On March 24th, 2023, the Dutch Supreme Court declared that despite Deliveroo's intentions to classify its riders as self-employed contractors, they are in fact employees.

Background 

Originally, Deliveroo riders worked under a temporary employment agreement. However, Deliveroo did not extend the employment agreement as of 2018 and instead entered into contractor agreements with its riders. 

The FNV trade union opposed this decision and argued that the contractor agreements should be considered employment agreements. Following the Amsterdam Court of Appeal and the Advocate General's ruling in favor of the FNV, the Supreme Court has now confirmed that Deliveroo riders are in fact employees.

Judgement Supreme Court 

The Supreme Court stated that a holistic approach should be used when determining a worker's status, taking into account all relevant circumstances. This includes the nature and duration of the work, the integration of the work in the organization of the company they work for, the obligation to perform the work personally and whether the worker bears commercial risk. 

Contrary to what many believed, the Supreme Court importantly ruled that the contractual possibility of a worker arranging for a replacement did not make the qualification as an employment agreement impossible.

A&M’s Take

Although the Deliveroo case is not a tax case, it can definitely have its implications for tax purposes, as wage tax and social security premiums should be paid by companies when workers are classified as employees. This ruling means that workers are more likely to be classified as employees, and the fact that free replacement is not incompatible with an employment agreement could have consequences for self-employed individuals, including managers who work under a service agreement with their own management companies.

The Dutch tax authorities currently however only enforce deemed employment situations in cases where companies do not follow instructions provided by the tax authorities or if the company acts maliciously. The latter is difficult to prove, but we do think that the Deliveroo ruling could give the tax authorities more grounds to provide instructions or even try to substantiate malicious practices for companies with similar arrangements to Deliveroo.

In light of the above it is also important to note that the Dutch government currently investigates new rules to reduce (financial) differences between self-employed persons and employees, (ii) clarify the rules of having an employment agreement and (iii) increase enforcement of these rules. Additionally, the EU is in the process of introducing a new directive specifically for platform workers which introduces a presumption of employment for self employed platform workers. 

How Can A&M Help?

In light of the Deliveroo ruling and in anticipation of new Dutch and EU legislation regarding deemed employment, it is advisable to evaluate the working relationship with self-employed individuals and adjust procedures and working methods where necessary.

If you have any questions or would like to discuss your specific situation, please feel free to contact your usual A&M adviser or Frank Buitenwerf (fbuitenwerf@alvarezandmarsal.com) or Jorn Konijn (jkonijn@alvarezandmarsal.com). We are happy to schedule a meeting to discuss your concerns.