Caution: an agreement is more than its name

The name of a contract is not decisive: a judge or the Tax Authorities look at what actually happens, not at the heading on the document. Do you call an agreement a 'contract for services', but does someone work as an employee in practice? Then that relationship can still be classified as an employment contract, with all the associated legal and tax consequences. This reclassification is one of the biggest contract risks for entrepreneurs. On this page, you can read how it works, which contracts are sensitive, and how to prevent it.

What does reclassification of an agreement mean?

Reclassification means that an agreement is assessed legally differently than the parties intended or wrote down. It is not the chosen name that counts, but the actual content: what rights and obligations have been agreed upon, and how do the parties implement them in practice?

A striking analogy: whether you call a mouse an elephant or not doesn't make it a six-tonner. The same applies to your contracts. If the title reads 'purchase,' but the agreement meets all the characteristics of a lease, the judge applies the statutory rules for tenancy. The chosen title changes nothing in this regard.

Why is that so important? Many statutory rules are mandatory :you cannot validly deviate from them in a contract. If you try to do so anyway, those rules will still be declared applicable to your relationship, regardless of what is written on paper.

Contract for services that turns out to be an employment contract

The best-known and most far-reaching example is the boundary between a contract for services (with a self-employed person) and an employment contract (with an employee). Pursuant to Article 7:610 of the Dutch Civil Code, an employment contract exists as soon as someone performs work for another in the service of another for wages for a certain period of time. If those characteristics are present, it is an employment contract – even if both parties intended to agree otherwise.

In the so-called Deliveroo judgment (2023), the Supreme Court made it clear that the intention of the parties is not decisive. What is decisive is a coherent assessment of all the circumstances of the case. Indications pointing towards an employment contract include:

• a relationship of authority: you give instructions and the other person must follow them;
• the obligation to perform the work personally , without free substitution;
• the extent to which the work and the person are embedded in your organization and business operations;
• continued payment during illness or leave, or the need to request vacation;
• the absence of real entrepreneurial risk (no hourly billing, no multiple clients, no personal investments).

If the relationship is classified as an employment contract, the 'contractor' may claim employee rights such as protection against dismissal, continued payment of wages during illness, and vacation days. At the same time, social security contributions and payroll taxes may be due.

Bogus self-employment and the DBA Act

The tax aspect of this risk is called bogus self-employment: on paper, you hire a self-employed person, but in reality, there is an employment relationship. The Tax and Customs Administration assesses this based on the DBA Act. Since January 1, 2025, the previous enforcement moratorium has been lifted, and the Tax and Customs Administration is once again checking for bogus self-employment. For clients, this means that additional assessments of payroll taxes and social security contributions are possible.

Enforcement will be built up with some restraint during the first few years (a so-called 'soft landing'), initially employing lighter instruments such as company visits. The rules regarding fines and the pace of enforcement have been adjusted several times recently. Therefore, ensure you are informed about the current state of affairs specific to your situation; do not assume that a lenient approach is permanent.

The practical lesson is clear: it is not your contract, but your daily way of working that is decisive. A well-drafted standard agreement only protects you if you actually act in accordance with it. Would you like to have this assessed for your specific situation? Our employment law would be happy to help.

Reclassification as a non-commercial loan

Reclassification also plays a role in financing. In the case of a classic loan, the obligation to repay the amount including arm's length interest is a key characteristic. However, if you lend money to or from your own company under conditions that no independent third party would accept, the tax authorities may classify the loan as non-arm's length .

From a civil law perspective, it often remains simply a loan. From a tax perspective, however, the outcome can be different: a non-arm's length loan can have consequences for the determination of taxable profit and for the deductibility of, for example, a write-down. Because these types of issues depend heavily on the facts and current tax regulations, it is advisable to consult with your tax advisor or a legal expert before formalizing loans between you and your BV. You can also read how to formalize such an agreement on our page regarding the loan agreement.

From franchise agreement to employment contract or agency

The franchise agreement has been regulated by law since the introduction of the Franchise Act (2021), but the designation still offers no guarantee. If a franchisee operates in practice under the strict authority of the franchisor, without genuine entrepreneurial freedom, reclassification as an employment contract may also be a threat here. The line between an independently operating franchisee and an employee is sometimes razor-thin.

Moreover, reclassification does not always have to result in an employment contract. Sometimes, for example, a relationship turns out to be an agency agreement (commercial agent), with different mandatory legal protections, such as statutory compensation for clients upon termination. The result is always the same principle: mandatory legal rules apply, even if the contract explicitly excludes them. After all, you cannot simply deviate from those rules.

What are the consequences of a reclassification?

The consequences vary by situation, but are rarely minor. Consider:

• Employment law: protection against dismissal, continued payment of wages during illness, vacation days, and unforeseen pension entitlements.
• Tax: additional assessment of payroll taxes and social security contributions, possibly retroactive, and consequences for the profit and deductible position.
• Civil: provisions that are suddenly void or voidable because they conflict with mandatory law.
• Practical: strained relations with the counterparty and unexpected costs in your budget.

Precisely because reclassification takes place retroactively—often during a conflict, inspection, or termination—the impact is felt particularly harsh. Prevention is therefore considerably cheaper than remediation.

How do you prevent your contract from being reclassified?

A strong contract starts with honesty about what you are actually agreeing to. A few practical steps:

1. Choose the right contract form. Describe the relationship as it really is, instead of opting for the most 'convenient' fiscal or legal designation.
2. Ensure that paper and practice align. Make sure the actual execution fits the chosen structure: give a self-employed professional genuine freedom, avoid unintended hierarchical relationships.
3. Clearly define key agreements. Consider replacement, autonomy, risk, and remuneration—precisely the points on which requalification hinges.
4. Check doubtful cases in advance. If you feel you are walking a tightrope, have the contract legally reviewed before signing.

Our legal experts review your contract for services or other contracts, make adjustments where necessary, and advise you on the actual execution. This helps you avoid surprises afterwards.

Frequently asked questions about the reclassification of agreements

Does the title of my contract determine which rules apply?

No. The designation is merely an indication. A judge and the Tax and Customs Administration look at the actual content and execution of the agreement. If it meets the characteristics of, for example, an employment contract or a lease, then those rules apply, regardless of the title.

Can a judge simply interpret my contract differently?

A judge does not reclassify arbitrarily, but weighs all facts and circumstances. If the factual situation does not correspond to the chosen contract form, the agreement may be reclassified, and the corresponding, often mandatory, legal rules apply.

What is the difference between a contract for services and an employment contract?

In a contract for services, a self-employed person works at their own risk and expense, without a hierarchical relationship. In an employment contract, a person works for wages for a certain period, in the service of and under the authority of the employer. If these characteristics are present, it is legally an employment contract.

What is bogus self-employment?

Bogus self-employment occurs when someone works as a self-employed person on paper, but is in practice actually an employee. The Tax and Customs Administration may classify such a relationship as employment, resulting in additional assessments of payroll taxes and social security contributions.

How can I avoid requalification?

By choosing the right contract form, aligning paper and practice, and having doubtful cases legally reviewed in advance. A legal expert can assess whether your contract and working methods hold up.

Have your contract reviewed by MKB Juristen

Are you unsure whether you are entering into the correct agreement, or do you want to rule out the risk of reclassification? Our legal experts review your contracts, amend them where necessary, and advise you on practical matters. View our expertise in contract law or schedule an intake directly to discuss your situation.