Independent contractor compliance has no borders. Governments everywhere are taking steps to tighten requirements that organizations must follow when they use independent contractors and freelancers. In some cases, the governments argue that these regulations will ensure self-employed workers are not subject to the same conditions or obligations as full-time employees without the same job security or benefits such as health insurance or pension schemes. In other instances, these requirements are clearly designed to ensure off-payroll arrangements are not simply used for tax avoidance.
Whatever their intent, these tighter regulations require companies to take action to ensure that they are in compliance.
The Netherlands has recently enacted two pieces of legislation that will require the attention of contingent workforce owners and managers.
- The DBA Act (Deregulering Beoordeling Arbeidsrelaties – Deregulation of the Review of Labour Relations) will be replaced on Jan. 1, 2021, by a new module (Opdrachtgeversverklaring) that will help to verify, maintain, and give clarity to the independent contractors as well as the business.
- The WAB Act (Wet Arbeidsmarkt in Balans – Balancing Out the Job Market) was introduced on Jan 1, 2020, to “make permanent work less permanent and … flexible work less flexible.” For contingent workforce managers, this act primarily affects job tenure.
The Challenge: A robust solution for meeting compliance requirements
To comply with these requirements, organizations using non-employee workers in the Netherlands need a solution that combines complete visibility with an auditable record of the process by which workers are properly classified.
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Fortunately, vendor management systems are designed to offer just such as solution and to automate the process, reducing the chance of missteps or inaccuracies when engaging workers. This is particularly important when failure to manage and document employment status determination can expose an organization to risks including legal action, reputational damage, and substantial financial penalties.
Even if a company has a VMS in place, some updates in the organization’s VMS configuration or functionality may be necessary to accommodate new processes and procedures that DBA and WAB compliance may require.
From these new laws to IR35 in the UK and other regulations around the world, organizations need to work with their VMS provider to ensure compliance. Talk with your provider to ensure it is addressing any new requirements that may affect your program.