The classification of workers as self-employed or employees has significant implications for labor rights, tax obligations, and social security. This issue has gained prominence in the Netherlands, particularly with landmark cases involving companies like Deliveroo and Uber.

This article explores the distinctions between self-employment and deemed employment, the impact of recent legal rulings, developments in neighboring countries as well as the U.K. and U.S., and the effect of Environmental, Social, and Governance (ESG) principles.

This article was written by Brian James ([email protected]). Brian is part of RSM Global Employer Services, specifically focusing on International Employment Taxes.

Self-Employment and Deemed Employment: Definitions and Implications

In the Netherlands, self-employed workers, known as "Zelfstandigen Zonder Personeel" (ZZP-ers), operate independently, set their own schedules, and handle their own tax and social security contributions.

In contrast, employees (“werknemers”) have defined working hours, receive a fixed salary, and are entitled to benefits such as pension contributions, holiday pay, and sick leave. The distinction is crucial for determining the rights and obligations of both workers and employers.  

Key in this respect is the employer’s obligation to withhold, report and remit tax and social security contributions. Going forward, this means that tax departments will need to understand and undertake action with respect to their self-employed workers to ensure that they are not faced with a tax and social security claim in the event of a tax audit.

The Deliveroo Case

The Dutch Supreme Court's ruling in March 2023 that Deliveroo riders are employees, not self-employed contractors, marked a significant shift in the gig economy. The court emphasized the presence of a relationship of authority, as Deliveroo managed the riders' actions through its app, which outweighed the riders' freedom to choose their working hours. This decision underscored the importance of considering the actual working conditions over contractual labels.

The Uber Case

Similarly, the Dutch Supreme Court's ruling on the Uber case in February 2025 highlighted the role of entrepreneurship in determining employment status.  The court identified nine factors to assess the nature of the work relationship, with entrepreneurship being a critical element.  This key ruling suggests that drivers who exhibit entrepreneurial behavior, such as acquiring clients and making investments, may be classified as self-employed, even if they perform similar tasks to employees. In essence, this means that entrepreneurial behavior weighs just as strong as other elements in determining the nature of the relationship.

Developments in Neighboring Countries

The Netherlands is not alone in grappling with the classification of gig economy workers. In Germany, the Federal Labor Court ruled that platform workers could be considered employees if they are integrated into the company's operations and subject to its directives.  Similarly, in France, the Court of Cassation ruled that Uber drivers are employees due to the company's control over their work conditions. These rulings reflect a broader European trend towards recognizing the rights of gig economy workers.

Developments in the United Kingdom

In the UK, the IR35 legislation plays a crucial role in determining employment status for tax purposes. The IR35 rules were reinforced in January 2025 in part due to the Uber ruling in the U.K. in 2021. In this ruling, the U.K. Supreme Court classified Uber drivers as workers rather than independent contractors. The legislation aims to ensure that workers who would be considered employees if not for the intermediary through which they provide services, pay similar taxes to employees.

Recent changes have shifted the responsibility for determining IR35 status back to contractors for small businesses, reducing the administrative burden on these companies.

However, medium and large businesses still bear the responsibility for IR35 compliance, which has led to significant challenges and increased costs

Developments in the United States

In the United States, the Department of Labor announced a final rule in January 2025 to clarify the classification of workers under the Fair Labor Standards Act (FLSA).

This rule reinstates a multifactor analysis to determine whether a worker is an employee or an independent contractor, focusing on factors such as the degree of control the employer has over the work and the worker's opportunity for profit or loss.  This change aims to combat misclassification and ensure that workers receive the wages and protections they are entitled to.

ESG Principles and Employment Classification

Environmental, Social, and Governance (ESG) principles are increasingly influencing corporate practices and labor policies.

From an employment perspective, ESG emphasizes fair treatment, diversity, equity, and inclusion (DE&I), and transparent governance. Companies are now expected to ensure that their labor practices align with these principles, which includes providing fair wages, safe working conditions, and opportunities for career development. This means that the considerations and risks for companies go beyond tax, social security and employment law aspects.

Supply-Chain Compliance and ESG

In addition, supply-chain compliance has become an integral part of ESG principles, particularly in ensuring that labor practices throughout the supply chain meet ethical standards. Companies are increasingly held accountable for the working conditions of their suppliers and subcontractors. This includes ensuring that workers are not misclassified as self-employed to avoid providing benefits and protections.

By adhering to ESG principles, companies can promote fair labor practices, reduce the risk of legal disputes, and enhance their reputation among consumers and investors.

Forward Thinking 

The classification of workers as self-employed or employees remains a complex and evolving issue in the Netherlands and beyond. The Deliveroo and Uber cases highlight the need for a nuanced approach that considers the realities of modern work arrangements.

As neighboring countries also move towards greater protection for gig economy workers, and as ESG principles gain prominence, companies must adapt to ensure compliance and foster a fair and sustainable work environment.

By understanding these developments and integrating ESG principles, businesses can better navigate the challenges of employment classification and contribute to a more equitable labor market.

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