Bogus self-employment: information for freelancers and clients

The ‘Herrenberg ruling’: the turning point?

A key event was the Herrenberg ruling by the Federal Social Court (BSG) on June 28, 2022, in which a music school teacher who had been considered self-employed for years was subsequently classified as an employee. Decisive criteria:

• Fixed timetables
• Client’s curricula
• Remuneration even in the event of absences
• Lack of entrepreneurial risk

This ruling had the effect of breaking a dam: it established new standards that are now being applied to numerous professional groups – including lecturers, coaches, fitness trainers, rally drivers and even construction workers. The result is general uncertainty throughout the freelance market.

Pseudo-self-employment: What does this mean for managing directors or clients?

➔ High operational pressure to adapt

➔Consideration: Temporary employment vs. service contract

An ANÜ model offers legal security, but requires

• A license from the Federal Employment Agency
• Compliance with equal pay after 9 months
• Maximum assignment duration of 18 months

Service contracts, on the other hand, are more flexible, but involve a significantly higher risk of bogus self-employment. A hybrid strategy in which, for example, long-term activities are handled via temporary employment and project-based services via service contracts can make sense.

What does this mean for freelancers?

Confidence protection is fading

Even in the case of written contracts with self-employed status, it is only the actual practice that counts. If instructions are followed, work equipment is provided or fixed times are adhered to, there is a risk of rescission in an emergency – including penalties.

Cost risks threaten the existence of the company

In the event of a reconversion into an employment relationship, the client must pay up to 40.9% of the fee as social security contributions – even retroactively for four years. Under criminal law, there is a risk of sanctions under Section 266a StGB (up to five years imprisonment).

“Brain drain” in full swing

According to studies by the German Economic Institute (IW), up to 54% of freelancers are thinking about emigrating. Main reasons:

• 69% complain about excessive bureaucracy
• 42% fear bogus self-employment
• 52% cite high duties and taxes

Practical recommendations for freelancers

• Provide evidence of several clients
• Use your own hardware and software
• Do not work on site at the client’s premises – prefer home office
• Use your own website, accounting system, GTCs, business address
• Do not use the client’s internal communication (e.g. Slack, Jira)

Joining a cooperative such as Smart Coop Germany can also help: These models offer an interim solution with social security and administrative relief.

Conclusion: A changing market

Germany is at a crossroads: on the one hand, highly specialized external expertise is urgently needed for digitalization, AI and ESG consulting. On the other hand, legal uncertainty in the bogus self-employment/freelancer/client triangle is driving more and more skilled workers abroad – with potentially serious consequences for innovation and competitiveness.

As long as there is no clear legal reform, the following applies to all parties involved: document, separate, seek advice. Only through strategic foresight and professional contract drafting can the scope for self-employment in Germany continue to be used safely.