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Employment Contracts: Distinction Between Interpretation and Qualification

Last month the Supreme Court ruled on the legal matter of qualification of an agreement as an employment contract. In its ruling, the Supreme Court draws attention to the fact that, contrary to what is sometimes argued, party intent is not relevant to the question whether an agreement should be classified as an employment contract.

The Supreme Court considered that the law defines the contract of employment as “the agreement by which one party, the employee, undertakes to perform work in the service of the other party, the employer, against payment of wages during a certain period of time”. If the content of an agreement satisfies this description, the agreement must be regarded as an employment contract. It is irrelevant whether the parties actually intended to make the contract subject to the legal regulation of the employment contract. The intention of the parties therefore plays no role in the question whether the agreement must be regarded as an employment contract.

The Supreme Court makes a distinction between, on the one hand, the interpretation of an agreement and, on the other hand, the qualification of an agreement. The interpretation question concerns the assessment of which rights and obligations the parties have agreed upon. This question must be answered on the basis of, among other things, the intentions of the parties (the so-called Haviltex criterion). The qualification question simply concerns the assessment of the legal criteria (a contract, personal employment, salary, and authority) and not the intention of the parties. Execution, i.e., the way in which the parties actually implemented the agreement, is the decisive factor for the qualification of the agreement, to determine whether the agreement belongs to one of the special contracts regulated by law, for example an employment contract or a contract for services.

It is becoming more and more common for companies to make use of self-employed workers to carry out (interim) work. Parties then enter into a contract for services with each other. However, in view of this ruling of the Supreme Court, attention is required for both parties, especially when it comes to self-employed workers who perform the same work alongside salaried employees. Depending on the specific circumstances, including its actual implementation, the agreement may be qualified as an employment contract with all of its legal consequences.