Caution should always be exercised when working with self-employed contractors. An agreement with a self-employed contractor can indeed be re-characterised as an employment contract if the contractor is subject to the company's instructions
and does not enjoy a certain degree of freedom to organise his or her work and working time.
The impact of recharacterisation (regularisation of social security contributions and taxes, interest and penalties, arrears of various benefits and severance pay) is indeed significant in terms of costs.
The risk of recharacterisation can be mitigated through the use of properly drafted agreements, emphasising the parties' intention to opt for a self-employed relationship, excluding the possibility of instructions by the company, and giving the contractor freedom to organise his or her work and working time.
A well-drafted agreement is not sufficient, however. Consistent performance of the agreement is also key to limiting the risk of recharacterisation. Companies that opt to work with self-employed contractors should act in accordance with that choice in order to mitigate the risk.