Pseudo self-employment: definition and practical examples

Pseudo self-employment

refers to a form of work in which a person is officially considered self-employed but works under conditions that are more akin to an employment relationship. This is often done to avoid social security costs and labor law obligations.

Characteristics of bogus self-employment

Some characteristics that may indicate bogus self-employment are:

• Instruction-bound: The "self-employed person" is subject to the instructions of the client in a similar way to an employee.
• Integration into the work organization: The "self-employed person" is integrated into the day-to-day work and structures of the client.
• No entrepreneurial freedom: The "self-employed person" has no operating resources of his own and bears no entrepreneurial risk.
• Exclusivity: The "self-employed person" works predominantly or exclusively for one client.

Practical examples

1. IT service provider
   An IT specialist is hired by a company as a freelance consultant. However, he regularly works on the company's premises, uses its equipment and has fixed working hours. He also receives instructions from a superior and only works for this one company. This strongly suggests Pseudo self-employment there.
2. Parcel service driver
   A parcel service hires drivers as "self-employed". These drivers use the service's vehicles and work clothing, adhere to specified routes and schedules and are not allowed to accept any other clients. This is also a clear case of bogus self-employment.
3. Journalists
   A freelance journalist writes exclusively for a newspaper, receives regular assignments, is subject to editorial guidelines and has a permanent job in the editorial department. Despite his official status as a freelancer, he effectively works like an employee.

Consequences of bogus self-employment

If bogus self-employment is discovered, this can have considerable legal and financial consequences for both parties:

• Back payment of social security contributions: The client must pay social security contributions retroactively.
• Claims under labor law: The bogus self-employed person can assert claims under labor law, such as protection against dismissal or vacation entitlement.
• Tax consequences: This can result in additional tax payments and possible penalties for both parties.

Avoidance of bogus self-employment

In order to avoid bogus self-employment, clients and contractors should make clear agreements and ensure that the criteria for self-employment are actually met:

• The self-employed person should have several clients.
• The self-employed person should use their own resources and bear entrepreneurial risk.
• The work should be carried out independently and without being bound by instructions.

Bogus self-employment is a complex issue that requires careful attention in order to avoid legal and financial pitfalls.