A ruling by the Court of Appeal of Den Bosch has recently appeared, in which, after referral by the Supreme Court, it was ruled that there is no obligation for two minority shareholders to be insured for employee insurance. How did the court reach this judgment?
This case involved two individuals who, through their personal holdings, each owned 24% of the shares in the operating company. The personal holdings had entered into a management agreement with the operating company.
Personal labor by shareholder
According to the inspector, the two individuals perform their work under the authority of the operating company's general meeting of shareholders. This constituted an employment contract and the operating company should have paid employee insurance premiums for the two individuals, the Inland Revenue ruled.
However, the court notes that, at most, there is a contractual relationship with the personal holdings. The court and does not see where the general meeting of shareholders would derive the power to exercise direct authority over the activities performed by the two individuals.
In addition, the management agreements do not contain any further provisions on the conditions under which the assignment is to be performed, such as, for example, working hours, vacation days and sickness arrangements. The mere circumstance that the two persons actually performed the management work and they had the expertise to do so does not mean that they personally undertook to perform labor. The fact that they mutually replaced each other supports this judgment.
Insurance obligation
The court rules that it has not been made plausible that both persons were in (fictitious) employment. The provisions in the management agreement entered into do not indicate that both persons actually (or in essence) entered into employment contracts with the operating company.
On this basis, there is no employment relationship with these individuals and therefore no insurance obligation for the workers' compensation insurance.
Importance for practice
This court ruling fits seamlessly into a series of court rulings on this subject. Case law shows that the first thing to be considered is the mutual contractual relationship between the parties and how this is actually interpreted and implemented in practice. According to case law, if a genuine management agreement has been concluded, which does not contain any essential characteristics of an employment contract, there is no obligation to be insured for employee insurance. In other words, the chosen contractual structure may not simply be ignored, case law has now repeatedly confirmed.
Finally
As a result of this post, do you have any questions about the implications of this ruling for you as a minority shareholder? Please feel free to contact us via your relationship manager, via our contact form on the website or on our general telephone number 040 - 2 504 504.