After more than eight years, the enforcement moratorium on the Deregulation of Labor Relations Assessment Act (Wet DBA) has officially ended. As of 1 January 2025, the Tax Authorities will resume enforcing the classification of employment relationships. This means that when individuals are hired as self-employed persons without personnel (zzp'ers) but are classified as employees, the employer of this pseudo self-employed person can be retroactively subject to correction obligations, additional tax assessments, and fines.
This development impacts both employment law and pension law. In this newsflash, we briefly inform you about the pension consequences after the reclassification of a self-employed person as an employee.
Pension Funds - No premium, yet entitled
A self-employed person is not entitled to a pension from the hiring entity, even if the hirer is required to participate in an industry-wide pension fund or has taken out a pension insurance for its employees.
What happens if a self-employed person is legally classified as an employee? If the hirer/employer is affiliated with a pension fund, current legislation entitles them to the principle of "no premium, yet entitled". This means that a pension fund must register the reclassified employee (retroactively) as an employee, including all accrued pension entitlements and the associated returns. This is required even if no premium has been paid for the reclassified employee.
Once a pension scheme with a pension fund is applicable, the employee accrues pension entitlements from the beginning of the employment relationship with the employer. The fact that the pension fund was not aware of the employee during the period of pseudo self-employment does not affect the right to pension accrual.
Consequently, pension funds will strive to collect these premiums from the employer and have the legal authority to issue enforcement orders in case of overdue payments.
The principle of "no premium, yet entitled" has certain exceptions, which are limited to exceptional circumstances. In evident cases of 'malicious intent' by both the employer and the employee, no retroactive premium payment will be required in the event of reclassification.
Pension Insurers – No premium, no right?
For employers with insured pension schemes, the principle of "no premium, yet entitled" does not apply. The basic premise of these insured schemes is that there is a relationship between paying pension premiums and the entitlement to a pension. Therefore, not paying premiums results in the absence of a pension entitlement. A reclassified self-employed individual who approaches the employer's pension insurer to receive a pension will generally be rejected.
However, this does not mean that the employer is exempt from a damage claim by the reclassified self-employed individual. The employee can argue that they – like all other employees – were entitled to a pension and that the employer should compensate for the damage they suffer due to the lack of a pension.
What are the implications for employers?
Pseudo self-employed individuals can claim pension rights, even when no premiums have been paid to the pension fund. These premiums will be retroactively claimed from the employer. Additionally, the damage can be recovered from employers for not including the individual in the insured pension scheme. This can lead to significant pension costs for employers if a self-employed individual is reclassified.
Legislative proposal Vbar – Does the new Act offer protection?
The legislative proposal for the Assessment of Employment Relationships and Legal Presumption (Clarification) Act (Vbar) provides protection against additional tax assessments, such as wage taxes, in the event of the reclassification of self-employed individuals during the period when the enforcement moratorium was in effect. However, this Act does not offer similar protection for the retroactive collection of pension premiums during the same period.
As a result, pension funds are confronted with a challenge: should they retroactively collect premiums from employers, potentially imposing a financial burden on them, or should they distribute the costs across the collective in the pension fund?
The Dutch Council of State has advised that the explanatory memorandum to the legislative proposal should address methods for managing these risks and adjust the proposal where necessary.
What actions can be taken by employers at this time?
- Conduct a thorough assessment of your self-employment contracts and the nature of your working relationships to identify any instances of (fictitious) employment.
- Verify your eligibility for industry-wide pension funds and ascertain whether you may be required to participate in one.
- Mitigate potential adverse pension impacts by promptly reviewing and, if necessary, adjusting your working relationships to ensure compliance.
Contact
Should you have any questions on pension consequences after the reclassification of a self-employed person as an employee, please contact us.
