It’s often said that everything was better in the good old days. I’m not so sure about that. However, I do agree that things were often a lot clearer back in the day. Labour relations is a great example.
Throughout most of the 20th century, people in the Netherlands generally worked in either agriculture or industry, and their work was carried out on the basis of the predecessor of the employment contract we have today. You had a boss, or you were the boss, and you were paid a wage or a salary. Then, towards the latter stages of the century, the service sector saw rapid growth in line with the working population’s level of education.
There were, of course, also self-employed individuals. These people weren’t that hard to recognise. The family doctor worked for himself, as did the lawyer, the plumber and the local baker. Nobody ever considered a nurse to be self-employed. In simple terms, ‘social status’ determined if someone was seen as an employee or an entrepreneur.
Flexible labour? That barely existed, although employees could enter into a temporary contract with an employer. The contract could be extended just once, as long as it had been agreed in writing. Meanwhile, trade unions fought for the welfare of employees.
And that was more or less the situation right up until the eighties and nineties. Since then, however, many types of labour have evolved: temporary staffing (which existed in the sixties but has increased in scope greatly since), secondment, payrolling, job pooling and contracting.
After changes were made to the 1998 Flexibility and Job Security Act (Wet Flexibiliteit en Zekerheid), the temporary contract became a new standard, at least for new employees. Yet this wasn’t necessarily reflecting a need for flexible labour. More often than not, it was done ‘because it was possible’.
More recently we’ve seen a sharp increase in the number of self-employed individuals, which has led many to question the true independence and entrepreneurism of these people. It’s a question which even the OECD has asked—more or less rhetorically—our country.
The increase in alternative forms of employment to the detriment of the permanent contract has received a great deal of attention from many quarters. Why has the permanent contract suddenly become almost redundant? There are many theories. But, as far as I’m concerned, the clue lies in the fact that these alternative arrangements have appeared in unison with globalisation and the surge in employment contract rules relating to sickness, dismissal, administration, labour and welfare.
It leaves us with a strange situation in today’s labour market. Let me give you an example that isn’t as far-fetched as it might seem. If we pick at random a medium-sized trading company, we’re likely to find the following groups of people:
- People with a permanent employment contract (usually older employees)
- People with fixed-term contracts
- Employment agency workers (not necessarily to help during peak loads or staff absences)
- Payrolled workers (because employers prefer to outsource)
- Seconded workers subject to the agency or supplier’s Collective Labour Agreement, or CAO (because the company’s CAO is expensive and not for everyone)
- Self-employed people (who actually do the same work as the others)
These labour categories, their terms and conditions, and their legal positions can be likened to the card game Happy Families: play continues until someone has collected a complete fictional family of different occupations, only in this case, until the company has collected a complete workforce of different types of employees.
A situation like this was unthinkable only a few years ago. But, in 2018, where uncertainties and mismatches abound between supply and demand, it’s seen as almost normal. Of course, unlike in our fictional company, not all these alternatives are present in all companies. Moreover, I don’t want to suggest that all employers have or aspire to a similar mosaic of labour relations. My example simply serves to illustrate that ‘social status’ doesn’t hold as much sway as it used to.
Status or, if you like, one’s social position, is nevertheless still a relevant factor for the Supreme Court when determining if an individual work is subject to an employment contract or another legal construction—generally an assignment or commission (see the Court’s judgment of 14 February concerning notaries: ECLI: NL:HR: 2014:283)
So, how is it that, in today’s labour market, parcel deliverymen and care providers can be designated as self-employed, even if they’re working for the same employer and their work was previously recognised as an employed person’s activity? How ‘enterprising’ should we actually find these people?
Some self-employed people find themselves in the same economic and social situation as employees. Do these self-employed people deserve the same protection as employees? The discussion on the legal interpretation of online platform work provides a great example: are Uber drivers and Deliveroo couriers ‘real’ self-employed people, are they employees, or are they something in between? In 2016, a British judge made short work of Uber’s assumption that its drivers were self-employed:
“The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous.”
The chosen wording revealed that this judge was not about to assign a new social status to these drivers.
Ultimately, this is all about the formation of labour relations and the desired level of regulation. The employment contract is, according to some, a Christmas tree adorned with too many decorations. Meanwhile, the flexible forms of employment are frequently used, despite the lower level of protection they offer.
We don’t have to ponder for too long to see the obvious and growing gulf between workers. Why is it that one employee in our fictional trading company has a right to an annual salary increase, pension, unemployment benefit, transition compensation and even a seat on the Works Council, while his colleague doesn’t get any of these benefits?
It’s concerning that current discussions are still based on existing concepts: self-employed vs. employee, regulatory platform vs. permanent contract regulations, mandatory company pension scheme vs. voluntary self-employed pension scheme. Those discussions touch on our values of employment law, yet they’re not being fully addressed.
In 1907, with the introduction of the Collective Labour Agreements Act (Wet op de Arbeidsovereenkomst), the values of social legislation were formulated: responsibility, job security, protection, inequality compensation and solidarity. But do those values remain in force? That is the real topic of discussion.
The world of 2018 is not that of 1907, and that must have consequences for the way we look at employment regulation. A better educated, wealthier population needs to reassess the value of pay inequality. Perhaps we need a little less protection for the employee who is nevertheless still well rewarded? And what more can we do for the large group of ‘self-employed people’ who earn less than the minimum wage? After all, we’re no longer restricted to seeking solidarity within our own religious or social circles.
The search for these values and the eventual outcome need not provoke a revolution. In fact, current discussions already reveal the direction of travel, which is the erosion of the huge gulf between various types of employees. At any rate, it’s fair to say that existing concepts have become obsolete: there are groups of employees that we would like to protect in a different way now.
A cause for increasing dissatisfaction, in light of their socio-economic position, is the lack of a social scheme for self-employed people. An article published in Het Financieele Dagblad on 18 October 2018 is a case in point: The Dutch Federation of Trade Unions (FNV) accused online cleaning platform Helpling of operating bogus schemes: the cleaners work as self-employed individuals and, therefore, don’t pay any social security contributions, even though their collective labour agreement makes it mandatory.
A day later, in the same newspaper, the Minister of Social Affairs and Employment, Wouter Koolmees, demanded that a social protection floor be laid under the labour market because the market was becoming polarised. A week later, Van den Broek, CEO of Randstad, pleaded for a minimum rate for the self-employed and for a social scheme that includes this group:
If you allow one million people to work in this way, it hollows out the social system. A flexible labour market can still give people the right to insurance, training, mortgages, etc. The temporary staffing sector needs sound, permanent legislation. We agree with the European trade unions that online platform employees must be subject to the same regime. (FD 24 October 2018).
Each era has its problems. In the seventies, gangmasters (illegal labour subcontractors) infuriated the established order by undermining the social system; since then the temporary employment sector has been institutionalised. Now those same agencies are being threatened by the platform economy and by the extensive use of ‘self-employed’ labour.
Trouble is, we really don’t have an answer because we have don’t have a clear opinion on these newer types of employment. What’s more, roles are becoming more interchangeable. Tradtionally, the temporary employee was there to help during staff absences and peak periods, and the self-employed was a clearly defined category which included the general practitioner, the lawyer, the plumber and the baker.
These days, a meal delivery driver can now have a temporary employment contract, work as a temp, work for a staffing or contracting agency, or simply—if that’s the right word—be self-employed. The nice lad who used to deliver my Chinese meals (the only exotic choice in my village by the way) happened to have an employment contract.
Aligning social security benefits—including pension rights—would be a good first step. This would lead naturally to the necessity of contribution payments, which in turn would increase for all the costs of hiring self-employed services. Who would foot that particular bill? Should the self-employed be forced to pay for it with their tax advantage (if that even still exists)? After all, if they’re no longer 19th century employees requiring financial assistance, perhaps they’re this century’s ‘entrepreneurs’.
I put quotations marks around the last word of the previous paragraph for a reason: a substantial number of self-employed individuals—around 500,000—aren’t considered true entrepreneurs, at least according to the definition given to us by our legal framework, in particular by the European Union.
A self-employed healthcare entrepreneur is already a strange combination. But to call a home care assistant an entrepreneur is far removed from the original meaning of the word, from what the common understanding of the term is, and from the situation in other EU countries. That some decide voluntarily to become self-employed because they disliked the way they were being treated by their former employer is not an example of an employee exercising free choice, rather it’s a testimonium paupertatis (literally ‘proof of poverty’) within the sector.
It is time to say farewell to our binary system of employee versus self-employed. This simple contrast is no longer sustainable, yet adding an extra category doesn’t really solve anything. It’s time we developed an employment act that provides all employees with more protection than that which the self-employed currently receive (especially in the case of safety legislation and equal treatment), but less than is given in the employment contract.
Of course, we can invent specific rules for certain categories and/or hand over some issues to our social partners, such as those relating to high-income earners. But the building that accommodates regulation for the Dutch labour market is cracking. It’s time to hire a couple of good builders.