What is the situation in Belgium?
Introduced almost 20 years ago, Belgian legislation on the nature of employment relationships is clear and simple. Hardly any adjustments have been made to the legislation, except for certain high-risk sectors or professions. In particular, specific criteria and a recruitment system have been introduced for the construction sector or, more recently, for activities on digital platforms.
Self-employment is of course permitted in Belgium. Moreover, the first principle of our legislation is that the parties are free to decide whether to enter into an employment relationship or an independent collaboration.
However, this freedom is not absolute: the classification must reflect the actual reality. The client company and the self-employed person must closely watch the method of cooperation if they wish to avoid the risk of the self-employed person being classified as a ‘disguised’ employee. However, a court can only reclassify the relationship provided there are sufficient elements that are incompatible with the parties' classification of self-employment.
What are the risks?
Such a reclassification would entail significant financial consequences for the client company that is recognised as an employer (arrears of employer and employee social security contributions, together with increments and outstanding interest, possible claims for financial benefits related to employment law, or even fines). Imprisonment can also not be ruled out, although this is not very likely in practice.
However, the risk may also apply to the person who has been reclassified as an employee on the grounds that he/she received remuneration exempt from payroll tax. The employee is therefore at risk of having to declare the amount of payroll tax not deducted by the employer as a benefit in kind in his/her tax return - and therefore having to pay tax on a higher amount.
What are the things that one should look out for? What are the things to be avoided?
The legislator has established four general principles for clarifying the distinction between ‘real’ and ‘false’ self-employed persons:
The will of the parties;
The freedom to organise working hours;
The freedom to organise work;
The absence of hierarchical control.
Given these criteria, we can offer some concrete advice:
Needless to say, the will of the parties to work together independently should be clearly stated in a duly drafted service provision contract;
This contract should describe the assignment given rather than the tasks to be performed. The description should focus on the expected services rather than on the means to achieve them;
A relationship in a personal capacity with a particular person should be avoided, and replacement or even assistance of the self-employed person should be permitted;
Communication with the self-employed person should also focus on objectives and expectations rather than on detailed instructions and furthermore, should respect operational autonomy;
Consultation moments can be organised with the client company, and there may be fixed deadlines, but there should be no direct supervision of activities;
The organisation of working hours should be autonomous, without any requirement for clocking-in or for fixed working hours. The service provider must report when he/she is absent, but does not have to justify it;
Exclusivity is not incompatible with the status of self-employment, although working for multiple clients may indicate that the person is running his own business and is not economically dependent on a single client;
Assignments may be indefinite or fixed-term, but a fixed-term relationship may indicate that the assignment is specifically related to a project or research from a particular expertise and consequently, that the service provider is not a permanent employee;
Etc.
Being self-employed in a company provides some protection, since in such case there can be no relationship of authority, and therefore no employment contract between the company and the client. It is important to note that this set-up is not an absolute guarantee. After examining the factual situation, the NSSO may make the finding that apart from the aforementioned relationship between the parties, another relationship exists between the client company and the person providing the services - a relationship in which there is a relationship of authority.
What if the self-employed person works in connection with project sourcing, or as a subcontractor?
In situations in which the self-employed person does not work directly for the client company, but in connection with project sourcing, or as a subcontractor of a service company, false self-employment must also be guarded against.
However, these situations also offer protection. Indeed, to some extent, this intermediary has a role to play as a barrier that helps prove that the self-employed person is not directly integrated into the client company. In addition, in principle, such arrangements are used to meet temporary needs of companies that need specific support or specialised competences. This underlines the self-employed nature of the relationship.
BDO Interim Management
In this light, BDO Interim Management can contribute to the strengthening of the status of self-employment by acting as an intermediary and proposing interim managers to companies with specific temporary needs. At BDO, we can also reduce risks by drafting contracts that leave the autonomy of the self-employed person intact, in order to avoid creating a relationship of authority.