Belgian parliament tightens legislation towards the practice of false self-employment

The 25 August 2012 Act amends the Act of 27 December 2006 on employment relationships (‘the Labour Relations Act’) and introduces a rebuttable presumption that self-employed persons working in specific industries are in fact employees if at least 5 out of 9 socio-economic criteria are met. As the new legislation introduces criteria of economic dependence to assess whether an employment contract exists, it can be expected that these new measures will have a significant impact on existing self-employed relationships as well as on future self-employed relationships in targeted industries.

Furthermore, parties in a self-employed relationship who wish to obtain legal certainty with respect to the exact nature of their relationship in any given industry will, in principle, be able to request a social ruling from an Administrative Commission under certain conditions from 1 January 2013.

Targeted Industries

The new legislation targets false self-employment in the four following industries:

1. Construction;
2. Transport (excluding ambulances and the transport of disabled persons);
3. Surveillance, and
4. Cleaning.

This list can be eventually extended by a Royal Decree, after consultation with relevant parties, including social partners in the joint committees. Furthermore, this rebuttable presumption does not apply for certain employment relationships in a family context. It is important to note that the actual type of service rendered by the self-employed person is irrelevant for this rebuttable presumption to apply. Only the type of industry matters.

Legal presumption

If five of the following nine criteria are met, a self-employed persons active in any of the four industries will be presumed to be bound by an employment contract, unless the opposite can be established:

1. The self-employed person has no financial or economic risk (e.g. because he or she does not make any personal and substantial investment in the client with private means or because he or she does not personally and substantially take part in the client’s profit and loss);
2. The self-employed person has no responsibility or decision-making power with respect to his or her customer’s financial means;
3. The self-employed person has no decision-making power regarding the client’s purchasing policy;
4. The self-employed person has no decision-making power on his or her customer’s pricing (except if prices are determined by law);
5. The agreed work does not entail the obligation to reach results;
6. A fixed fee is guaranteed, regardless of the client’s financial results or the scope of work performed by the self-employed person;
7. The self-employed person is not the employer of personally and freely hired staff, nor is at liberty to hire personnel for the execution of agreed work or to have him- or herself replaced;
8. The self-employed person does not present him- or herself as an enterprise towards his/her client or third parties, or works mainly for one contractual party;
9. The self-employed person operates in office spaces which he/she neither owns or leases, or is entrusted with working tools that are financed or guaranteed by the client.

Evidence contradicting the legal presumption can be introduced. For example, evidence based on the general criteria enforced by the Labour Relations Act in determining the nature of a relationship, i.e.

(1) the nature of the agreement as explicitly chosen by its parties (this is only relevant to the extent that the agreement is executed in line with its terms),

(2) freedom to organise working time,

(3) freedom to organise the agreed work and

(4) impossibility of hierarchical supervision.

For industries which are not targeted by this new legislation, the situation remains in its current state until similar rules or criteria are applied by law. Consequently, the relationship between two parties will only be considered incorrectly categorised as a self-employed relationship if there are a sufficient number of elements that rule out the self-employed status chosen by the parties. On the basis of this rule and the Supreme Court’s rulings, it has become very difficult for authorities to prove false self-employment. Furthermore, according to the Supreme Court’s case law, economic dependence does not rule out self-employment.

Social Ruling

For parties who seek legal certainty with respect to their relationship, the amended Labour Relations Act will allow parties to request a 3 year ruling from an Administrative Commission (yet to be established) before or within one year following the start of their self-employed relationship, or within one year following the date on which the new Act became effective. The principle of a social ruling was already imbedded in the Labour Relations Act of 2006. However, as the Commission never actually saw the light of day, it was impossible to obtain legal certainty with respect to the nature of a relationship through a social ruling.

Entry into force

The new legislation is applicable as of 1 January 2013, unless a Royal Decree mandates an earlier entry into force.

Final remark

It is safe to say that with the new Act, the legal landscape with respect to the qualification of a relationship has become quite complex. Changing the rules of the game with respect to existing relationships and contracts does raise questions. By applying different rules depending on the industry in which a person is active and including criteria, deemed relevant in one industry but not in another, to assess the exact nature of a relationship, the new legal framework will undoubtedly give rise to many questions and interesting case law developments in the future.