Hiring staff on loan: risks for the hirer

If you hire staff on a temporary basis, you need to ensure that everything is in order. This will help you avoid fines or liability.

Staff secondment

Staff are considered to be on loan when employees employed by another business carry out work in your company under your management or supervision. The other business may be a temporary employment agency, but could also, for example, be a fellow business owner who is (temporarily) lending their staff to you.

Risks associated with hiring staff

If you hire staff on a temporary basis, you may face risks such as the following:

• The lessor is wrongly failing to apply the VAT reverse charge mechanism. In that case, you run the risk of being unable to claim back the VAT shown on the invoice.
• The hirer does not pay their payroll deductions (income tax, national insurance contributions, employees’ insurance contributions and the employer’s contribution under the Health Insurance Act). In that case, you run the risk of being held liable for the unpaid payroll deductions. You can prevent this by, for example, recording certain details and paying part of the invoice into the hirer’s G-account.
• The lender is not registered as such with the Chamber of Commerce. In that case, you run the risk of being fined between €12,000 and €48,000. You should therefore always check using the free Waadi check or whether a lender has actually registered.
• The lender does not pay their employees their full wages. In that case, you run the risk of these employees holding you liable for these unpaid wages. This liability is based on the Act on Tackling Bogus Schemes (WAS). You should therefore always check that you are working with reliable companies.

There are other risks you may face. For example, you could face heavy fines if your supplier pays its employees less than the minimum wage or fails to pay holiday pay, or if a foreign national working for you does not hold a work permit. If you hire staff on a temporary basis and are unsure whether your risks are adequately covered, please consult our advisers.