contains very few provisions related to this type of work. Although this indicates that there is little need for protection in this category, it does not mean that labour law does not apply at all. Whether this is the case depends on the scope of the various public law regulations in the field of labour.
The third type, commission, is broadly speaking different from the employment-contract type. However, it has more similarities to the latter type than to contracting. In practice, these 'workers' generally operate more in the twilight zone between employee and self-employed, depending on the specific circumstances under which they work. However, the consequences as to whether it is the one or the other, are substantive. If it is considered 'employee-like working', the whole range of protective labour law (private and public) and social security law 'automatically' applies. If not, only parts of labour law and social security law are of relevance. Here again the scope of the various regulations is decisive. One can think for instance of the protection against an unsafe and or unhealthy working environment. Should a self-employed person (without personnel) working on the basis of commission be protected against damages caused by occupational accidents or diseases in the same way as an employee is?
The regulations governing the two categories of contracting and commission are fewer and less extensive, and therefor less protective. It is left to the parties themselves to shape their relationships according their own wishes and needs. With regard to the social security schemes it must be kept in mind that the self-employed (in the pure sense of the word) are excluded from employee-linked social security schemes. They benefit from general social security benefits to which they are entitled only by staying in the country (National Insurance), the main ones of which are the schemes covering old-age benefits, child allowances and costs of long-term nursing. [12] For the self-employed, disability is covered by a specific scheme (the Self-employed Disability Act), which is less favourable than the comparable employee disability scheme. [13] As to the insurance covering the risk of (losses of income due to) illness the difference between employees and self-employed is even bigger: the self-employed are not covered by a general scheme providing for a kind of disablement benefit during the first year. Consequently, a self-employed person has to provide for him/herself (if so desired), on the basis of private insurance covering this risk. The difference still exists although the scheme of sickness benefits for employees has been significantly changed in recent years. The entitlement to sickness benefits guaranteed by the public law scheme has been replaced by the employer's obligation and, consequently, the employee's entitlement to continued salary payment as long as the employee is unable to work due to the illness for a maximum period of one year. [14] So while the employee is still entitled to the payment of a substantive part of his wage be it not by any compulsory social security scheme but by his employer, the self-employed is lacking this kind of a guaranteed income in case of disability to work due to illness.
Against the background of the two previous sections, it is highly relevant to investigate under which conditions a person who is 'working for another person' has to be considered as being an employee or as self-employed, in particular in the twilight zone of the employee or the quasi-employee on the one hand and the self-employed or the quasi-self-employed on the other. The differences are substantive as has been showed above. A following question will be whether or not there are good reasons to distinguish between these forms of 'working for another' taking for granted the consequences of it. I will come back to this question later on.
At first it can be stated that legal practice in the Netherlands is different from the German and Austrian situation. The approach in Dutch private labour law focuses on the use of one definition of an employee. This implies that employment relationships will be assessed on whether they can be considered as an employment contract in terms of private labour law, or whether they meet the criteria of an employment contract as defined in the Dutch Civil Code. An approach as practised in Germany and Austria: the extension of the applicability of the labour law regulations to employment relationships by subsuming employment relationships deviating in one way or another from the genuine employment contract under the regulations which are applicable to these genuine contracts (by way of an 'arbeitnehmerähnliches' approach), is not customary nor accepted in the Netherlands. Rather the reverse. 'Arbeitnehmerähnliche' employment relationships are, and have to be interpreted as, regular employment contracts governed by general labour law regulations. It has to be noted that the practice in Dutch social security law also seems to be of a deviating nature comparing to the German approach in this field. In Dutch law, the approach has been taken of subsuming quasi-employment relationships under the social security regulations by way of putting this type of relationship on a par with the regular employment relationship. In the Dutch wording of the relevant act: these relationships (i.e. not meeting the regular criteria of an employment contract) have to be considered as employment relationships and are therefore covered by the same protective rules as applied to standard employment relationships. So the Dutch law does not rule explicitly or separately the position of the quasi-employee as to his social security arrangements.
Therefore, with regard to the Dutch situation, the main question in the field of labour law is which employment relationships will qualify as an employment contract in terms of the civil code and therefore be covered by employment law regulations. As mentioned, in the Dutch doctrine the qualification of an employment relationship as an employment contract offers an 'admission ticket' to the whole range of protective labour law rules. In the field of social security law, however, the situation is different. The legislation directly indicates which employment relationships are covered by the rules. Consequently, relationships that deviate in one way or another from the employment contract type (i.e. they do not qualify as such due to the fact they do not meet the criteria of an employment contract) are nevertheless relationships in the sense of social security law and therefore covered by this law. We will deal with both these categories.
The legal concept of the employee and the quasi-employee
The concept of the employee is used in private employment law as well as in public labour law. For the sake of the structure of my contribution I will deal with it in two separate paragraphs, although the concepts used in both fields do have a lot of similarities.
The concept in private employment law
In Dutch labour law, as in the labour law of most of the European countries, the definition of the employment contract contains the following essential elements. The necessary requirements for qualification are: one has to carry out the work personally (this implies two obligations: the obligation to work and to do so personally); mandatory payment by the employer; subordination to the employer; and applicability to a certain period of time. [15] As to the issue at stake here: how to distinguish between the employee and the self-employed, the assessment should be made whether in a certain case these criteria are met.
In practice, the first criterion only has a limited distinguishing function. After all, also within the framework of commission and contracting, the party entering into the obligation to carry out the work accepts the obligation to work and, in the case of commission, generally also to do so personally. [16] However, this does not mean that this requirement is not important. According to the case law of the courts, if a person is not obliged to work, which could be expressed in the freedom to come and go as he/she pleases, this would argue against the existence of an employment contract. This also applies if it has been explicitly agreed that there is no obligation to carry out the work personally. [17] If this requirement is not met, an employment contract does not exist. He belongs to the category of the quasi-employee. Usually he is not a self-employed either. [18] He is working on a sui generis contract. In any case, he is not put on an equal footing with the employee. [19]
The obligation to pay wages, the second criterion, hardly ever plays a role in assessing whether an employment contract exists, as the other forms of work also include a payment obligation. It might, however, be of significance in situations like training or apprenticeship for which little or no payment is made.
According to the legal literature and case law, the greatest distinguishing function is awarded to the third criterion: subordination of the 'worker' to the employer. At the same time, however, this requirement is problematic due to modern developments in how work is carried out. Employees often have a high degree of autonomy and responsibility with respect to the work they carry out, both in terms of content and method. Work is becoming increasingly task oriented. That means that the common feature of subordination, being the power to give assignments and instructions with respect to the content and method of work [20] is gradually losing its significance. In the literature, a distinction is drawn between the formal and material conception of subordination and between the existence of subordination in legal terms and economic dependency. While these two distinctions are not identical, a certain concurrence exists between the formal concept of subordination and economic dependency. The greater the dependence of the worker on the employer with respect to the organisation and (the manner of) performance of the work, the greater his economic dependency. In order to determine whether subordination exists, the degree of dependence of the worker with respect to the organisation and performance of the work must be examined. A decisive influence on the content of the work is not essential for the recognition of subordination and therefore of an employment contract.
On a case by case basis, the facts will be taken into consideration in determining whether an employment contract exists as an admission ticket to all the protective labour law measures.
The tendency to extend the scope of the employment contracts to all kinds of 'workers' in order to maximise the protection by law of these various kinds of workers characterised as quasi-employees (German: Arbeitnehmerähnliche Personen) is undergoing change. In more recent case law, courts are becoming increasingly aware of and sensitive to current changes in work patterns and the desire to be considered and treated as self-employed. As reflected by numerous court decisions during the past five years, the issue hinges on the extent of dependency of the workers concerned and the similarity of these quasi-workers to employees under an employment contract. This movement started with the famous Agfa case [21] in which the Netherlands Supreme Court (Hoge Raad) decided that the employment relationship of an employee working on a 'revolving door' basis [22] has to be put on a par with the employment relationship Agfa had with the other personnel employed on a permanent contract. The Supreme Court argued that the mere fact that the contract, while based alternately on fixed-term contracts and 'hiring out' contracts, was carried out for years [23] in a manner that was comparable to how the contracts of the permanent personnel were carried out, justified the conclusion that the employee concerned should be treated just like a permanent employee. Since then this decision has been confirmed in other judgements. So the actual situation is decisive regardless of the formal wording of the contract. In another case during the same period, the Supreme Court decided in a similar vein. Some youngsters working during the summer holidays had a high degree of freedom to come and go as they pleased. Although this tends to suggest the absence of a regular employment contract, the court argued that these youngsters were in fact working on a regular employment contract basis, as their way of working was similar to that of the permanent staff. [24] Rather recently the Supreme Court has reaffirmed this actual approach [25]: to assess the legal nature of a contract to work for someone else in exchange of payment one has to take into account the intention of the contracting parties at the moment they conclude the agreement in the light of the way they actually carried out the contract. All the facts are relevant and have to be assessed as to meet the criteria of the employment contract. According to the recent case law of the Supreme Court one can not say for sure that the obligation to be present on fixed times, nor the obligation to follow the assignments of the 'employer' is sufficient as to decide that the requirement of the existence of subordination has been fulfilled. This practice implies that it is quite uncertain for those who want to set up a business for themselves to know in advance whether he could be considered as self employed or as employee. The consequences of being the one or the other, in particular in the field of taxes and social security are great.
The other development mentioned above: the degree of (economic) dependency of the worker on having a structural relationship with the employer, in the first place to ensure an income, is also raised in recent case law. Lower courts have decided that 'freelancers' active in the world of broadcasting and press were not working under an employment contract if they also held a full-time or nearly full-time job elsewhere, thus seriously restricting their availability. That points in the direction of an assessment on the basis of whether or not the worker was dependent in terms of income or work. In deciding in this manner, the courts take another key factor into consideration: the position taken by the worker and his behaviour in practice. In a recent judgement, the Netherlands Supreme Court decided that if a worker has manifested him/herself as self-employed, or at least not as an regular employment contract employee, he/she may not claim the status of an employment contract employee at a later date. [26]
Another recent development in employment contract law should also be mentioned here. The coming into force of the Flexibility & Security Act on 1 January 1999 introduced a presumption of law in employment contract law that is primarily of practical procedural significance. This in effect has shifted the burden with respect to proving the existence of an employment contract. Whereas in the past it was the employee who in case of being challenged by the employer had to give evidence that his employment relationship entailed an employment contract with all the related protective private labour law rules, at present the employee need only refer to the factual situation which gives a presumption of the existence of an employment contract. An employment contract is assumed if somebody has carried out paid work for somebody else during a period of three consecutive months. The consequence is that such an employee is covered by protective private labour law rules. It is up to the employer to prove that there was no employment contract due to the fact that the criteria of the existence of an employment contract were not met. It is a reversal of the burden of proof, therefore. It is not easy to give the evidence required. In practice this constitutes an important change, important particularly for the employee in a fragile employment relationship. It is explicitly aimed at extending the protection of these employees, to groups of persons who find themselves in the twilight zone. [27] Whether this legislation will influence the legal and actual position of the self-employed, in this sense that the person concerned can appeal to these rules to ascertain the legal nature of this relationship, is a question I will return to in the conclusion.
The concept in public labour law
As said above, not only private employment law makes use of the terms employee and employer. They are also used in other labour law regulations of a public law nature. [28] All of them are more broadly defined than the definition in the civil code. This may imply that employment relationships in the twilight zone that fall beyond the scope of the civil code, are indeed covered by the protective rules of these public labour law regulations. In practice, these regulations depart from the position that quasi-employees are placed on a level footing with employees according to civil employment law, in other words familiar to the German situation, meaning the inclusion 'arbeitnehmerähnliche Personen' in labour law regulations, without using this term or similar terms. That is understandable, as the objective of these regulations may well be completely different. It should be noted that the definitions applied have a great deal in common.
Besides workers with an employment contract, the Act on Safety and Health at the workplace and the Act on Working Times also offer protection to people who carry out work under the authority of somebody else. These acts therefore also apply to so-called 'arbeitnehmerähnliche' people or quasi-employees. The decision whether or not working people are covered by these laws appears to be based on meeting the subordination criterion. Again this criterion is essential in distinguishing between the employee and employee-like worker on the one hand, and the self-employed on the other. However the main question still remains unanswered. On what grounds can it be determined whether someone is working on a self-employed basis or under conditions characteristic of a dependent employee?
A third public labour law regulation may be of use here. The Extraordinary Decree on Employment Relationships (the BBA) of 1945, which includes part of the law on dismissal, [29] applies a definition that may be very useful in drawing a distinction between the status of the employee and the quasi-employee or the employee-like worker on the one hand and the self-employed on the other. This decree awards protection to 'those who carry out personal labour for somebody else', unless this work is normally carried out for more than two other people, or the work carried out is of an incidental nature only. [30] Therefore, if somebody works for more than two principals, or the work carried out for somebody else is clearly of an incidental nature, then the self-employed status is assumed as there is too little evidence of dependency. In the first part of the sentence, the worker clearly displays autonomous characteristics, while in the second part the existence of economic dependency is absent. In both cases there is no reason for specific protection as awarded to people who are regarded as dependent workers. 'Arbeitnehmerähnlichkeit' is therefore not assumed.
The same approach is evident in Dutch social security law. In the first place, the worker with an employment contract is covered by social security schemes. The personal scope of these schemes has been extended by law to the employee-like worker or 'arbeitnehmerähnliche Person'. Under certain circumstances, this could cover those who personally carry out work on grounds of a contracting agreement not concluded within the performance of a company or business. But also those who personally carry out paid work and whose employment relationship is not based on an employment contract, but under conditions which are regarded as comparable. Further conditions have been imposed by law with respect to this category. First, such people should work at least two days a week. Second, the work agreement should have a minimum duration of 30 days and, finally, a 'wage' must be paid of at least 40% of the statutory minimum wage. [31] Here, one can see a clear similarity with the definition applied in the Extraordinary Decree on Employment Relationships: the work carried out may not be of an incidental nature.
Extension to the Belgian law
A short extension to the Belgian situation can be useful although it has to be of a more restricted kind. The definition of the employment contract in Belgian law is rather similar to that in Dutch law: "the employee is by contract committed to work in exchange of a wage in subordination to the employer". The requirement of 'working during a certain period of time' is lacking in this definition. As in The Netherlands the main issue is whether or not there is subordination. [32] To state the existence of an employment contract there must be subordination of the employee to the employer, at least potentially. It is not necessary the employer is exercising his power to give assignments or orders actively and continuously. What is required is the mere potential to exercise this power at any moment. Whether this potential exists, has to be assessed by the facts of the case concerned.
There seems to be no differences between the law and the pratice in both countries. Going a bit more in depth, a difference of the approach and of the application of the law has to be noticed. The case law as to the subordination criterion is less severe, as in other countries. What becomes more important and more weighty is the qualification the parties themselves give to the (content, the terms of the) contract. So when the parties explicitly agree upon an contract carrying out work in the capacity of a self-employed, the courts generally accept this choice of the parties. That implies that a lot more working relationships are characterized outside the scope of the -traditional- labour law and social security law. They are lacking the protection usually offered by this law. This development implies also the will of the parties tends to prevail above the actual situation as was the basis for assessment by the courts in the past.
However this is not the whole story. According to the case law attention should be paid to the wording of the contract and the way the contract has been applied and put into effect as well. If the wording is clear, the judge has to decide according to the wording. In case of uncertainty he has to take into account the way of application of the contract in practice. At the end there is not much difference as to the approach in both countries.
A similar development as has been taken place in The Netherlands, has to be pointed out. There is some case law learning that the qualification of the contract by the parties themselves is not decisive. It is observed as to be a priori true and valid, but can be passed if objective grounds turn out that the actual situation is not in conformity to that. One can state, this means the introduction of an presumption of fact with the effect the burden of proof -as to the existence of another qualification of the contract concerned-will be considerably strengthened. [33]
The similarity with the Dutch system in the field of the social security is striking. The motives expressed by the Belgian government to put the quasi-employee -i.e. those who are working on the basis of an employment relationship not being a regular employment contract but in a way which essentially is similar as to the employment contract situation- on a par with the 'genuine' employees are worthwhile to note. The first one is of the same nature: in order to bring the employee-likes under the protection of the social security schemes (for employees) the personal scope has to be extended. [34] Another ground as to extend these regulations to quasi-employees or quasi-self-employed was the 'justified necessity' of protecting the employers as well. The legislator wishes to avoid the distortion of fair competition by the employers which tried to scrub round their social security obligations, particularly the obligation to pay contributions. [35] The criterion applied by the Royal Decree of 1969 as to bring these categories of quasi-employees under the social security law was the economic dependency of these people. They are incontestably presumed to work under the same conditions as regular employees do. The courts only have to assess whether these requirements were met. It is not necessary to investigate whether the work as a matter of fact has been carried out under the similar conditions. If the criteria are fulfilled, these 'employees' are covered by the schemes regardless their own wishes. Even in case they have stipulated explicitly of being e 'real' self-employed person not covered by the social security regulations. Moreover it is impossible to give evidence of the opposite. [36]
A final development in Belgium that has to be mentioned in the context of this contribution is the measure of the government to 'combat the escape into the quasi-self-employment'. To have access to the social security system of the self-employed, the self-employed has to be registered by a specific social security institution. That institution has to approve the application of a self-employed. The applicant has to inform the institution about the identity of the previous employer, the date of terminating the employment contract and whether there has been paid a compensation. Moreover the applicant has to inform about the activities as employee in the past and what activities he is intended to perform. So there seems to be a substantive investigation, at least theoretically, as to establish whether the applicant is a self-employed and therefor covered by the specific social security schemes for self-employed or he still has to be considered as employee. The problem however is that the initiative is on the side of the social security agency for self-employed. So the effect is depending on the activity of that agency. One can wonder whether this approach is effective to make a clear distinction between employee and self-employed, to separate the quasi-self-employed from the genuine self-employed.
In conclusion the situation in Belgium is not much different from that in the Netherlands. The law uses in both countries the notion of the "arbeitnehmerähnliche Person" as to provide these category of 'workers' with protection by law in the same way as employees are provided for.
Conclusion
As to respond to the question whether there are reasons to distinguish between employees and 'workers' which do not differ substantially from that category on the one hand and self-employed on the other, one has to take in account the changes which are and have been taken place in our societies. Firstly there seems to be a development of promoting and revaluation of self-employment. More people wishes to present themselves as self-employed, as socially and economically independent, taking care of and being responsible for their own situation in social and economic terms. Research in The Netherlands is turning out an increase of the number of self-employed. That seems to be the case in the other European countries as well. They appreciate the capacity of self-employed more and more. They do not need nor want the protection measures affiliated to the capacity of employees.
So the question might rise are there other grounds to provide this category of 'workers' with protection measures in a mandatory way. A further question will be assuming they need some protection whether the protection provided for by law comparable to the employees' protective rules should be offered in all fields of labour law, private and public. From the traditional approach familiar to the labour law and social security law concepts a collective regulation, whether it is by collective agreements either by statute, as to guarantee to a certain level a set of reasonable working conditions and working environment as well as at least a decent standard of living, it seems obvious that if more protection is needed, the quasi-self-employed or even the self-employed should be treated as were they employees. Like the employees they are assumed to be too weak to afford themselves sufficient protection. That is the reason why in all legal systems of Europe, except in a way the United Kingdom, these categories of 'economically dependent workers' are covered by labour law and social security law regulations. The way how it has been done in the various legal systems, differs. One can opt for a specific regulation as to the quasi-self-employed or -more correctly in this respect- the quasi-employees, as has been done in Germany and Austria ("arbeitnehmerähnliche Personen"). Another solution is to extend the protective regulations applicable to employees, all or parts of it, to this category of 'workers'. In principle there are two ways of doing that. The first method is used by Belgian government: by legislative act (statute or decree). The second is the way The Netherlands is operating: by leaving it to the courts to decide on general, flexible criteria. Another method that gains some attractiveness is the use of the instrument of the legal presumption, contestable or in more rigid form incontestable, as experienced in The Netherlands and Belgium. It is up the person concerned to take the initiative. So it is left to him whether or not he wants to be considered or treated as an employee or as a self-employed. At the same time it expresses the weakness of this option: one can wonder whether the weak, dependent 'worker' is willing and capable to take action by himself to appeal to the protective rules he wants to be applied to his situation.
On the other hand the appeal to the idea of the individual responsibility responds to the growing awareness and recognition that 'workers' who have and really do prefer the capacity of self-employed with all the consequences of that choice, should not be forced to be treated as employees against their own will presumed they can choose in freedom. The Dutch example can show this is a passable way. Starting from the point of an ongoing development that self-employment is and has been promoted as one of the solutions for unemployment [37] the Dutch policy intends to distinguish between the relationship based on the regular employment contract with all the necessary protection on the one hand and activities by self-employed. That enables to subsume those workers which are in a precarious working situation in which they need protection perhaps even more than the regular employees, under the protective labour law and social security law. On the other hand those who have demonstrated to be independent self-employed persons and who behave themselves as such, can stay outside the protective legal system. A governments' proposal that 'circulates in the governments' offices in The Hague', entails the following: the self-employed who wants to be considered and treated in that capacity, has to obtain for a legal status as self-employed. By a joint decision the tax authorities and the board of the social security administration decide on the application for a period of two years. After the expiring of that period the self-employed have to renew his application. The decision will be based mainly on criteria applied in the tax-regulations, that means on criteria of managing a business, which implies aiming at and gaining of a profit out of the business. [38] Once the qualification has been obtained, the person concerned has to be excluded during that period from the protection rules of the employment contract and of the social security benefits of the employees. I would add he will be excluded from all these benefits as well after expiration of the term even in case of liquidation of the business. He has to meet once again the criteria in order to qualify for being employee and for benefiting of the rights of the employees.
All this does not mean that the self-employed are also excluded from the protective rules of the public labour law. One can argue that some of these regulations, in particular those dealing with safety and health of the 'workers' have to be applicable to them. Being in a more or less similar dependent position at least in this respect. I may remind that I am talking about those self-employed who work for themselves, i.e. without personnel. That is an important restriction, that should be kept in mind.
A very last question I like to raise is whether there is any need for a regulation in the European Community law. Comparative research as presented here is useful to explore how in the various countries the issue of the quasi-self-employed has been tackled and which are the similarities in order to find out whether they are fruitful as to apply in the domestic situation and whether they can perhaps be copied in one way or another. More important seems to me whether there is a challenge or even a necessity to harmonize or at least to converge the legal systems within the European Community/Union as to the subject we are dealing with.
The EC law in the field of social policy is not very elaborated. Often the political will is failing. Some issues which belong to the core business of the labour law, are explicitly excluded from the competence of the European Council. The principle, the objective of harmonisation of domestic legal systems of the Member States into a Community legal regulation can as far as the social policy domain is concerned, only be applied to those subjects which are directly linked with the general principles and objectives of the European Community. It has to be noted that the definition, the legal concept of the employee generally speaking has been left to the competence of the national authorities of the Member States. I only might remind to for instance the directives on collective redundancy, on the transfers of undertakings, on the European Works Council. [39] If a general objective of the European integration is at stake, such as the free movement of workers and services, and the freedom to exercise a trade or a profession, the community law defines the personal scope of the regulations. According to the case law of the ECJ in the framework of the free movement of workers provision (art 39 of the EC Treaty) [40] the concept of 'worker' is of a community nature. It can not be left to the law of the Member States to define this concept. The effectiveness of Community law would be impaired if a Member State is free to determine unilaterally the content of the employee concept and consequently even may restrict the scope of the free movement provision of the Treaty. Another proof of it is the Regulation 1408/71, on the co-ordination of national social security schemes aiming at and guaranteeing the free movement of workers.
By the way it is worthwhile to mention the European Community is taking the lead as to the way of tackling the issue we are discussing. The personal scope of the Co-ordination Regulation 1408/71 has been extended to the self-employed. [41] Could this be understood as a recognition of the vanishing distinction between the employees and the self-employed? However it has to be taken into account that these regulations are an application of the right to free movement within the EC for those who are performing "a real and genuine activity" regardless whether he is an employee or a self-employed. The EC is opting for the approach of equal treatment of self-employed with employees. At first sight this seems not to mesh with the Dutch approach.
So from the view point of the social security law it is has to be noticed there is a remarkable similarity between the approach of the Member States and of the EC. In the domain of labour law it is left to the Member States due the lack of competence of the Community Institutions. Here the principle of competition of policies is still prevailing. There seems to be no need for harmonisation or even convergence. The similarities which appear in the law and in the practice of the Member States, enable to make progress as to harmonising the law on the issue we are dealing with. Perhaps it is necessary as to avoid the distortions of competition between Member States within the EC. It has been more than once the ground for interference by the Community authorities in the field of social policy and labour law. This contribution is aiming at challenging the EC and the Member States, its lawyers and politicians as to the question here discussed.
Noten
[1] In countries such as Italy the number is traditionally high, relatively speaking: more than 20% of the workforce, whereas in Germany, France, the Netherlands and Belgium the figure is around 10%. The increase during the last 20 years in these countries, including Italy, is rather impressive, between 20% and 30%. Cf. Employment in Europe, [...].
[2] The share of women in this category of self-employed is significantly lower than that of men, varying from a half to a third.
[3] To compare, the absolute number of employees is [...]. CBS, microbestanden EBB 1992 and 1997.
[4] In the construction industry, the figure has increased by 45% in the past five years, forum 17.400 in 1993 to 25.300 in 1998.
[5] These are the results of a recent research project conducted by the Hugo Sinzheimer Institute of the University of Amsterdam in cooperation with labour lawyers at the Utrecht University. See for a first report: M. Verheul, De schijnzelfstandige en het arbeidsrecht, in P.F. van der Heijden e.a, Naar een nieuwe rechtsorde van de arbeid? Den Haag 1999, p. 21-41. The final results of the research project will be published in the research paper: "Zelfstandigen zonder personeel: regels en ervaringen, AWSB, Utrecht 2000.
[6] Such as subsidies and reduced contributions to social security schemes. Another measure is the offer to 'starters' an orientation period while retaining the unemployment benefit or providing a form of social assistance.
[7] A recent proposal by the government is to abolish the general license needed in order to qualify as self-employed.
[8] This policy was also the result of the desire for deregulation and to create sufficient leeway for market forces.
[9] Particularly the organisation of the small and medium-sized businesses, the MKB, implements this point of view.
[10] Expenses increase not only because of the growing number of elderly people, but also due to the fact that the benefits that must be paid to these categories will increase. Additionally, the costs of medical treatment for those more vulnerable groups are going up whereas the group of contributors is decreasing.
[11] Fully in accordance with the tradition of the great labour lawyers as Sinzheimer and the British industrial relations lawyers as Webb, Kahn-Freund and Wedderburn They are not only the founders but also the guiding scholars of this approach
[12] It is noteworthy that the Dutch government recently presented a proposal to parliament regarding the extension of the act on medical treatment and short-term nursing (the Compulsory Health Insurance Act), covering only those employees below a certain income level and self-employed people earning less than a certain amount (which, by the way, is lower than the threshold for employees). This may prove that government's approach towards the self-employed is changing in that the differences between employees and 'small-scale self-employed' are disappearing. Small-scale self-employed people need the same protection in this area as employees. The background of the proposal seems to be recognition of the fact that the 'small-scale self-employed' are as economically dependent as employees.
[13] The benefit for the disabled self-employed is based on the subsistence level that, in its turn is based on the minimum wage level. Widows' pensions or, in more contemporary terms, public 'surviving dependants' pensions are no longer available for this category. Again, a self-employed person has to insure him/herself privately.
[14] This is the most important measure in the whole process of privatising public social security. As to the benefit level, little has changed. It remains 70% of the last-earned wage.
[15] Not to be confused with the notion of an employment contract for a fixed term. Many legal authors argue that the last criterion has become superfluous and can be abolished, as it has no distinguishing power. My objections to this reasoning are stated below.
[16] This is not strictly essential. An assignment may be personally addressed, but sometimes the intention is simply that the work in question is carried out.
[17] The contract includes a clause specifying that the contracting party is not obliged to carry out the work personally or granting explicit permission for others to carry out the work under the contracting party's responsibility.
[18] That means that he/she is not working on a contracting basis or for commission.
[19] That does not mean that the person concerned is not covered by the social security schemes. That has to be decided on the basis of the social security law. Actually, in many cases, he will be covered.
[20] Resulting in dismissal if the assignments and instructions are ignored.
[21] HR 16 September 1994, JAR 1994, 94.
[22] Formally, this concerned a fixed-term contract that was extended several times and interrupted by several 'hiring out' contracts, during which the employee was excluded from an employment contract with the employer. The purpose of employing someone in this way is to avoid the protection against dismissal offered in the law governing regular employment contracts.
[23] The employee had actually been working for several years on a nearly full-time basis.
[24] HR 16 September 1994, NJ 1996, 329. Similarly, HR. 17 November 1978, NJ 1979, 140.
[25] HR 14 November 1997, NJ 1998, 149. It was about a teaching contract of a self employed tax advisor with a private institute.
[26] That had to and has been assessed on the basis of the facts of the case concerned. In the case judged by the Supreme Court on the 14 November 1997 (NJ 1998, 149) a tax advisor who was working in a limited partnership, had been contracted by a private occupational training centre to lecture on a part-time basis. The advisor took the initiative as to the form of the contract: actually it was a 'commission-based' contract. The centre was likely to terminate this contract without compliance with the dismissal rules. The advisor claimed that the dismissal was null and void.
[27] For the sake of completeness, another presumption of law has been introduced. Not only the existence but also the scale of the employment relationship is determined by a presumption based on the average scale of work during the last three months. Again the employer has the burden of proof to give evidence that the scale thus determined does not give an accurate representation of the work carried out by the employee concerned over a longer period of time.
[28] It has to be noted that in the US these terms are synonymous. Labour law is used to refer to public law.
[29] It contains the obligation of the employer to request and receive (from a public officer: the director of the regional recruitment office) a permit before the decision to dismiss an employee. Failing this, the dismissal is null and void. The employee can easily claim the nullity of it.
[30] See art. 1 of the Decree. From a community law perspective, it is noteworthy that the European Court of Justice in Luxembourg applied a similar notion in its case law on the free movement of workers. The appeal based on the free movement provision in the EC Treaty is restricted to those who work occasionally.
[31] The Minimum Wage Act contains a provision that combines elements of the Health and Safety Act and the Social Security Act on Unemployment, Sickness and Disablement. To be entitled to a minimum wage on the basis of this act, a worker has to have paid employment which is not of an incidental nature; the employment relationship should be put on a par with a regular employment contract. Additional requirements are that the person concerned has to work for at least five hours a week over a period of at least three consecutive months, and cannot work for more than two other people in either a professional or self-employed capacity.
[32] As in all countries there is an enormous number of cases in the Belgian case law.
[33] Contrary to this it has to be noted that the Court de cassation has been moved in the opposite direction. In two cases (the first one of 7. September 1992 and the second of 5. October 1998) the Supreme Court decided that the court is not bound by the qualification given by the parties, but it has to examine and assess the existence of a subordination on the basis of the facts of the case concerned. The lower courts are still deciding contrary to the case law of the Court de Cassation.
[34] 'Socially and economically' they are in a similar situation, the government stated officially.
[35] Parl. St. Senaat 1968-69, nr. 150/9, 2. See also K. Van den Langenbergh, , p. 138.
[36] The Belgian social security law extends the scope of persons covered by mentioning special categories, such as homeworkers and actors. As to the actors it is interesting to note that the Belgian government is likely to introduce e contestable presumption of being employee in the sense of the social security acts. This appears to be a recognition of the change of mind as to accept the preference of people to be self-employed and of taking care by themselves of their social security needs. Another question is whether this is acceptable from a point of view of the joint responsibility of the community and its members, of the citizens. It could be a threat of the continuity of the social security system due to the decreasing support for those who have to rely on this system of solidarity.
[37] Understood in the broad sense: not participating in labour for one reason or another.
[38] According to a -first instance- proposal of the government, based on a report of experts. See also the report of M. Verheul, A. Jaspers, M. Westerveld and A. Wilthagen, Zelfstandigen zonder personeel: regels en ervaringen, research paper, Amsterdam/Utrecht 2000.
[39] Cf. the directives themselves. As to the Directive on collective redundancies the EC Court of Justice had affirmed this approach. Cf ECJ 11 July 1985, Case 105/84 ECR 1985, 2639.
[40] See ECJ 1964, case 75/63 (Unger), ECR 1977; ECJ 1982, case 53/81 (Levin), ECR 1035 and ECJ 1992, C-357/89 (Raulin), ECR 153.
[41] Regulation 1390/81/EC.