Bogus schemes cause a lot of outrage, but when are they also illegal?

Rotterdam uitzicht
Court in The Hague
Rechtbank Den Haag

Buying up a transport company in Hungary to pay drivers in the Netherlands a Hungarian wage – is that allowed? This is an example of a long, drawn-out legal dispute that has been dragging on for ten years. Amber Zwanenburg of Erasmus School of Law carried out research into bogus schemes in labour law. Her dissertation shows that judges often struggle with these kinds of cases, so she has come up with a new definition that should provide more guidance.

What exactly are bogus schemes?

"They are schemes by which you try to gain an advantage by pushing the limits of the law. In my case, it’s about employers and companies trying to reduce the cost of labour or trying to be subject to more favourable rules. Well-known examples include the case against Deliveroo, which was sued for allowing its delivery drivers to work as self-employed contractors. The Supreme Court ultimately put a stop to this false self-employment. Another example is employers using payroll schemes to avoid putting employees on permanent contracts.

In the transport sector, too, where profits are under severe pressure, you can see the limits of the law being tested. An example is the case against a Dutch company that has drivers making trips while earning Hungarian wages. This company bought up a company in Hungary and is using the workers on the Hungarian payroll to drive its trucks. That’s a lot more advantageous for that company than having to pay drivers the rates specified in the Dutch collective labour agreement. The drivers and the FNV union filed a case back in 2015. Several judges have already looked at the case, but we’re still waiting for a final ruling."

Amber Zwanenburg smiles into the camera.

It takes a long time. Why do you think that is?

"I think it’s an indication that there’s a lot of ambiguity about what exactly constitutes a bogus scheme. There’s been a big focus by politicians on tackling bogus schemes, and a special Act was passed in 2015. You would think that might have brought more clarity, but you still see a lot of debate in practice. Politicians often refer to bogus schemes as something undesirable or immoral, but that doesn’t necessarily mean they’re not allowed under the law. That’s why I wanted to research when something is legally considered a bogus scheme."

You’ve looked at quite a few cases. What stands out?

"I’ve examined more than eighty court proceedings relating to bogus schemes. If a company has been cunning and has found a legal loophole, you sometimes have to conclude that it is simply allowed. If the legislator didn’t intend that outcome, an amendment to the law is often required. In practice, you often see a kind of cat-and-mouse game developing between companies and legislators."

A very busy Koopgoot in Rotterdam

How might your dissertation help?

"With my research, I wanted to provide guidance not only to judges, but also to legislators. In tax law, a clear distinction is made between tax avoidance (which is legal) and tax evasion (which is illegal). I think a judge should be able to justify why something should not be allowed. Therefore, I came up with a new definition of a bogus scheme. Briefly, it is an agreement on paper or a scheme that does not reflect the true will and intention of the parties involved, and where both parties are aware of this. In other words, it must be a deliberate plan to jointly circumvent the law or disadvantage a third party."

What made it a fun topic to research?

"The cases were often very interesting, and I found the examples engaging. The term ‘bogus scheme’ evokes a lot of outrage, and everyone instinctively has feelings about it. You can point fingers as much as you want, but there’s always an underlying reason. For example, it might be because profit margins in logistics are small and because we as consumers don’t want to pay too much for our parcels. The subject also features in the news a lot. The FD newspaper recently published a cry for help from companies fearing high wage costs when the court decision banning bogus self-employment is enforced. And Dutch broadcaster NOS interviewed me about the Hungarian case. I’m following that case closely; hopefully, there will be a final decision this year."

More information

Hungarian drivers must receive Dutch wages: 'Principle example case'. Read more at NOS (in Dutch)

High bill looms for businesses in enforcement of sham self-employed workers. Read more at FD (in Dutch)

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