In a letter, the House of Representatives was recently informed about implementation aspects of the abolition of the self-employed enforcement moratorium from 1 January 2025. The Tax Administration believes that the lifting is feasible, even though it will lead to turmoil in the labour market. The letter discusses in detail pension accrual and retroactive contribution collection in cases of bogus self-employment.
Pension accrual in false self-employment
Mandatory pension funds are subject to the 'no contribution, but right' principle. This principle ensures that those subject to compulsory membership must be registered as members and that they do not have to worry at every salary payment whether their employer is also paying the pension premium due. If, after years of employment, something is found to have gone wrong here, they can rest assured that this will not affect their pension entitlements.
This solidarity principle functions effectively to protect individual employees from the financial consequences of negligent employers and is considered one of the solidarity features in the pension system.
This solidarity principle also comes into play in cases of false self-employment. If a working relationship turns out not to have been a client-employee relationship but an employer-employee relationship, this implies that the worker was an employee from the start. From the principle 'no contribution, but entitlement' it therefore also follows that the employee, if a compulsory pension scheme applies, has accrued pension entitlements from the start of the work. The fact that the pension fund was not yet familiar with the worker during the period of bogus self-employment is irrelevant to the accrual of pension entitlements.
Limits to 'no premium, but right'
The right to pension in cases of bogus self-employment is not unlimited. In cases of, among other things, malicious intent on the part of employer and worker, the "no contribution, but right" principle can be deviated from. This could be the case in the context of sham self-employment if the parties deliberately and for a long time misqualify the employment relationship. It is up to the pension fund, in the specific circumstances of the case, to make a reasoned determination that no pension entitlements or rights will be granted as long as no contribution has been made. It is also important that a pseudo self-employed person must prove an employment contract in proceedings against the pension fund.
Sham self-employment and enforcement moratorium
The lifting of the enforcement moratorium means that from 1 January 2025, the Tax and Customs Administration can again fully enforce the qualification of employment relationships. This means that companies and organisations that hire people as zzp'er for work that they do not perform independently can again face retroactive correction obligations, retrospective payroll tax assessments and fines. With regard to the period before 1 January 2025, Belastingdienst - subject to the five-year period - can only impose corrections if there is malicious intent or if a previously issued instruction has not been sufficiently followed. In those cases, corrections and retrospective levies may be imposed up to the time when maliciousness occurred with a maximum of five years or up to the time when the Tax Administration issued the designation. It is expected that due to the publicity surrounding the lifting of the enforcement moratorium, many employers and employees will review their agreements and, where necessary, bring them into line with the legal framework. This is necessary, also to reduce the problem of false self-employment identified here.
For pension entitlements accrued in the past, this is more complex: pension funds will have to identify which entitlements have been accrued based on their own information, information via the payroll declaration chain, the employers and/or the worker, and then recover the premium due for this from the relevant employer.
The enforcement moratorium did not entail a suspension of legal obligations. For instance, during the moratorium, employers have always been legally obliged to join a pension fund for all employees and pay contributions. Also for the bogus self-employed workers they hired. The imposition and lifting of the enforcement moratorium does not change these underlying legal obligations. Recovery of these contributions by pension funds can be complex, but there are no new obligations or burdens for employers who have correctly qualified their workers under labour law.
Recovery of pension contribution in case of bogus self-employment
Now that sham self-employed persons can claim past pension without having paid contributions, the issue of payment and concealment of due contributions follows.
The starting point is that the premium debt is for the account and risk of the employer. After all, the employer was, and is, liable to pay contributions. Moreover, it would be undesirable for the premium to be borne by the pension fund. Then the costs would be borne by the fund collective, the employers and employees who did pay premium for pension accrual. This undermines the support base of the pension system. Laying the costs entirely on the shoulders of the pseudo self-employed is also undesirable, since, in addition to the above-mentioned reasons, they are also the least affluent party and they should not suffer as a result of the employer's non-payment of pension contributions.
Pension funds will work to recover contributions for the benefit of the collective of members. This means that, in principle, they will actively collect overdue contributions from employers as soon as assignment relationships are requalified. This process can be complex, especially when long-term working relationships are involved where premium payments have to be recovered over several years. To this end, mandatory pension funds have the legal possibility to issue independent subpoenas if premium payments eventually fail to materialise.
Although the exact financial impact is difficult to predict, there is a real risk that some employers may be unable to pay the overdue premiums, e.g. due to bankruptcy. In such cases, the cost of the unpaid premiums will still be borne by the fund collective.
Claiming the pension contribution may also have consequences for the sham self-employed person. If the pension fund recovers the full premium from the employer, the employer can recover any employee contribution from the pseudo self-employed person, if prescription and the duty of good employment practice do not prevent it. In addition to consequences for pension contributions, there may also be other consequences for the sham self-employed person, for example in terms of taxation. For example, the attribution of pension entitlements to the worker may in certain cases affect the annuity premium deduction.
Sham self-employment and social security
Sham self-employment does not only have consequences when it comes to pension entitlement. The correct qualification of the employment relationship is also important for social security. For instance, a worker falls under the scope of employee insurance when there is an employment contract. Even if the worker is a pseudo self-employed person, and thus no contributions have been paid. This means that the worker is always insured for the Unemployment Act (WW), Sickness Act (ZW), Disability Insurance Act (WIA) and Maternity Leave (Wazo) if there is, or should have been, an employment contract.
In that case, it means that the employer still has to pay employee insurance contributions and the income-dependent health insurance law contribution. In addition, the employer must include the employee in the payroll administration and fulfil the administrative obligations that go with it. The employer must withhold wage tax, national insurance contributions, employee insurance contributions and the income-related Healthcare Insurance Act contribution (collectively referred to as wage taxes) from the wages and pay them to the Tax and Customs Administration via a wage tax return.
So, broadly speaking, the same applies to this as to pension funds. Only the principle of 'no contribution, but right' is anchored differently in social security. An additional levy for employee insurance contributions can be imposed on employers via payroll taxes with retroactive effect for five years at most. A retroactive levy will again be possible from 1 January 2025 with retroactive effect to 1 January 2025.
If the employer does not pay, has not paid contributions, or if the employment relationship has already ended, this does not adversely affect entitlement to benefits. A self-employed person who is of the opinion that there was an employment relationship can, if the period for doing so has not yet expired, apply for WIA or WW benefits. The UWV will then consider that application and, if there are indications, will assess whether there was an employment relationship after all.
If this is the case and there is no longer an entitlement to continued payment of wages - if the other conditions for entitlement are also met - there may be an entitlement to such benefits, even if no contributions have been paid. The employer may, after the enforcement moratorium is lifted as of 1 January 2025, face an after-tax assessment from the Tax Administration for the period from 1 January 2025.
Tip: The implementation test prepared by the Inland Revenue can be found here.
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