By Emmanuel Wauters, Partner employment law & Sita Vanbinst, Associate

I.          Context

In Belgium, a professional collaboration between a company and individuals can be set up either through an employment contract or a contract for self-employed.

The main differences between both kinds of contracts can be resumed as follows:

• Employees perform their duties under the employer’s authority, while self-employed workers perform their duties in the absence of any form of subordination towards their client.
• Employers have to pay social security contributions on the employee’s salary (13,07% employee’s contributions and +- 35% employer’s contributions), while self-employed workers are solely responsible from the payment of the social security contributions to be calculated on their income. In addition, these social security contributions are often much lower than the social security contributions to be paid by employers for their employees.
• Finally, employees benefit from the protection provided by the labour law rules (in particular with regard to minimum salaries, vacation pay, dismissals and termination indemnities). These rules do not apply to self-employed workers.

Needless to say that, based on these elements, for companies it may be more interesting to collaborate with self-employed workers rather than with employees. However, such choice is not without risks for these companies.

II.         Risks

Labour courts can always proceed to a requalification of the contracts for self-employed consultancy into an employment contract if it turns out that a self-employed worker performs his duties in a relationship of subordination with the company. Such requalification can happen upon request of either the consultant or the social inspectorate.

In case of such requalification, the company (employer) can be condemned to the payment of arrears of social security contributions (over a period up to 3 years – and even 7 years in case of proven fraud) and possibly to arrears of salary, vacation pay and/or termination indemnities. Finally, the company may also be subject to criminal prosecution.

For that reason, it is crucial for the parties to set out their terms and conditions in a written contract. The following tips will help you to limit the risks of such requalification in to an employment contract.

III.        Practical tips to set up a self-employed consultancy contract

Tip 1: the contract should be explicitly qualified as a contract for self-employed

The law provides that parties are free to determine the nature of their collaboration (employment contract of contract for self-employed consultancy). As a consequence, the qualification given to the contract is usually considered by the courts as an important element of appreciation.

Although the judge is not bound by the title used in the contract, the qualification will be maintained unless it is not compatible with the content of the agreement and/or how the contract is performed in practice.

Tip 2: confirm that the self-employed worker will be free to organize his work and working time

Self-employed workers are supposed to be free to organize their work and working time.

Therefore, the contract should mention that the self-employed worker will be free to determine when and how his duties will be performed.

Try to avoid a too detailed overview of the self-employed worker’s duties. This would be considered as indication for the existence of a relationship of subordination. It is preferable to mention general goals to be achieved by the self-employed worker.

Tip 3: be careful with the possibility to control the self-employed worker (authority)

Self-employed workers do not perform their duties under the authority of an employer. The sole possibility for a company to control a worker - regardless whether such control is effective - can be sufficient for the judge to conclude that the worker is bound by an employment contract. Therefore, any kind of hierarchical control should be excluded in the contract.

However, the case-law admits that the self-employed worker can be requested to complete and provide time-sheets and that parties can agree to plan meetings on a regular basis in order to discuss the progress of the work. These elements can be included in the contract.

Tip 4: include the following additional elements in the contract

According to the law – for certain industrial sectors^[1] – if a minimum of certain specific criteria are fulfilled, the contract will be deemed to be an employment contract. However, in practice, the courts often apply these criteria, regardless of the industry sector the company and the self-employed worker are active in.

As a consequence, it is advised to provide at least 5 of the following elements in the contract, regardless of the sector:

1. The self-employed worker should be able to recruit co-workers in order to fulfill the work. In this regard, contracts generally provide that the self-employed worker can appoint another person with equivalent skills to perform the duties, provided that the company gives her prior approval with regard to that person.
2. The fee should depend on the duties performed by the self-employed worker. It is advised to provide a daily fee rather than a fixed monthly fee.
3. The self-employed worker has an obligation of result rather than a best-efforts obligation.
4. The self-employed worker will carry out his duties with his own equipment. Company car, company phone etc. are a no go.
5. The worker must be presented to third parties as being self-employed (f.i. on the company’s website, business cards, etc.).
6. The self-employed worker should bear the financial or economic risk (f.i. by investing in the client’s company).
7. The self-employed worker must remain fully responsible for the financial resources of his business.
8. The self-employed worker must be able to decide autonomously about the purchase policy of his business.
9. The self-employed worker must be able to decide autonomously about the prices charged to his clients.

Tip 5: submit the contract to the social ruling commission

As from 2013, both parties can submit their contract to a specific administrative commission in order to obtain a ruling on the nature of the contract. This commission can either confirm the qualification of the contract (employment contract or contract for self-employed) or decide to requalify the nature of the contract.

This ruling is valid for a period of 3 years. However, courts are not bound by this ruling.

Tip 6: specific measures when a former employee becomes self-employed

During their collaboration, parties sometimes agree to change the qualification of their contract (often from an employment contract into a contract for self-employed). Such decision must be implemented with the greatest caution.

According to the case-law, the fact that a self-employed worker has performed identic or similar duties as an employee before, can be considered as a motive for proceeding to a requalification of the nature of the contract.

Therefore, if parties decide to pursue their collaboration under a contract for self-employed, they will have (1) to terminate the existing employment contract by signing an appropriate settlement agreement and (2) to sign a new agreement, according to which:

• The worker’s position will be changed into a position which could justify the change of the nature of the contract (f.i. from sales employee into sales director).
• The worker will be granted with a sufficient autonomy with regard to the organisation and performance of his duties.
• The salary structure would be changed in such way that the worker would bear a certain enterpreneurial risk (f.i. by replacing a fixed monthly salary by a daily fee).

Tip 7: the performance of the contract must be in line with its content

Finally, even if the contract is in line with the tips mentioned above, Courts can still proceed to a requalification into an employment contract if it turns out that, in practice, the self-employed worker performs his duties in a relationship of subordination.

Therefore, the company must avoid to exercise any kind of authority towards the self-employed worker, f.i. by giving explicit directives regarding the content of the work, absences of the worker, etc.

Conclusion

In conclusion, when setting up a collaboration with a self-employed worker in Belgium, a number of precautions must be taken. The measures described above will allow companies to reduce the risks related to a requalification of such contract into an employment contract.

Feel free to contact us, should you have any further questions regarding this issue.

Emmanuel Wauters | e.wauters@crosslaw.be | +32 (0)2 510 52 00 | www.crosslaw.be