Payrolling has been a growing form of employment over the last few years. Payroll employees are recruited and hired by a company, but all matters relating to legal employment, such as payment of salary, pension and taxes are outsourced to a payroll company. This form of employment has become increasingly popular because of the flexibility it offers companies, as the risk and costs in case of termination of work or illness of the employee is taken over by the payroll company. Employment experts have long debated on the question whether payrolling should be qualified as employment or as temporary agency work. In its ruling of November 2016 on Care4Care/StiPP, the Dutch Supreme Court ended this uncertainty and qualified payrolling as a form of temporary agency work. This means that payroll employees can be obliged to participate in the StiPP pension fund for flexible workers and the collective bargaining agreement for temporary workers (ABU-cao) can apply to payroll employees.

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Current status: less dismissal protection

Payroll companies fall under the dismissal rules that apply to temporary agency work, which are generally more flexible than the dismissal rules for regular employees. As a type of temporary agency worker, a payroll employee has less protection in the case of a chain of contracts, and has less protection against dismissal, than a regular employee. As a result, a payroll employee can be employed on temporary contracts for a maximum of 5.5 years and the employment contract with the payroll company can end automatically if the employment with the client terminates. In addition, the payroll company does not have to notify the payroll employee on whether or not the temporary employment contract will be extended.


New legislative proposal

The Labour Market in Balance bill will strengthen the legal position of payroll employees. The flexible dismissal rules for temporary agency workers will no longer apply to payroll employees, meaning they will be better protected against dismissal. Furthermore, payroll employees will be entitled to the same primary and secondary employment conditions as the regular employees at the hiring company. They will also be entitled to an adequate pension arrangement.


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