When an employee asks to work as a freelancer (self-employed) from now on, there are really no reasons not to do so. The risk of false self-employment can be greatly reduced and, if a social ruling proves possible, even reduced to zero.

Moreover, if the freelance fees are fair, this will result in savings for the company, while the freelancer will still make a net gain. The fear that every employee will want to switch to freelance self-employment status is unfounded, at least when the freelance fees are fair relative to the employees' wages.

If you would not respond to the employee's request to want to work as a freelancer (self-employed) from now on, you run a real risk that the employee will quit. And you'd rather keep talent in your own ranks. Especially in times of labor market tightness.

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What do you do when an employee says they want to work as a freelancer from now on?

Refusing is often not an option. Because there is a real chance that the employee will seek his liking elsewhere. And you want to keep talented employees in your own ranks. And just find new talent in times of labor shortage.

But how do you start there?

How do you deal with false self-employment? But above all: how do you calculate a fair freelance fee? And how do you make sure that not all your employees suddenly want to work as freelancers?

It's a topic that people from HR often want to stay far away from today. What the reasons are, we will cover in a separate blog.

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Are there reasons not to respond to the question?

Often those reasons are not there.

Yet in practice, three arguments are made:

• The risk of false self-employment increases when a freelancer was previously employed as an employee. That's true. But since that risk can be reduced and even reduced to 0, that is no reason not to address the question.
• A second argument is more practical in nature. People (not illogically) have a hard time charging a fair freelance fee, and so they avoid the discussion.
• One does not want to set precedents by responding to one employee's request. "Before one knows it, everyone is freelancing."

Those arguments, by the way, are not out of the blue.

The point is that the reasons for not responding to the employee's request do not outweigh the reasons for doing it.

Because if you refuse, you run a good chance that the employee will seek his liking elsewhere. And you obviously want to keep talented employees in your own ranks. And just find new talent in times of labor shortage.

How to counter the counterarguments and mitigate the risks, read below 👇

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How can you reduce the risk of false self-employment?

Sham self-employment occurs when the parties view the employment relationship as a collaboration between client and self-employed worker, when in reality the employment relationship is based on an employment contract.

Want to know more about the indicators of false self-employment? Read all about it in this blog.

To reduce the risk of false self-employment, you can (should) bet on two things:

• A watertight service agreement. Considerations for a service agreement have outlined in another blog post.
• in certain cases you can obtain a social ruling - the social ruling is often unknown. Want to know more about this? Then read our blog post on social ruling.

With a watertight service agreement, you can already greatly reduce the risk of false self-employment. With a social ruling, you can even reduce the risk of false self-employment to zero.

In both cases, the service agreement must (obviously) match its actual performance.

For example, stipulating in the service agreement that the contractor is free to organize his/her working time and that he/she is not under the hierarchical control of the client and in practice demanding a sick certificate or vacation request is incompatible.

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How do you calculate a fair freelance fee?

Fair - that is the key word.

There are two ways to approach a fair freelance fee:

• Option 1: from the payroll cost to the company
• Option 2: from the net income of the employee / freelancer

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Option 1: as a freelancer, you may cost (at least) as much to the company as the employee

While there is a case for the first possibility, it is not evident in practice.

Unlawfully, one starts from the employee's gross salary, while gross salary is a legal concept - but no one has ever seen a gross salary in real life except on paper.

Moreover, from which cost do you start: the gross labor cost or the net (aka effective) labor cost?

Starting from gross payroll, this can be cost-prohibitive for the company - which is not desirable for many companies.

Starting from the net wage cost, the would-be freelancer is penalized for the wage subsidies to which the company is entitled.

If you present this to lawyers and consultants, they will invariably choose the first option. The reason is very simple: they can still more or less calculate the first option; they simply cannot calculate the second option.

Still, the second option is the most appropriate.

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Option 2: as a freelancer, you should take home (at least) as much net income

It is fair to say that a freelancer takes home (at least) as much net income, both in the short term and in the long term (e.g., in terms of pension accrual, guaranteed income, unemployment).

At the end of the story, the wage and employment cost to an individual is irrelevant. The income must enable the employee and freelancer, respectively, to earn a living.

So what matters is net income. Freelancers will judge the fairness of their (gross) fees based on net income and the extent to which they can make a living from it.

In addition, if you use this second option, the employee will still gain on net as a freelancer, while the company will have a lower employment cost.

So with the second option, you can create a win-win.

With the first option, this is not possible. On the contrary, using the first option can cause freelance fees to be overestimated. Result: employees are remunerated unfairly compared to freelancers (this happens all too often in practice). Result: employees experience a financial driver toward freelance self-employment status.

Now, approaching fair freelance fees according to the second option is not obvious. To quantify it, several domains must converge: personal and corporate taxation, social security and wage strategy translated into sophisticated mathematical models.

Fortunately, with hukaroi (the only one in Belgium, and beyond) we have all that expertise in house 💪

Want to know how to get started with this calculation? You'll discover all about it in our blog How to calculate a fair freelance fee? 👀

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En masse from employees to freelancers?

The core idea is: facilitate, not motivate.

You facilitate employees when they want to work as freelancers, but as a company, you shouldn't push your employees to do it now either.

But when you (invariably) respond to employees' requests to freelance from now on, aren't you encouraging a massive push from employee to freelancer?

The point is that when you approach fair freelance fees according to the second option, you remove an important financial incentive for employees to work as freelancers in the future.

There will still be a financial incentive. But it will be insufficient to compensate for the "ambiguities" of self-employment status. Read: employees must really want to work as independent freelancers for reasons other than purely financial ones.

Conversely, if the freelance fees are not fair relative to the net income of your employees, you will just barely provide a financial incentive for employees to work as independent freelancers.

In short, if your freelance fees are fair, employees will not want to switch to freelance self-employment status en masse. So calculating fair freelance fees according to a sound methodology has benefits from several dimensions.