A management agreement under Dutch law is a contract in which a company engages a director or manager — usually through a management BV — to run part of its business as an independent assignment rather than as an employee. Because it is not a named contract, the parties have wide freedom to shape it, but they must keep it clearly distinct from employment. This page explains how it works, the risks, the key clauses, and how it ends. Our Dutch corporate lawyers draft and review management agreements.
What is a management agreement under Dutch law?
A management agreement is an agreement in which a company (the operating company) engages a managing director, shareholder or manager to carry out defined management tasks. In practice the manager is usually hired through their own management BV. Dutch law does not name this contract type; it is generally treated as a contract of assignment (overeenkomst van opdracht) under article 7:400 of the Dutch Civil Code, whose rules are largely non-mandatory and leave the parties considerable freedom.
Is a management agreement the same as an employment contract?
No — and the difference matters. A management agreement is an assignment, not an employment contract (arbeidsovereenkomst, article 7:610 of the Dutch Civil Code). But if the relationship in fact shows work, pay and a relationship of authority, a court or the tax authorities can reclassify it as disguised employment, which brings dismissal protection, sick pay, and tax and social-security consequences with it.
How do you avoid a management agreement being treated as employment?
By making sure the arrangement really is independent, in both wording and practice. What counts is the parties’ intention and how the work is actually carried out. Relevant factors are whether the manager uses their own resources, bears entrepreneurial risk, works for more than one client, and is not paid during illness or holidays. The more these point to independence, the smaller the reclassification risk.
What clauses should a management agreement contain?
A workable management agreement sets out the tasks and their scope, the management fee, the term and notice period, liability and indemnities, and confidentiality and non-compete terms. Because there is no statutory fallback, anything left unsaid is a gap, and a clause that is missing cannot protect you later.
Why do companies use a management agreement?
A management agreement offers independence and flexibility, and it can be favourable for tax, which is why it is widely used in the Netherlands. Those advantages only hold, though, if the arrangement is genuinely independent — the same features that make it attractive are the ones that create the disguised-employment risk when the set-up is not right.
How can a management agreement be terminated?
As a contract of assignment, a management agreement is ended on the terms the parties agreed, so the notice period and grounds for termination in the contract are decisive. Because the ordinary dismissal protection of employment law does not apply, the manager’s position on termination depends almost entirely on the wording — another reason to draft it with care.
A practical example: a manager paid through a management BV
Suppose a manager works full-time for one company through their management BV, uses the company’s equipment, is paid a fixed monthly amount and takes no business risk. Although the contract is called a management agreement, the actual relationship looks like employment. If the tax authorities reclassify it, the company can face payroll-tax and social-security claims, and the manager can gain dismissal protection. Building genuine independence into the arrangement from the start would have avoided that exposure.
Speak to a Dutch corporate lawyer
Whether you are setting up a management agreement or checking whether an existing one holds up, the line between assignment and employment decides your exposure. Our Dutch corporate lawyers draft and review management agreements, structure them to reduce the reclassification risk, and act in disputes. This work sits within our wider practice in Dutch company law. Contact us to review your management agreement.
Frequently asked questions about a Dutch management agreement
Is a management agreement an employment contract?
No. It is a contract of assignment under article 7:400 of the Dutch Civil Code, not an employment contract (article 7:610). If the relationship functions as employment, however, it can be reclassified, bringing labour-law and tax consequences.
Why use a management BV for a management agreement?
The manager is engaged through their own management BV, which contracts with the operating company. This structure supports independence and can be favourable for tax, provided the arrangement is genuinely independent.
What makes a management agreement risky?
The main risk is that it is treated as disguised employment. Full-time work for one client, using the client’s resources, fixed pay and no entrepreneurial risk all point toward employment rather than an assignment.
How is a management agreement terminated?
On the terms agreed in the contract. Because employment dismissal protection does not apply to an assignment, the notice period and termination grounds in the agreement are decisive.
