Self-employment
As pointed out above under the section headed “Who is an executive?”, a corporate officer, as either a director, a managing director (at least in respect of being a board member) or a member of an executive committee, will be treated as a self-employed person for social security purposes on the basis of a statutory, irrebuttable presumption. At least, such officers qualify for that status and will also pay social security contributions as such to the extent their position is remunerated. The market is showing a tendency towards switching persons holding such offices or who are appointed to such positions from the status of an employee to that of a self-employed person.
You may well be aware that self-employed persons are entitled to fewer social security benefits, but may be less aware that the extent to which the range of benefits is lower can be perfectly easily identified and quantified. Hence, it is definitely possible for the company or the individual to take particular measures to offset the differences. The table below is a tentative overview of possible solutions.
| Difference in cover between employees and self-employed persons |
Possible solution |
|
Statutory pension |
The difference can be estimated and compensated for by |
|
Disability |
Industrial accidents cover does not apply and benefits |
|
Medical costs |
Adjusted insurance cover can be provided against minor |
|
Family allowances |
The difference can be eliminated if the spouse has earned |
|
Unemployment |
Specific contract terms and conditions can be laid down |
|
Non-statutory pension |
Specific tax law provisions have to be taken into account. |
If all the above factors are taken into account and properly compensated, the differences between working as an employee and working as a self-employed person should not hinder a switch.
We would again stress that any claim by an executive to qualify as a self-employed person must reflect the true facts of the situation.
