On June 17, 2011, the Dutch Supreme Court rendered an important decision on sector classification in relation to employer insurance. The decision is particularly important for companies which have set up one central company to employ all its group employees, who are made available to group companies. In practice, this type of central company is also referred to as a staff company (“personeelsvennootschap”).
The Supreme Court regards these staff companies as employment agencies under certain conditions, which could result in a significant increase in their employer unemployment insurance premiums (“wachtgeldpremies”). The Supreme Court agreed with the Arnhem District Court's ruling, which stated that when staff are employed and made available within a group, this could be considered a 'real' employment agency activity. However, one condition for this classification is that the company for which the employee performs his work manages and supervises this.
However, the Supreme Court considered that the District Court had insufficiently researched and/or stated its reasoning as to whether or not the work was performed under supervision and management. The Supreme Court has therefore requested the District Court to investigate this matter further.
Should the District Court conclude that the work was performed under management and supervision, this gives the Dutch Revenue an opening to classify staff companies as employment agencies.
Practical relevance
Group companies using staff companies are well advised to assess whether they are at risk of being classified as an employment agency. In practice, there may be ways to avoid a reclassification. Should the District Court conclude that the supervision and management criteria have been met, it may be possible to take steps to avoid this financially unfavorable reclassification. We would be pleased to provide further information on possible solutions.