Con­sid­er­ing a busi­ness acquis­i­tion? Do not over­look the inde­pend­ent con­tract­ors work­force in your due dili­gence!


Published 8 April 2024 Reading time min Author Jeannet van Vleuten Labor & Employment

When assess­ing the desirab­il­ity of a busi­ness acquis­i­tion, and if so, what agree­ments should be made in the con­text of that acquis­i­tion, a Due Dili­gence (DD) is often con­duc­ted. An increas­ingly import­ant com­pon­ent of the DD is the issue of wheth­er inde­pend­ent con­tract­ors are involved and, if so, wheth­er there might be a case of pseudo inde­pend­ent con­tract­ing. This is a cru­cial issue because, in addi­tion to tax, there are also labor law (includ­ing col­lect­ive agree­ments and pen­sion) risks involved. Risks that a poten­tial buy­er wants to be able to assess.

Digit­al assess­ment of inde­pend­ent con­tract­ors
Dur­ing a DD, the inde­pend­ent con­tract­ors and the cor­res­pond­ing con­tracts for ser­vices of the com­pany being acquired are eval­u­ated. The clas­si­fic­a­tion ques­tion (con­tract for ser­vices or an employ­ment con­tract) is, of course, the key issue here. Is there a case of real inde­pend­ent con­tract­ing, or is it pseudo inde­pend­ent con­tract­ing? If the con­clu­sion is that there are pseudo inde­pend­ent con­tract­ors, what are the con­sequences?

This issue itself often gen­er­ates much dis­cus­sion, espe­cially con­sid­er­ing recent devel­op­ments. How­ever, assess­ing the (employ­ment) rela­tion­ship dur­ing a due dili­gence is even more chal­len­ging. After all, you only see the con­trac­tu­al agree­ments and must judge based on the answers received to the ques­tions wheth­er there is a case of real inde­pend­ent con­tract­ing and not pseudo inde­pend­ent con­tract­ing.

How to assess a con­tract?
Assess­ing the text of the con­tract alone is insuf­fi­cient. It is import­ant to view the entire con­text and con­duct a risk ana­lys­is of all cir­cum­stances of the case, as far as pos­sible dur­ing a DD. For example, ask the fol­low­ing ques­tions:

  • How many inde­pend­ent con­tract­ors are there?
  • Is the inde­pend­ent con­tract­or struc­tur­ally employed?
  • Does the inde­pend­ent con­tract­or have mul­tiple cli­ents, or do they primar­ily or only work for the selling party?
  • Can the inde­pend­ent con­tract­or determ­ine how the work is struc­tured, or is there con­trol from the com­pany?
  • Is the inde­pend­ent con­tract­or employed for the core busi­ness of the com­pany, or does the inde­pend­ent con­tract­or per­form more sup­port­ive tasks?
  • Are stand­ard inde­pend­ent con­tract­ors ser­vice con­tracts used, or were the con­di­tions genu­inely nego­ti­ated?
  • What is the hourly rate being applied?
  • Is the inde­pend­ent con­tract­or treated dif­fer­ently than the employ­ees in the com­pany (who per­form com­par­able tasks)?

Why is this so import­ant?
If the inde­pend­ent con­tract­or turns out to be an employ­ee after­ward, the risks are not insig­ni­fic­ant! What risks should you con­sider, for example?

  • Although there is an enforce­ment morator­i­um until 1 Janu­ary 2025, which makes the Dutch tax author­it­ies do not act­ively mon­it­or and act on pseudo inde­pend­ent con­tract­ing, this will change after 1 Janu­ary 2025. The Dutch tax author­it­ies will be inter­ested in unpaid payroll taxes and social secur­ity con­tri­bu­tions and can claim these ret­ro­spect­ively.
  • Labor law (dis­missal) pro­tec­tion will apply. Thought you could eas­ily ter­min­ate the con­tract for ser­vices? Noth­ing could be fur­ther from the truth.
  • The oblig­a­tion for wage pay­ment dur­ing ill­ness for at least 104 weeks will also apply, includ­ing all asso­ci­ated rein­teg­ra­tion efforts and the risk of a wage sanc­tion if you do not (suf­fi­ciently) com­ply.
  • Hol­i­day pay? Can be claimed ret­ro­spect­ively!
  • Does your com­pany fall under a man­dat­ory col­lect­ive agree­ment? Here too, the pseudo inde­pend­ent con­tract­ors can – ret­ro­spect­ively! – make a claim. There might even be “con­flict­ing col­lect­ive agree­ments”, for example, if dif­fer­ent man­dat­ory col­lect­ive agree­ments apply to the seller and buy­er. An addi­tion­al risk if the falsely inde­pend­ent con­tract­or can pick the most favor­able employ­ment con­di­tions for them­selves.
  • Is there a sec­tor­al pen­sion fund? Then I is highly likely that a pen­sion fund (even years later and ret­ro­spect­ively!) can suc­cess­fully claim unpaid con­tri­bu­tions.
  • Is there a trans­fer of under­tak­ing? Then the pseudo inde­pend­ent con­tract­or also falls under these pro­tect­ive rules. The buy­ing com­pany could end up with a much lar­ger work­force than anti­cip­ated, with all the con­sequences that entail, such as not being able to avoid a reor­gan­isa­tion due to duplic­ate func­tions.


After the inten­ded busi­ness acquis­i­tion, the above-men­tioned risks are, in prin­ciple, for the account of the buy­er, unless oth­er arrange­ments have been made. Parties can agree on vari­ous guar­an­tees and indem­nit­ies, but for example, also include con­di­tions that all inde­pend­ent con­tracts that the buy­ing com­pany sees as a risk, must be con­ver­ted into employ­ment con­tracts (with or without ret­ro­spect­ive effect) before the sale. It is also import­ant that the selling party remains jointly and sev­er­ally liable for all wage claims up to the trans­fer for the first year after the sale.


As soon as a buy­ing party deals with a (sig­ni­fic­ant) inde­pend­ent con­tract­ors at the seller’s side, alarm bells should ring. It is advis­able to scru­tin­ize these con­tracts and their prac­tic­al exe­cu­tion closely. Espe­cially if the selling party has been mak­ing struc­tur­al use of this inde­pend­ent con­trac­ted pop­u­la­tion for a long time, per­form­ing largely core busi­ness activ­it­ies, and has few to no oth­er cli­ents. If false inde­pend­ent con­tract­ing is iden­ti­fied, this could have very sig­ni­fic­ant fin­an­cial con­sequences. Be alert, and in case of doubt, we are more than will­ing to think along with you!


Want to know more about everything related to the top­ic of inde­pend­ent con­tract­ors? Click here!