Quasi self-employment in Germany

Quasi self-employment in Germany

Quasi self-employment is an important topic relevant for freelancers, all companies working with them and of course us, your freelance recruiter. The question is, whether a freelancer / consultant is really self-employed or actually works as a permanent employee – just without the respective taxes. The status of self-employment or not has implications on taxes, social security contributions and labour law. Which is why the government and politics care about this topic.

There is no clear jurisdiction / case law for the problem of quasi self-employment and therefore no legal certainty. There are criteria that tend to be speaking in favour of self-employment and other that tend toward a dependent employment relationship (permanent employment).

A labour court could interpret and judge the same criteria differently than a social court. There are numerous documented cases for that. So, one always floats around in a bit of a grey zone, which does not change, if you put in a bit more black (signs in favour of permanent employment) or white, it remains grey. The important thing though is to know that and make sure to avoid adding too much black to the picture. Try to put as many white factors on your side, that clearly speak for a self-employed activity.

So we are talking about adjusting the grey area: the new §611 BGB (German Civil Code) states among others, the determination of being a permanent employee requires an overall consideration of all circumstances (translated freely).

Criteria (interpretation in both ways possible)

  • Personal dependency on the company
  • Capital use (entrepreneurial risk, use with the risk of loss) – room for interpretation when the activity covered as a freelancer is an intellectual activity
  • Remuneration based on time
  • Working outside the customer’s premised (remote / home-office)
  • Several clients
  • Trainings and continuous education at own expenses
  • Own insurance
  • Use of own resources
  • Rendering services personally
  • Time management (no obligation to provide information in case of illness, vacation or absence, no shift or service plans, no obligation to provide documentation on working hours)

    • Given time tables do not have to be a problem if they have been arranged together, not as an assignment or an order
    • Agreeing on working days or hours is better than on a work order volume
    • The use of internal time recording systems is very inadvisable
  • The objective of the contract cannot be unilaterally modified by the customer, but must be agreed upon in a contract
  • Subject to direction / bound by instructions
  • Know-how transfer is the primary objective of the contract (e.g. 1st level support is less advisable)
  • Integration into the working organization

    • Use of internal IT systems, email address (esp. without “external”)
    • Company car with logo
    • Workwear
    • Business cards, incorporation into the organization chart and telephone list
    • Use of employment benefits (e.g. canteen discount)

However, being integrated into the working organization to a certain extent can be perfectly acceptable for a self-employed activity, if the use is necessary due to the nature of the assignment. Although it can be interpreted as an order concerning the location of the project execution.

Options, how to gain more security

  • Obtaining self-assessment on being a consultant (“Beraterselbstauskunft”)
  • Establishing a compliance process. Every company or freelancer has to define for themselves how much gray is tolerable.
  • Even if certain industries, such as IT, journalists, photographers, nurses, construction sector or creative jobs in the media sector are more on the radar, every self-employed consultant and company should be aware of the topic of quasi self-employment.In principle, we can also recommend working on a service agreement rather than a contract for work. And make sure, that the service is defined in detail. An undetermined objective describing the performance speaks for an employment, as it must be made more concrete through instruction.

    We look forward to cooperate with you in 2017.

    Your K-Team

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