Creating legal certainty, combating pseudo-self-employment
In spring 2017, a legislative change occurred of paragraph 611a in the BGB [German Civil Code]. With this, the legislator intends to proceed more effectively against pseudo-self-employment and create more legal certainty. What does the legal change mean in detail? Do you profit from it as an employer? JET Services will answer the most important questions for you.
1. What is the legislative change comprised of?
During the course of the amendment of the AÜG [German Temporary Employment Act], the legislator newly introduced paragraph 611a into the German Civil Code (BGB). The inclusion of the new paragraph took place as of 1st April 2017. With this, the employment contract is clearly defined as an individual type of law for the first time. Wording of Section 611a I BGB:
By virtue of the employment contract, the employee is obligated, at the service of another party, to perform work bound by instructions, directed by others in personal dependency. The right to issue instructions may relate to the content, implementation, time and location of the activity. Anyone who is not essentially free to structure his activity and determine his working time is bound by instructions. The degree of personal dependency is also based on the specific nature of the respective activity. An overall analysis of all circumstances must be performed to determine whether an employment contract exists. If the actual implementation of the contractual relationship shows that it involves an employment relationship, the description in the contract is irrelevant.
2. Which goal is pursued by the legislator?
On the one hand, the legislator intends to improve transparency and on the other hand, increase legal certainty. Furthermore, it is unequivocally clarified, that when someone is bound by instructions in relation to content, implementation, time and location, he is an employee according to the new case law. Conversely, this shows which unequivocal criteria defined pseudo-self-employment.
3. When does pseudo-self-employment exist according to Section 611 BGB?
In total, there are 8 different criteria, for when pseudo-self-employment exists. This exists, if:
- Someone is not free to structure his working time or the owed performance or his work location.
- The owed performance is mainly provided in the premises of a third party.
- For the provision of the owed performance, work equipment of a third party is used on a regular basis.
- The owed performance is provided in cooperation with persons, who are assigned or mandated by a third party.
- Someone is exclusively or mainly working for a third party.
- The relevant person does not maintain his own business organisation in order to provide the owed performance.
- Performance has been provided without an arranged work result or owed work success and subject to correction.
- No guarantee is provided for the result of his activity.
4. Which possible consequences does pseudo-self-employment have for the employer?
First of all, a social security obligation must be established afterwards. If this case occurs, the employer must pay social security contributions for up to 4 years in arrears. Furthermore, employers are required to cover both the employee and employer portion of the social security. In addition, there is a threat of arrears payments of wage tax and input tax.
5. Which advantages arise from permanent hiring for employees?
With JET Services, you have an employer at your side, which relies on permanently employed staff. Therefore, we guarantee you absolute legal certainty. Additional advantages of permanent employment at JET Services for all staff:
- Contractually guarantee income
- Receipt of a proper payroll statement
- Payment of the taxes by the employer
- Insurance by the employer in the case of accidents on the way to the place of work
- Integration into the work organisation
- Statutory dismissal protection after the probation period
- Professional promotion opportunities
- Further development of skills and knowledge through training courses