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Headline Labour & Employment: The new legislation regarding bogus self-employment in 3 Q&A's

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As of 1 January 2013, a number of provisions of the Employment Relations Act, which aim at facilitating the government’s fight against bogus self-employment (and bogus employment), will enter into force. As we have already mentioned in our Headlines of 18 June 2012 and 6 July 2012, the introduction of a refutable presumption of employment for a number of activities which are supposedly “susceptible to fraud” (“real estate services”, transport, surveillance and cleaning) constitutes one of the most important innovations. This refutable presumption applies if at least 5 of a list of 9 specific criteria are fulfilled. If that is the case and if the presumption is not rebutted, then a contract pertaining to the performance of services on a self-employed basis will be re-characterized into an employment contract.

Whoever appeals to self-employed service providers, consultants, subcontractors, etc. should be aware of the new legislation. As we notice that there are still many misunderstandings, you will find hereunder 3 questions, which may have also arisen in your company.

1.    My company is not active in the sector of construction, transport, cleaning or surveillance, so I do not have to take into account the new list of specific criteria?

The list of specific criteria (see our Headlines of 6 July 2012 for an enumeration) will apply to all employment relationships existing in the frame of activities which pertain to “real estate services” (the construction sector in its broad sense), transport activities, surveillance and security services and activities who fall under the scope of the joint committee for cleaning services. The new provisions will thus not only apply to those exercising these activities as a main activity. As a re-characterization can have serious financial consequences, in particular for the principal, anyone who outsources an activity belonging to the list of these 4 categories must be on his guard. An IT company must, for example, verify whether its contracts with its self-employed security guard and its cleaning company comply with the new provisions. Also a textile company which outsources its transport activities to self-employed drivers must have knowledge of the legislation.

2.    I appeal to self-employed persons for certain activities, but those activities have nothing to do with “real estate services”, transport, surveillance or cleaning. Does the Employment Relations act is of importance to me?

As the focus now primarily lies on the 4 sectors which are supposedly “susceptible to fraud”, the impression could arise that the Employment Relations Act is not important for all other activities. However, for other professional activities, sectors of industry or professions, specific criteria can also be assessed. Even more important is that every agreement pertaining to the performance of services on a self-employed basis can be verified against the 4 (already longer existing) general criteria, being: - the parties’ intention; - the freedom to organise his/her own working time; - the freedom to organise his/her own work; - the possibility to exercise a supervisory control.

3.    Do the new provisions apply as of 1 January 2013 to all existing contracts pertaining to the performance of services on a self-employed basis?

The new provisions apply to all agreements. Also existing agreements could be re-characterized into an employment agreement by applying the refutable presumption.