False self-employment (Scheinselbstständigkeit)

In practice

The risk falls mainly on the engaging business. It usually comes to light during an audit by the Deutsche Rentenversicherung (the German statutory pension insurance institution), or when an assignment ends and the person concerned files an application for status determination. The contract is then of little help, because what is assessed is how the relationship works in practice, taken as a whole. Indicators are fixed working hours, a desk in the office, a right to give instructions on the place, time and content of the work, and work done primarily for one engaging business. Anyone who lets the people they engage work with genuine freedom, with their own tools, their own schedule and their own customers, has little to fear. For longer assignments, the status determination procedure can provide certainty. Since 2022, this has been possible even before the work begins. Back payments arise retrospectively. In cases of intent, the fee is treated as net pay and grossed up. In practice, the employee’s share can no longer be recovered once the assignment has ended.