Conversion of employees into self-employed

It speaks in favor of dependent employment if an activity that was previously carried out within the framework of an employment relationship has been converted into an independent contractual relationship by means of an amendment contract without the external appearance of the cooperation changing.

Also note and check how the activity should be carried out in practice:

A third person, e.g. the client’s staff, provides support with the business registration.

The notifying party does not have any foreign language skills or these are completely inadequate. A hotel or shared accommodation is hidden behind the business address.

The activity as a parcel deliverer is displayed, but parcels cannot be stored. These are all actual indications of bogus self-employment.

Establishing self-employment in the status assessment procedure

Note on the status determination procedure. The reporting party (i.e. presumed trader) and the client can initiate a status determination procedure – individually or jointly – in order to clarify whether or not they are bogus self-employment.

The status determination concerns the question of whether the activity is self-employed or the person concerned is employed. The obligation to contribute does not arise until the notification is issued.

The procedure for status determination

If the policies determine a “pseudo-self-employed” employment relationship, for example during an external audit, the social security obligation begins with the start of the activity.

Therefore, an application for status determination can be made within one month of starting the job in order to exclude the risk of a misjudgment and to have a binding determination of whether the person is in employment that is subject to or exempt from social insurance.

The “Pension Insurance” then decides on the basis of an overall assessment of all circumstances of the individual case. An activity according to instructions and the integration into the work organization of the instructor are regarded as clues for dependent employment.

Special case commercial agent

Whether the commercial agent is self-employed or employed is determined by whether he is employed essentially freely divide and can determine his working hours.

Self-employed commercial agent

If this requirement is met the commercial agent is self-employed, i.e. not bogus self-employed.

Result:

He is not a self-employed person subject to pension insurance.

Dependent commercial agent

Can the commercial agent neither essentially freely divide his activity nor determine his working hours, he is to be regarded as an employed commercial agent.

Indications for this are:

  • Tour plans
  • Sales targets
  • Mandatory presence, tight controls by the client
  • prescribed mandatory appointments with customers
  • Vacation coordination with the client or
  • the ban on hiring employees

In this case, his or her activity must be assessed as a whole, taking into account the aspects of freedom of instruction and personal independence.

Result:

The sales representative is an employee.

Status determination procedure:

If, after this check, the classification of the commercial agent as independent or dependent remains unclear, an application for status determination can be submitted.

The special case of managing partners of a legal person can be self-employed and thus, like the self-employed commercial agent, be a “self-employed person subject to pension insurance”.

The managing partner is not a trader; this is the legal person.

Significance of the business registration:

Business registration not binding. The business registration is not binding for other authorities. Nevertheless, it is only through them that the “self-employed” is strengthened in his belief that he is his own entrepreneur.

Court decision is binding

Only legally binding is a court decision in a specific case as to whether a self-employed activity has actually been taken up with this employment.

Practical procedure of the trade offices

Check the term “commercial” carefully. The chambers of industry and commerce provide the information, the trade offices only accept business notifications, but do not check the existence of the conceptual features that require a trade.

Punish this statement with a lie and only accept the advertisement of a trade after examining all the conceptual features on a case-by-case basis.

A trade is only required to be notified if all characteristics of a commercial activity are present (intent to continue, profit-making, self-employment), it is capable of business and there are no exceptions, e.g. medical professions, liberal professions or primary production.

If the criterion of self-employment is not fulfilled, no trade is carried out. The trade office has to reject the trade registration.

There is a procedure after carrying out a status determination procedure:

De-registration of the business

If the status determination procedure reveals that the activity is to be regarded as pseudo self-employment, the business must be de-registered by the person concerned.

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