Liedekerke Headlines Labour & Employment
The draft bill which will profoundly change the fight against bogus self-employment in a number of sectors of industry, was adopted by the Chamber. The most important change relates to the introduction of a refutable presumption of employment, provided that 5 out of 9 criteria are fulfilled. This presumption will, for the time being, only apply to well-determined sectors of industry.
As we have already announced in our Headlines of 18 June 2012, the government intends to reinforce its approach to tackle bogus self-employment. Bogus self-employment is a situation whereby a person provides services on a self-employed basis, whereas there actually exists an employment relationship. Bogus employees, on the other hand, are persons who are wrongly registered as employees, e.g. in order to benefit from certain social security rights. Both are a thorn in the flesh of the public authorities, which are confronted with a loss of income from social security contributions or with the undue payment of social security benefits. Further, bogus self-employment is viewed as a distortion of competition as regards the contractors who have the contracted services carried out by employees and not by self-employed persons.
In order to act more efficiently against the abuses of the self-employed status, the government proposed a draft bill in order to modify the current legislation, i.e. the so-called Employment Relations Act of 27 December 2006. A sector-specific approach was chosen, as abuses arise, according to the government, in a limited number of sectors of industry in particular.
The four sectors of industry targeted by the bill are:
- The construction sector or, more precisely: the sector of industry related to "real estate services". This definition encompasses also the installing and repairing of central heating, sanitary fittings, kitchens and bathroom fixtures, the covering of floors, etc.
- Surveillance and security services for the account of a third party;
- Transport of goods and persons for the account of a third party;
- Activities which fall under the scope of the joint committee for cleaning services.
A list of 9 criteria is drawn up for the four sectors of industry mentioned above. If the analysis of the employment relationship leads to the conclusion that 5 out of 9 criteria are fulfilled, a refutable presumption of employment applies. The following criteria should be assessed:
1. the absence of any financial or economic risk for the person carrying out the tasks. This is for instance the case if there is no:
a. personal and substantial investment in the company with personal means, or
b. personal and substantial participation in the profits and losses of the company;
2. the absence of any responsibility and decision making power with regard to the financial means of the company;
3. the absence of any decision making power about the purchasing policy of the company;
4. the absence of any decision making power about the pricing policy of the company, except if the prices are determined by law;
5. the absence of any obligation to achieve a result with regard to the agreed work;
6. the guarantee that a fixed price (standard rate) will be paid, without regard to the business results or the extent of the work performed by the person that carries out the activities;
7. not being an employer of own and freely hired personnel, or not being allowed to hire personnel in order to carry out the work agreed upon or to have oneself replaced;
8. not act or present oneself as a company towards third parties or the co-contractor or mainly or usually work for one co-contractor;
9. work in space (offices) of which one is not the owner or tenant or work with tools that have been put at the disposal, financed or guaranteed by the co-contractant.
If more than half of the criteria are not fulfilled, the relationship is refutably presumed to be a subcontractor relationship.
The scope of application of said refutable presumption is, according to the adopted bill, limited to the four sectors mentioned above. The list of the sectors of industry can however be extended by means of a Royal Decree, following a procedure provided by the bill. Furthermore, the King is competent to determine specific criteria which are proper to one or more sectors of industry, professions, and categories of professions or professional activities amending or replacing the abovementioned 9 criteria.
The provisions discussed above modifying the Employment Relations Act would enter into force as from 1 January 2013. An earlier date of entry into force can however be determined by means of a Royal Decree.
