DBA law threatens career opportunities of interim managers

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The Netherlands are at the forefront in terms of the number of independent managers hired on a project basis. Interim management is a serious career opportunity here. Or so it is for now. A recent new law for independent freelance professionals (DBA) is threatening to throw a spanner in the works.

Although she is only 37, Mandy Verman feels like an ‘old hand’ in the online marketing profession. And with thirteen years of experience, she thinks she’s earned the epithet. After gaining enough experience in permanent employment, she decided to start working as an interim manager five years ago. “When I was still in permanent employment, I noticed my attention waning when things became run-of-the-mill. That is why I thought it would be better to work on stand-alone projects,” she shares in an interview with Dutch newspaper NRC Handelsblad. “It is important to me to make my own schedule. Travel is one of my greatest passions, and as a freelancer I am able to combine it with work.”

The Netherlands as a testing ground

Mandy is just one example of the growing number of interim managers in the Netherlands. This is largely because of the way the job market is organised here. According to the International Labour Organisation (ILO), this abundance of different forms of flexible labour cannot be found anywhere else in the world. In that sense, the Netherlands is a testing ground and international leader, says Guy Ryder, director general of the ILO: “The Netherlands demonstrates that a large part of its one million freelance professionals has opted for self-reliance and freedom,” says Ryder in the Financieel Dagblad.

“Unlike in other countries, interim management is a serious career opportunity here,” Mischa Voogt, Managing Director at Michael Page confirms. “Most of our candidates are people with significant experience, who view interim management as the next step in their career. Research we conducted among interim managers shows that they are very happy with this choice. At the same time, we are currently also seeing many candidates who worry about the future of their profession. Since the Declaration of Independent Contractor Status (Verklaring Arbeidsrelatie or VAR) is being phased out since May 1st of this year, they are concerned that they will miss out on assignments. The new law is practically unimplementable.”

Uncertainty for businesses

Under the new Act for Deregulation of Labour Relations (DBA), businesses risk a hefty additional tax bill if the Tax Authority finds any false self-employment on their books. The consequences can already be felt: “Businesses are currently dealing with great uncertainty,” says Mischa Voogt. “Because the conditions under which someone can claim they are an independent professional are unclear.”

According to Voogt, the new law puts the cart before the horse: “Organisations are increasingly working on a project basis, with managers being hired for the duration of the project. All research points to the increase of this trend. The government should be facilitating it. Instead, things are being made more difficult for businesses.”

Strategic choice

There is a structural reason why companies increasingly need flexible labour. Due to increasing global competition and digitisation, they must be able to act on new developments quickly. One example is the corporate strategy of TSM Business School, where only one in eight employees are on a permanent contract. Aside from these, the school employs independent professionals. “Thanks to our flexible shell, we are always able to create a good balance between demand and supply,” says CEO Ivo Matser.

Almost all companies in the Netherlands are making this strategic choice. The reviving economy is also a factor. “During the crisis many cuts were made, and now that the labour market is recovering, companies need new labour quickly. These needs are largely met on a temporary basis,” Mischa Voogt explains.

A real battlefield

Whether it will stay like that remains to be seen. For one thing, businesses currently struggle with the model agreements meant to replace the VAR declaration since May 1st. Of all the contracts submitted to the Tax Authority as per August 1st, nearly a month later only 8 percent had been approved. Entrepreneurs were shocked: “How can one afford to wait eleven weeks to accept an assignment? Moreover, nobody seems to know the exact requirements for these agreements,” says Adrienne van Veen, Director of MKB Belangen (an SME interests organisation), in the Financieel Dagblad.

“I’m getting the same response from our clients,” says Mischa Voogt. “It’s a real battlefield. We’ve always said that this is an ill-conceived law. The government must stop denying that there are problems: the longer this situation continues, the more blows the entrepreneurial climate will suffer. If we want interim management to continue to be a serious career opportunity in the future, the government will have to act quickly to prevent any further problems.”