12 DEC 2019

The WAB and the future of the payroll business, part 2

In follow up to our previous blog article, we now want to explore the possibilities left for third-party payrolling companies under the WAB legislation. 


The new legislation has not been in place long enough to be able to confirm with certainty whether it has a negative effect on the hiring habits of the end clients in the Netherlands. 

However, we are already seeing some consequences of the legislation in the approaches that the recruitment and broker companies are taking to the situation. 

We have also noticed new solutions being implemented by the third-party payroll companies in the run up to 2020. 


Some end clients and broker companies (MSP providers) have now decided to completely discontinue the use of services by third-party payrollers. 

In the cases where the contractor is not employed/payrolled directly by the company recruiting and placing the contractor, the advice of the end client is to utilise the self-employed solution. 

This approach may be compliant in situations where the contractor can be fiscally classified as an independent, fulfilling the criteria set out by the tax office for working through their own companies. 

But by far not all positions qualify for the status of self-employed and can therefore pose financial compliance risks for mostly the end client if used with the malicious intent of by-passing the WAB legislation. 

We have to keep in mind here that if the tax office audits the end client and classifies the self-employed contractors as actual employees, the fines and back-dated tax payments will rest solely on the end client company rather than the individual contractor. 

In our opinion this approach can work if applied correctly within the legal framework but is not suitable across the board. Clients often do not realise that under the WAADI Act the self-employed individuals are entitled to the same labour terms as their internal staff. 


Another creative solution we have noted being offered by third-party payroll companies, as well as large recruitment organisations, so far is appearing to have carried out the recruitment activities themselves whereas the candidates were actually recruited by the clients. This surely seems to satisfy the WAB requirements of combining recruitment and payroll, however the bigger question is whether this approach will hold up to audits where the recruitment of the contractor would have to be proven and evident. 

The usual auditing authorities such as the SNCU, SNA and SZW will be carrying out the audits of the WAB legislation in 2020 and the fines for non-compliance can be divided across the contract chain, leaving the end client potentially exposed to risks. 


Most third-party payroll companies have reverted to applying the end client labour terms and conditions to all contractor placements and taking into account the shorter contract duration possibilities, unless they can traceably prove that the recruitment process was done by them. 

In some cases, the end clients do not even have a complex labour term structure, making it relatively easy for third-party payrollers to apply their conditions to temporary contractors. 

Mazura has long adopted this type of approach to the WAB legislation and always requests the end client labour terms from the recruitment agencies or clients directly prior to actual salary calculations. 

This may seem more tedious for recruitment agencies, but is certainly the most compliant way of dealing with the current legislation. 


The last compliant option under the WAB is for recruitment agencies to start an in-house payroll or for payroll companies to start in-house recruitment services. 

As a company we have decided against the last option since this is not our area of expertise and we do not want a conflict of interest with our recruitment agency partners. 

We have however designed a solution for recruitment agencies who want to start an in-house payroll. 

We will gladly provide more information on this later.