Did your freelancer negotiate their terms, or did they just sign what you put in front of them? And how are they paid: per result, or like a kind of salary? Those two questions together say surprisingly much about the nature of your working relationship.
In this article I cover two Dutch DBA Act factors at once, because they logically belong together: how the agreement comes about and how pay is determined. You will read why negotiation room and entrepreneur-style pay point to genuine independence.
This blog is for clients: IT managers and hiring managers who want to set up their agreements with a freelancer well.
The formation of the agreement and the way of paying are factors 5 and 6 of the Deliveroo ruling, two of the nine factors the Tax Authority uses to assess your working relationship. Want the full overview? Read our guide to the 9 assessment factors of the Dutch DBA Act.
Factor 5: how does the agreement come about?
This factor looks at the way the contract came into being. Did the freelancer negotiate their rate, terms and the content of the assignment? Then they behave as an entrepreneur closing their own deal. Were they presented with a standard contract they could only sign, then that looks more like an employee accepting an employment contract.
The core is the negotiation room. Two parties agreeing an assignment as equals fits an independent relationship. A client who unilaterally sets the terms and a freelancer who takes it or leaves it resembles the relationship between employer and employee.
For you this means: leave room for negotiation, and record that it was there. A freelancer who had a say in their rate, planning and terms gives a stronger independence signal than one who merely signed your standard contract.
Factor 6: how is the pay determined?
This factor looks at the way the freelancer is paid. Do they get a fixed monthly amount that strongly resembles a salary, or do they invoice based on hours worked or results delivered, like an entrepreneur? The form of the pay reveals something about the nature of the relationship.
Entrepreneur-style pay has characteristics you do not see with an employee. The freelancer sends invoices themselves from their own business, charges VAT, and is paid per assignment, project or hour worked. There is no holiday pay, no continued pay during illness, and no fixed monthly payslip.
If, by contrast, the freelancer gets a fixed amount that does not depend on work delivered, with various provisions resembling employment benefits, that colours the picture toward employment. So pay based on invoices for work delivered, not as a disguised salary.
Why do these two factors belong together?
Because they both concern the business side of the agreement: how you reach a deal and how the money flows. Together they sketch whether there is a negotiated, entrepreneur-style agreement between two independent parties, or a unilaterally imposed working relationship resembling employment.
A freelancer who negotiates and is paid on an invoice basis per result behaves as an entrepreneur on both points. Someone who signs a standard contract and receives a fixed monthly amount as salary resembles an employee on both points. The two reinforce each other, in both directions.
How do you arrange these two points wisely?
Give room for negotiation and pay in an entrepreneur-style way. These are not complicated interventions, but they strengthen your independence story on two factors at once. Also record the agreements so they match the practice.
A few practical principles:
- Let the freelancer negotiate rate, planning and terms
- Avoid a unilaterally imposed standard contract with no room
- Pay based on invoices for hours worked or results delivered
- Avoid a fixed monthly amount that resembles a salary
- Do not give employee provisions like holiday pay or sick pay
Remember that the practice is decisive. A contract suggesting negotiation room while in reality you let nothing move does not convince. Nor does an invoice construction that functions in practice as a monthly salary. Make sure paper and practice align.
How do these points relate to the level of the rate?
Factor 6 is about the way of paying, not its level. That level is a separate factor, namely factor 7. The two do relate: a negotiated, market rate paid on an invoice basis is a strong entrepreneur signal on several points at once.
Want to know why the level of the rate counts in itself, and what the legal presumption around a low rate means? Read our blog on the level of pay.
Frequently asked questions about formation and pay
Must a freelancer really negotiate everything?
Not every detail, but there must have been room. A freelancer who had a say in their rate, planning or terms shows they close a deal as an entrepreneur. A purely unilaterally imposed contract with no room at all is a signal toward employment.
May I agree a fixed monthly amount with a freelancer?
It is allowed, but be careful. A fixed monthly amount detached from work delivered resembles a salary. Better is payment based on invoices for hours worked or results delivered. That keeps the pay entrepreneur-style instead of salary-like.
Does it count if I use my standard contract?
Using a standard contract is allowed, as long as there was room to negotiate and adjust. It becomes a signal if you impose a fixed contract unilaterally with no negotiation room. Show that the freelancer could have a say in the content.
Does it matter whether the freelancer charges VAT?
It belongs to entrepreneur-style pay. A freelancer who invoices from their own business and charges VAT behaves as an entrepreneur. It is not decisive proof in itself, but it fits the broader picture of a business-like, independent relationship.
Do these factors weigh more heavily than the others?
No, there is no ranking. All nine factors are weighed in combination into an overall picture. Formation and pay are often not decisive in themselves, but they strengthen the picture the other points sketch, in both directions.
Conclusion: a negotiated, business-like agreement points to independence
How your contract comes about and how you arrange the pay together say much about the nature of your working relationship. Negotiation room and entrepreneur-style, invoice-based pay point to genuine independence. A unilaterally imposed contract with salary-like pay points the other way.
For whom is this most urgent? For clients who impose standard contracts unilaterally or pay a fixed monthly amount as salary. For whom less? For those who negotiate with the freelancer and pay on an invoice basis per result.
My advice: leave room to negotiate, pay in an entrepreneur-style way, and make sure paper and practice align. Two factors well arranged, with one considered approach.
Unsure whether your agreements hold up on all points?
Want to look together at whether your working relationship holds up on the nine factors, and which construction fits? Plan a no-obligation call with me. We go through your situation, with no strings attached.
Note: regulations around the Dutch DBA Act may change. For current information, consult rijksoverheid.nl or belastingdienst.nl. This article is general information, not legal advice. For complex situations, I advise consulting an employment lawyer or tax advisor.
