3. Employment subject to social security contributions
The question as to whether an employment relationship under social insurance law exists or whether it is subject to social insurance is governed by the provisions of social insurance law (§ 7 ff. SGB IV). An employment relationship subject to social insurance contributions does not exist in the case of marginal employment (§ 8 SGB IV).
As a rule, an employment relationship subject to reporting requirements exists if the activity is carried out in accordance with instructions and integration into the work organisation of the instructing party has taken place.
The case-law has developed a number of criteria for assessing the social insurance status, which are also used by German pension insurance (Deutsche Rentenversicherung) as a social insurance carrier. The following points, among others, are of importance:
– Is the gainfully employed person bound by instructions (in terms of time, content, organisation)?
– Does the gainfully employed person employ his own employees?
– Is the person concerned permanently and essentially only working for one client?
– What is the relationship with other gainfully employed persons who perform comparable activities? Is one and the same activity (e.g. transport services or construction work) partly performed by salaried employees or has this been the case in the past?
– Does the worker take any entrepreneurial risk of his own? For example, does he have his own expenses for advertising, work equipment (tools, computers), internet presence, business cards, tax consultants, lawyers?
– How are holiday and sick leave periods regulated?
– Who steps in when the employee is absent?
– Does the employee allocate his time freely?
– Who instructs the employee within the company what has to be done when and where?
– How many other clients does the employee have? How high is the turnover of other clients in relation to the potential employee?
Ultimately, it depends on an overall view of all characteristics. Only the actual conditions are decisive.
All in all, the standards are strict. Thus a relevant employment relationship under social security law can be assumed even if only a small amount of work is done (for example, a cleaning woman who comes only once a week, or an Eastern European craftsman who is employed on a construction site for a few weeks).
In the case of highly qualified jobs, which are typically performed as freelancers (lawyers, doctors), the yardstick is generally somewhat higher. However, there is no general legal principle that particularly qualified professions can never be bogusly self-employed.