Tales of the sea did not hold water

A Dutch company had 101 scuba divers without residence in Denmark to solve an assignment for a Danish company. The scuba divers worked in Denmark for about half a year and had between 3 and 64 days of work in that period. They were hired as independent contractors with special terms in favor of them either being employees or self-employed.

Some things you just can’t decide

After looking at the terms that applied to the scuba divers, the Danish Supreme Court found that they were employees, not self-employed. Therefore, the Dutch company was liable for taxes and labour market contributions.

What supported that the scuba divers were employees was that:

• They were paid for the days onboard the ship, even when they could not dive due to sickness or weather conditions.
• Before every dive, there was a meeting where the specific task was explained. They were not free to choose how to complete the task by themselves.
• They had not employed anyone to help them, and their flights to and from the project were paid for.

What supported that the scuba divers were self-employed was that:

• They were paid a fixed fee for each day of work, had to list each day of work, and had to send an invoice to the Dutch company.
• They had a declaration that directly confirmed their status as self-employed in the Netherlands, and the independent contractor agreement confirmed their status as self-employed.
• They were responsible for their own taxes, fixing any mistakes related to their work, purchasing and bringing their own scuba diving gear, and having the relevant certificates.
• They had the chance to work for other companies while completing their work for the Danish company, although none of them did.

It was emphasized that the scuba divers did not have any financial risk with completing their work. They had no other expenses except for the gear, which they also would have covered the cost if they had been hired directly as employees.

Also, the declaration as self-employed in the Netherlands was automatically issued by the authorities and only documented their registration with the Dutch authorities. In addition, it played no role that they had explicitly stated that they were self-employed in their independent contractor agreements.

IUNOs opinion

This case shows that it is not decisive what an employment relationship is called. This is especially interesting due to the increasing number of self-employed in industries such as platform work.

IUNO recommends that companies pay attention as to what type of relationship is created when self-employed are contracted for work. If the individual is in fact an employee, claims will relate to not only taxes, but also other areas, such as the rules for posted workers, insurance and pension contributions.

[The Danish Supreme Court in case 37342/2021 of 8 December 2022]