Status Determination Procedure on Self-Employment

Status Determination Procedure on Self-Employment

There is a new law on temporary work, which will come into effect from 1st April this year on. There are quite some changes coming along with it and people are worried that it will have a negative influence on their activities as a self-employed consultant and working on interim assignments.

We already talked about this in our blog. Today, we want to continue by providing a short summary on which aspects a status (employed or self-employed) determination procedure according to the German Social Act IV §7a et seq.

First of all it is important to know that during such a procedure all documents concerning a project will be screened. Contracts, agreements, project descriptions. The content and the phrasings are checked, including possibly involved employees / temporary workers. Also, all invoices and time-sheets will be looked at. If other projects were conducted for other clients at the same time. And at your qualification for the project(s) in question.

Further aspects, that will be looked at

  • Examination of the level of autonomy when carrying out specific tasks during a project. How much input was needed from the client along the way?
  • Was there an orientation period and if so, what did it look like?
  • Was it compulsory to attend meetings? What kind of meetings were in fact attended? To what extent did the meetings have and influence on the own performance? Any meeting protocols will be reviewed.
  • How was the integration into the team of permanent employees? Has one given or received instructions on how to carry out the project? Was there a project manager, and did he/she give instructions?
  • Has the task been changed during the project and if so, how?
  • Does a permanent employee at the client carry out the same activity?
  • How have working times been defined?
  • Was there on-call duty?
  • Did you apply for vacation / leave? Could the assignment be held idle at times or was an agreement necessary for that?
  • Did you use your own equipment or was it provided?
  • Was is necessary to use own capital and how much?
  • Did you execute the project yourself or did your employee?
  • Concerning project contracts, e.g. agreements about liability will be looked at, or if there was a limit regarding the remuneration.

It is important to know that there is no text-book procedure here. There is no black and white. It is possible that similar situations are assessed quite differently in two different cases.

What currently can be recommended is to describe the tasks as detailed as possible, so that it is sufficient to carry out the project without any further input from the client. This aspect has been interpreted positively in recent procedures in favour of self-employment. It can be helpful if you do this in the form of a target description.

 Note: this post is not legal advice.

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