How to avoid bogus self-employment for freelancers

Employing a freelancer has some advantages for the employer. Legally, however, there are stumbling blocks. Here's how to make collaboration go smoothly.


How to avoid bogus self-employment for freelancers


1. What does a freelancer mean??

The use of freelancers is becoming increasingly popular. But why do so many employers use freelancers?? Where is the difference to a permanent employee??

The employee is employed on the basis of an employment contract (§ 611a), whereas the freelancer is typically employed on the basis of a service contract or contract for work and services. The freelancer is therefore self-employed. He is an entrepreneur.

Legally correct, the one who employs a freelancer is not his employer at all. Instead, he is usually referred to as a "client.

Due to his or her self-employment, a freelancer, unlike an employee, is generally allowed to work for several clients. He therefore has the possibility of securing several sources of income, even without permission, and can decide for himself which assignments he accepts.

Since the freelancer is not an employee, no social security contributions must be paid for him or her. Instead, the freelancer must usually take care of his own insurance and make provisions for his future. Also he is not protected in principle by the labor law.

This results in some advantages for the employer when employing a freelancer:

  • No protection against dismissal
  • Flexible deployment
  • No fixed monthly salary
  • No entitlement to paid vacation
  • No representation by the works council

2. What is the difference between an employee and a freelancer??

The activity as a freelancer or in an employment relationship differs in essential points. It is therefore all the more important to distinguish between the two forms of employment.

Bound by instructions

Initial indications are provided by law (§ 611a BGB; § 7 IV SGB IV). The decisive factor is whether the employee is bound by instructions.

A person is bound by instructions if the content, place and time of work are essentially prescribed by the employer. A freelancer, on the other hand, is someone who organizes his or her own activities and freely determines the time and place of work.

Of course, freelancers are also bound to a certain extent by the instructions of the client. Otherwise they would not do justice to the order. However, the tighter the specifications regarding. working hours and location, the more likely they are to be employed. For example, content-related specifications alone tend to speak in favor of self-employment.

Therefore: The independence of the freelancer must be respected by the client. If, on the other hand, the employer treats the freelancer like a normal employee, there is a risk of bogus self-employment.

The term "bogus self-employment" is used when an employee is mistakenly employed as a freelancer. You can find out what the consequences are below.

Checklist for further indicia

In addition, the distinction between employee and freelancer u.a. the following indicia of this checklist must be observed:

  • Freelancers must deduct a large sum from their wages for insurance. He is therefore typically paid more than a comparable employee.
  • If the freelancer has his own offices or employees, this indicates that he is self-employed.
  • If the freelancer is allowed to have the work done by third parties, this also indicates self-employment.
  • If the employer is the only client of the "freelancer" and the freelancer is therefore economically dependent, this speaks against self-employment.
  • Another indication of bogus self-employment is when the freelancer does not appear on the market himself and does not bear any entrepreneurial risk.
  • This is also decisively supported by the fact that the person concerned is firmly integrated into the work processes (e.g., in the case of a freelancer, in the case of an employee, in the case of an employee).B. Agreement of vacation times, permanent and regular use, "client" determines duty rosters,…)
  • A fixed salary, which is also paid out without concrete benefits, speaks strongly for the employee status.
  • Likewise, continued payment of wages in the event of illness.

But beware: A blanket answer is not possible. The overall picture in the individual case must always be considered. The existence or non-existence of an index does not mean that the employee is a freelancer or an employee.


  • An employee also bears a certain "entrepreneurial risk" in the context of variable performance-based remuneration. Freelancer is not yet a freelancer for this reason alone.
  • Just because a self-employed person has only one client and is therefore economically highly dependent on that client does not mean that he is an employee there (s.u. in the case of persons similar to employees).

3. Employed or self-employed – is this not decided by the contracting parties??

It is not possible for the parties themselves to decide on the status of the freelancer. The distinction between employee and freelancer is made purely objectively, i.e. on the basis of actual employment.

Example: Employer A is looking for a new employee. The employment would actually be an employment relationship. However, A wants to save social security contributions and therefore agrees with applicant B that B is considered a freelancer regardless of the nature of his employment. They therefore call the contract a "service contract. Is this possible?

No, whether B is a freelancer is determined objectively. How A and B call their contract, however, is irrelevant. B is therefore an employee.

The will of the parties involved can at best be a first indication.

4. What is an "employee-like person"??

Freelancers are therefore basically self-employed and therefore do not enjoy social and labor law benefits like employees do.

However, if a freelancer is economically dependent on his client, he is in particular need of protection. Economic independence usually exists if the freelancer only works for one client and this income is his livelihood.

In this case, although he is self-employed, he is close to an employee. He is then a "person similar to an employee". It is often difficult to distinguish the freelancer from a bogus self-employed person. However, persons similar to employees are real self-employed persons, while the pseudo self-employed person is actually an employee.

Example: Journalist A only works for B and earns his only income from this. A is completely free of instructions, works from home and writes articles for B's magazine at irregular intervals at his own discretion.

If A is an employee? No, B does not give instructions to A and has not integrated him into his company.
Is A a person similar to an employee? Yes, A has no other clients, earns his entire income from this activity and is therefore economically dependent.

Employee-like persons are treated differently from classic self-employed persons in some respects. Thus

  • do they have a right to vacations ( 2 BurlG),
  • are subject to labor jurisdiction
  • and may have to insure himself in the statutory pension insurance scheme.

5. What are the consequences of bogus self-employment??

As tempting as the advantages of a freelancer may seem to the employer, the consequences of bogus self-employment are severe.

Criminal liability

The (at least personally) hardest consequence first: Whoever employs a bogus self-employed person does not pay social contributions. However, the withholding of social contributions is punishable under § 266a StGB (German Criminal Code). In addition, criminal liability for tax evasion (§ 370 AO) is also possible.

These are not trivial offences. In the worst case, the employer or. the acting management personnel a custodial sentence. The person concerned may then have a criminal record. In principle, however, intentional action is required here. Even in the case of negligent action, however, there is still an administrative offense, which entails a high fine (§ 378 AO; § 8 SchwarzArbG).

If criminal or administrative offence proceedings are imminent, legal advice is therefore urgently required.

Subsequent payment of social security contributions

Often the bogus self-employment remains undiscovered for a long time. However, if the whole thing comes to light after years in the course of a company audit, it will be expensive.

Because in this case the missing social security contributions are demanded subsequently. In this case, the employer must generally pay not only his own share, but also the employee's share. Sometimes the employer tries to contractually agree with the bogus self-employed person that the bogus self-employed person is to pay the social contributions himself in the event of an additional claim. However, such an agreement violates the law and is null and void.

In the case of intentional acts, the claim to contributions only becomes statute-barred after 30 years. In the case of unintentional action, at least a four-year reclaim must be expected (§ 25 I SGB IV).

In addition, late payment surcharges of one percent per month may be levied (§ 24 SGB IV).

In addition, wage tax must be paid in arrears. Employee and employer are liable side by side. Income tax already paid by the employee is of course to be credited.

Employee rights

If an employee is falsely employed as a freelancer, he can sue for a determination of his employee status in order to obtain the benefits of employee protection.

The supposed flexibility of the freelancer then turns into the opposite for the employer. Instead of a self-employed freelancer, he must permanently pay another employee, whose termination is also made more difficult by the Dismissal Protection Act. According to recent case law of the Federal Labor Court, even vacation claims from the past may be asserted.

Recourse claims of the accident insurance

There is also the threat of serious recourse claims. If properly employed as an employee, the freelancer would be covered by accident insurance under the law. If the employer tries to avoid the payment of contributions by means of bogus self-employment, he must reimburse the insurance carrier for all expenses in the event of an accident to the employee (§ 110 Ia SGB VII).

In the event of a serious accident, the consequential costs are often not foreseeable in such a case.

6. Avoid bogus self-employment

Only legal advice can answer the question of how to avoid bogus self-employment in individual cases. However, three recommendations can be made for cooperation here as well:

  1. If there is uncertainty as to whether a self-employed activity exists, a status determination procedure can be initiated with the German Pension Insurance Fund. However, such proceedings should be well prepared, otherwise there is a risk of misrepresentation of the facts of the case.
  2. The contract between the freelancer and the client should explicitly state that it is a contract for services or a contract for work and labor. If the designation remains open, this is the first gateway for doubts (however, the actual circumstances remain decisive, of course).
  3. In the contract, the contents of the o.g. Checklist to be found again. The contractor should be expressly left free to decide when and where he works. The decisive factor is that the contract is actually executed with these freedoms.

7. Conclusion

  • Freelancers are employed on the basis of a service or work contract, while employees are employed on the basis of an employment contract. Freelancers are therefore self-employed.
  • You cannot invoke protection against dismissal. No social contributions have to be paid for them.
  • The distinction is made purely objectively on the basis of the actual execution of the contract. The name of the contract is irrelevant.
  • Unlike freelancers, employees are bound by instructions and are integrated into the business process.
  • If a worker is actually an employee, but is employed as a freelancer, this is called "bogus self-employment" or "moonlighting".
  • In the case of bogus self-employment, the employer faces harsh consequences: He can make himself liable to prosecution, there is a threat of fines, recourse claims and an additional payment of social contributions. In addition, the employee can sue his way into a permanent employment relationship.
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