Flexible hiring: what are your options?

Are you looking for new staff on a flexible basis? Hiring a self-employed professional, or finding someone via a temping agency or payroll agency can help if you do not want to hire new employees, but need some extra help. This article explains the characteristics of different flexible employment contracts, to help you choose the right type of contract

There are various options for hiring a temporary employee. These are the four types of flexible employment contracts: 

Temporary agency contract

A temporary employee (in Dutch) is a good choice when you need a flexible employee relatively quickly for work that does not require any special expertise. There are 3 parties in a temporary agency contract: the temporary employee, the agency, and the hiring party (you). The agency and the employee sign the agency contract, but the employee works under your supervision. The temporary agency acts as their legal employer.

Pros

• You can hire a temporary employee for as long as needed, and you can end the contract without a notification period.
• The temping agency will take care of the entire recruitment process and personnel administration.
• This type of hiring is a good way to test whether an employee is a good fit for your company for a longer period, without other obligations. At many temping agencies, you can take on the employee at no extra cost after six months.
• As the hiring party, you do not have to pay the employee’s salary if they become ill or go on leave. 

Cons

• The temping agency usually decides which employee comes to work for you. So you often do not know what kind of person you will get.
• The employee can end the employment contract at any time, for any reason. That can cause scheduling problems.
• A temporary employee is more expensive. You pay not only the employee’s gross salary, but also the intermediary costs and coverage for the temporary agency’s employer risk. In practice, that can be up to 2 or 3 times the employee’s gross salary. The more qualified the employee, the higher their hourly wage, and the intermediary costs. 

Secondment contract

If you are looking for an expert for a temporary job, you can hire an employee from another employer through a secondment agency (detacheringsagency). The employee remains employed by the other employer, but works under your supervision. This is called secondment (detachering).

A secondment agency mediates on your behalf between the supply and demand for staff. Their candidates are usually educated professionals in a variety of fields. They have a contract with the secondment agency, but work on assignments at other clients. 

Pros

• Secondment is a good option when you are looking for specific expertise for a temporary project. For example, when you are running a large building project, and you lack knowledge of building permits or regulations.
• The external employer or secondment agency bears the risks, such as sick leave or payment of termination compensation.
• You can usually choose which person comes to work with you. The secondment agency will suggest a number of candidates. You can decide which one is the best fit for your company.
• Sometimes the secondment agency will recruit an employee especially for your assignment. If there is a good match, the secondment agency will hire the person to work on the assignment. That saves you time and administrative work.
• Secondment agencies have a large ne2rk, which can quickly help them arrange a high quality match. 

Cons

• A secondment contract is usually for a longer period. The secondment agency, the hiring organisation and the employee will agree on the end date and average number of working hours per week in advance. That means none of the parties can end the contract without notice. A secondment contract may include a notification period. In that case, you can end the contract with the agency before the end date.

You can only end the contract without notice if the secondment contract includes a temping provision.

• You will usually pay an hourly rate and a surcharge if you choose secondment. This rate will include the salary costs and premiums, as well as the costs for administration, recruitment and selection, and the risk of sick leave. On average, these costs will be 2 to 3 times the hourly wage. 

Payroll contract

One reason for hiring a payroll employee is to limit the amount of administration as much as possible. In a payroll contract, the payroll company is the employer of the payroll workers. You can hire these employees for your own company. The employees fall under the collective agreement for your company. The practical aspects, like recruitment and selection, negotiating terms of employment, and supervision, are your responsibility. 

Pros

• You have less financial risk.
• You can decide which employee comes to work for you.
• You spend less time and money on administration. The payroll company is responsible for the costs of sick leave, and will take care of payroll, wage payments, employment contracts, and pension accrual.
• You are not permanently tied to the employee. You can start on a temporary basis, and if you are satisfied with their performance you can extend the contract up to 3 times over a period of 3 years.

Cons

• You set the employee’s hourly wage, but you pay between 2 and 3 times as much to the payroll company on average.
• After 3 years, the employment contract automatically becomes a permanent contract (in Dutch) and you cannot end the employment relationship without a good reason.
• If the payroll company does not pay the payroll taxes and VAT, then you are liable (in Dutch). You can cover part of this risk by applying for the liability exemption for hirers. You can do that via the Tax Administration’s disculpatie regeling (hirer’s liability, in Dutch).
• The government considers the payroll company to be the employer of the payroll employees. This means the payroll company bears the most responsibility. But it also means you have fewer rights. 

Model contracts

Are you looking for staff to do work independently? For example, if you want to build a new website. In that case, you can hire a self-employed professional (a freelancer, zzp’er). A zzp’er does not have an employment contract, and decides for themself how they wish to do the work. They also use their own materials or equipment. There may not be an authority relationship between you. The zzp’er is liable for the business risk.

To clarify the work relationship between the zzp’er and the client, the government has passed the Employment Relationships Deregulation Act (Wet deregulering beoordeling arbeidsrelaties, wet DBA). This law considers a work relationship to be employment if it meets the following 3 characteristics:

• employer authority
• personal work
• compensation

If you decide how the worker does the work, if the work cannot be transferred to someone else, and if you only compensate the worker for the hours worked, then there is an employment relationship. Even if you hire a zzp’er. If there is an employment relationship, then you as the employer must also pay taxes. 

If you are not sure whether or not you comply with the DBA Act, you can choose to use one of the model contracts. A model contract describes how you work together, and has been approved by the Dutch Tax Administration. It shows that the work relationship does not qualify as an employment relationship. This will help you avoid false self-employment and a retroactive tax bill or a fine. 

Pros

• You can hire a zzp’er for any time period.
• You can alternate between several zzp’ers, so that you always have a backup.
• You do not pay payroll taxes, insurance or holiday allowances. The zzp’er is responsible for paying the taxes. You agree to an hourly rate or an all-in price, so you avoid the risk of unexpected costs.
• A zzp’er is used to working on assignments independently, and can often work flexible hours.
• You do not have to pay costs when the zzp’er is sick or absent.

Cons

• A zzp’er has a relatively higher hourly rate than an employee, because you as an employer do not need to pay any taxes.
• Because zzp’er often have more than one client, they may not be available right away.