THE LEGAL DIFFERENCE BETWEEN
PAYROLL AND STAFFING
"Payroll has its own place in labor law since Jan. 1, 2020. It has been legally separated from temping. As a result, specific differences between payrolling and staffing have emerged. Both types of employment contracts have their own advantages and disadvantages."
PAYROLL SINCE 2020
Freek van Loon Head of Legal & Compliance / Attorney at Law at Brisker Group.
"Payroll and staffing are separated"
On Jan. 1, 2020, the successor to the Work and Security Act (WWZ) came into effect: the Balanced Labor Market Act (WAB). The WAB introduced the payroll agreement as a new type of employment contract. Before then, how were we able to payroll for decades?
"Tens of thousands of Dutch people were working through a payroll construction up until 2020, but this legally fell under the agency agreement," explains Freek van Loon (Head of Legal & Compliance / Attorney at Law at Brisker Group). Since the separation of payroll and temporary employment contracts, different conditions are imposed on both types of employment contracts."
Main differences
"In both payrolling and staffing, the hirer enters into a hiring agreement with the legal employer and the worker is made available to the hirer," Van Loon continued. So much for the similarities, because on the other hand there are mainly many differences.
"For example, with payrolling the client can recruit its own staff, with staffing the legal employer makes the match. With the staffing contract you can employ employees flexibly for up to four years, but not with the payrolling contract, because the chain-of-commitments rule applies there as it does for the hirer's own staff. Also important: for temporary workers the 'Collective Labor Agreement for Temporary Workers' applies and for payrollers the collective labor agreement or remuneration scheme of their client."
Payrolling has regained its place
The WAB has not changed the need for companies to hire staff, Van Loon says. It did change the interpretation between payrolling and temporary. The new form of payrolling really had to regain its place here.
"You now see in practice that companies that really need flexibility choose to hire temporary workers. Business owners who want to recruit an employee themselves and use that employee exclusively for their company go for payrolling. They value the convenience of outsourcing the employment process."
THREE UNIQUE FEATURES
Freek Van Loon briefly mentioned above the three unique features that payrolling has because of the WAB. We list them below.
1. Legal status of payroll employee
Right to equal working conditions
A payroll employee has the same legal status as employees that you, as the client, employ. The payroll employee is subject to the collective bargaining agreement (or remuneration scheme) that applies to you as the client, entitling him to the same terms of employment (primary and secondary) and the same forms of contract.
Bonuses and additional vacation days
In practice, this means, for example, that you may employ a payroll worker for a maximum of 3 years without giving him permanent employment (with you or the payroll company). Do employees on your own payroll get bonuses or extra vacation days? Then so should the payroll employee.
Temporary workers flexibly employable
For temporary workers, this is very different. They can work for any client under the "Collective Bargaining Agreement for Temporary Workers," which includes 4 years of flexible employment.
2. Exclusivity
Exclusivity to one client
A payroll employee may be provided exclusively to your organization. Does he or she also want to be paid part-time to a third party through the payroll company? This is only possible with your permission.
For temporary workers, this does not apply
An exclusive posting may not sound special, but in the case of temporary workers this is not possible. Temporary workers are never made available exclusively to your organization and can be deployed to other clients as well.
Certainty versus flexibility
The client benefits from a high degree of flexibility with the temporary employment contract, but on the other hand, the employee also has more flexibility and can leave at any time, for example.
In short: with staffing you have more flexibility, with payroll more security.
3. Recruitment and selection
Recruitment in your own hands
If you employ staff on a payroll basis, you get to recruit, select and hire the employees all by yourself.
Grip on staffing
Then you ask the payroll company to hire the employees and provide them exclusively to you. This gives you complete control over the staffing of your team.
Temporary workers you may not recruit yourself
With the temporary employment contract, this is not possible. In order to be remunerated according to the Temporary Employment Agreement, the temp must play a role in bringing employee and client together.
