Coalition party VVD has joined forces with three opposition groups to draft legislation clarifying what constitutes self-employment.

They argue that the tax office’s decision to crack down on sham self-employment has caused considerable unease among both freelancers and their clients, and that the legal definition remains too vague.

The parties also claim that companies are increasingly reluctant to work with freelancers for fear of being fined. The new law is intended to offer legal certainty to both freelancers and employers.

“The self-employed want independence and to decide how and when they work,”  VVD member of parliament Thierry Aartsen told the Financieele Dagblad. “We are giving the self-employed the recognition they deserve.”

“We are doing this in a broad alliance because of the importance of getting this sorted out,” said D66 MP and former minister Hans Vijlbrief. “Freelancers are an unmissable driver of our economy.”

Inspired by Belgium

The draft law draws inspiration from the system in Belgium and introduces three main “tests”.

The first step is to determine whether the freelancer has multiple clients, their own tools of the trade, and is registered with the chamber of commerce. Then the relationship between the freelancer and the client is assessed: does the contractor work independently, do they have fixed hours, and is there a hierarchy?

The third test considers the sector. In Belgium, for example, anyone working in transport who does not own their vehicle is classified as an employee.

The parties say they want to strike a balance between safeguarding freelancers’ rights and ensuring a level playing field for all workers. The proposal aims to address trade union concerns about freelancers undercutting salaried staff on pay and social security contributions.

Under the plan, freelancers would be required to build up an “adequate” pension and make sufficient provisions in case they become unable to work. The freelancer tax allowance, which has already been significantly reduced, would also be scrapped.

Members of parliament are due to debate the issue of sham self-employment with ministers – who are drawing up their own proposals – later on Thursday.

Around 1.2 million people in the Netherlands currently work as freelancers but there has been increase in the number ending their registrations since the tax office crackdown was announced.