I. Problem
As a rule, professional, paid athletes are employees of their club (e. V., AG or GmbH). This is not usually the case for pure amateurs, i.e. unpaid club members. Since clubs sometimes feel compelled to provide financial support to talented players on a contractual basis, this can lead to the players being regarded as employees in the sense of tax and social law. Such players are referred to as contract amateurs.
The consequences of a possible employee status are hardly manageable for legal laymen. Such consequences can initially be tax claims and additional claims from social security providers against the club. In addition, the club officials can be held personally liable for such additional claims and ultimately held criminally responsible.
This paper examines the (often dubious) legal status of contract amateurs and provides concrete evidence for a status assessment. Furthermore, conceivable sources of error in criminal proceedings are pointed out and orientation aids for criminal defense attorneys of club officials are given, since an overview of the tax and social security system is essential for defense in such cases.
II. Offense under § 266a StGB
Section 266a of the German Penal Code (StGB) is a special offense. The realization of the offense depends strictly and accessorily on whether contributions are owed under substantive social security law. This assumes that the athletes are employees. The concept of employment in accordance with Section 7 I SGB IV is of central importance here, since the obligation to insure in the branches of social security requires the existence of an employment relationship. This is evident from § 5 I No. 1 of the German Social Code, Book V for health insurance, from § 11 No. 1 of the German Social Code, Book VI for pension insurance, from § 20 I 1 and 2 No. 1 of the German Social Code, Book XI for long-term care insurance and from § 24 I of the German Social Code, Book III for unemployment insurance.
1. Existence of an employment relationship
It is therefore necessary to clarify when such an employment relationship exists, although the terms "employment" and "employment relationship" are not synonymous.
a) Basic criteria. Pursuant to § 7 I 2 SGB IV, the activity according to instructions and an integration into the work organization of the person giving the instructions are indications of an employment relationship, which characterizes the dependence of the activity. The lack of independence is characterized by the employee's personal dependency on the employer, which is expressed by the employer's authority to issue orders. First of all, it depends on whether it is work. The concept of work is to be understood economically. The element of economic efficiency is particularly useful in distinguishing between play and sport.
Furthermore, it must be an activity carried out under instructions. Such authority to issue instructions is given if the employer has the right to issue instructions by virtue of which he can determine the type, time, duration and place of execution. In this respect, it should be noted that in the case of higher-level services, the right to issue instructions may be restricted and refined to "functional participation in the work process". Furthermore, an employment requires integration into a work organization. This is the case if there is an organizational context in which the activity takes place, whereby the decisive factor is whether the person performing the activity is a member of an external company, which is understood to mean any work organization. If the agreements differ from the actual circumstances, the actual circumstances are decisive.
If not all criteria are met, an overall consideration is to be made. The question is which characteristics predominate; it is not necessary that all characteristics recognized as ideal types are always present. Each characteristic initially only has an indicative effect; what is decisive in each case is their combination, the intensity and frequency of their occurrence in the specific individual case.
Additional supplementary criteria can be used in the overall consideration. The following factors suggest dependent employment: the non-employment of auxiliary staff, reporting obligations of the employed person, a lack ofpossibility of disposing of one's own labor and the lack of one's own business premises, furthermore, fixed remuneration instead of profit and loss sharing, the granting of continued remuneration in the event of vacation and illness, and the payment of wage tax. The use of one's own capital, the right to be represented by third parties and the possibility of working for other clients argues against dependent employment.
b) Special criteria for club and sporting activities. Case law has recognized that special features may apply to club activities. It should first be noted that the rights and obligations of amateur athletes may arise both from club membership and from contractual arrangements.
Sporting activityis not considered work as long as it is an end in itself, i.e. a leisure activity; however, it can become work in the legal sense if the person practicing sports primarily pursues economic interests and satisfies those of the club by exploiting their sporting abilities when they are personally dependent.
The promise of remuneration that goes beyond the mere reimbursement of expenses is considered an indication of an economic objective. However, the mere existence of an economic objective is not sufficient, as economic dependence can also result from other factors. Therefore, it always depends on the personal dependency. To assess the status, it is therefore necessary to clearly define whether the contractual or associational regulations characterize the employment relationship, whereby the actual circumstances are again decisive if they differ from the contract.
Since it depends on the actual handling, a comparison with the other players of the association is also to be made. The Federal Labor Court has ruled on several occasions that a uniform status assessment is to be carried out if, in the execution of the contractual relationship, there are no practical differences between the treatment of the professional players and that of other groups whose status has been established. Ultimately, this means that the question is whether the contract players are treated differently from the pure amateurs in the essential points.
On the basis of the existing regulations, it must therefore be determined whether the contractual obligation to follow instructions goes beyond that which already arises from membership; it therefore depends on whether "additional" obligations are established by the contract, i.e. whether there is a "graduated obligation to follow instructions" vis-à-vis the pure amateurs.
In the case decided by the Federal Labor Court, a settlement was reached regarding the granting of expense allowances, training and playing time, and attendance at player meetings. Furthermore, the criterion was whether the contract players had to complete additional training hours, for example, if the team was performing poorly in the league. Whether the planned sporting activity is temporary or the contract automatically ends when an employment relationship as a licensed player is established may also be important. The duration of the sporting activity (hours per week) was also taken into account. Furthermore, it must be considered whether, in the case of a "main occupation", this or training and games should take precedence in the event of a conflict. Therefore, the question of whether the training times of the players were in their "free time" in relation to their main occupation was considered relevant. Since this is about the distinction between work and leisure, the Federal Labor Court was correct to consider this criterion "not insignificant". If in actual practice, play and training take precedence, this indicates that it is not just a special form of leisure time, but an employment relationship.
c) Particularities of team sports. Since the question of whether there is a dependent employment relationship regularly depends not only on personal dependency but also on integration, it seems reasonable to conclude that such a dependency is more likely to exist in the practice of team sports than in individual sports, since the characteristic of the necessity of interaction with other persons is already given by the nature of team sports. However, such a general view is met with reservations.
It is in the nature of things that team sports only work if several people meet at a certain place at a certain time. Since the resources (gym, sports field, etc.) of a club are usually limited, it is necessary to draw up a plan as to which day of the week and at what time the resource will be used. This means that ultimately there are instructions as to when and where the sport is to be practised. In this respect, one could speak of a right of the association to issue instructions, which includes the time and place of the activity. Furthermore, one could therefore also assume that the members are integrated into an organization. Although the essential criteria for classification as an employee are therefore met, the association members are not employees solely because they are subject to instructions and integration does not go beyond the usual and necessary membership and integration. Therefore, it is true that the BAG requires a more extensive connection and integration.
In this context, however, it cannot make any difference whether it is a team or an individual sport, because even in an individual sport, the available resources can only be used within the framework of the given organization; for example, a badminton game can only be played if the playground is available, which requires that the game is played at exactly the time can and should be played badminton. Furthermore, it should be noted that even with a large number of so-called individual sports, coordination with other people is necessary, because sports such as tennis, badminton, chess, etc. also require a playing partner.
However, two conclusions can be drawn from this: when defining the activity, it is not important whether a specific place and/or time is specified for the activity. Such a requirement only serves to distribute resources. However, since it is not important whether a contract player or a pure amateur can only use the club's resources to the extent specified, the characteristic of integration cannot be used for the distinction, unless it is determined on the basis of other criteria that the network of relationships goes beyond the usual club law conditions. Secondly, the question of whether an individual or team sport is practiced cannot be relevant to the question of whether the intensity of the relationship goes beyond what is usual for an association, since the degree of integration is given for almost all players, regardless of their status. But what almost all players have in common cannot be used to draw a line.
The above statements have shown that the usual club-law circumstances with regard to the place and time of the performance of the sport are not suitable for being a criterion for the distinction between dependent employment and non-employment. In this respect, no distinction can be made between team and individual sports either.
d) Specific criteria. It is therefore questionable which criteria can actually be used. One possibility is to draw a distinction based on whether the player can miss training and the game without major problems and losses. If a player has the option of deciding for themselves whether or not to attend training, they have a say in the extent of their commitment. Such an option suggests that this is a typical leisure activity; for an employment relationship, such a co-decision option is rather atypical.
In the opinion of the authors, it does not depend on whether it has been contractually agreed that one has to register or deregister with the trainer or another person. Such a report is only for informational purposes, in order to ensure that – in the case of team sports – a sufficient number of players are present. In order to coordinate this, the information of the trainer is required. However, since such (actual) behavior is also common in the purely amateur sector, an obligation to deregister cannot be used as a criterion.
The only exception to this is if the approval of the responsible person is required and if there are sanctions for unauthorized absences. Since it depends on the actual circumstances, it is not sufficient that sanctions are only conceivable or agreed; rather, such sanctions would have to have actually been imposed in order to be able to make a group comparison based on the actual handling.
Furthermore, this possibility of absenteeism must also be seen in the context of the "remuneration". If remuneration, in whatever form it is provided, is paid even if the player has not actually taken part in training or matches, this argues against an employment relationship and in favor of it being just a way of organizing leisure time. In labor law, the principle of "no pay without work" applies. However, if no activity has been performed (work) but remuneration is still paid, such a situation is diametrically opposed to the principle. Rather, this suggests that the only thing that should be strengthened is the player's bond with the respective club. In this regard, it should be noted once again that the actual behavior that is exhibited is the deciding factor if it differs from the contractual agreement.
The criterion of continued payment of wages during illness and vacation, which is usually used, should also be seen in this context. Ultimately, these are provisions that correspond to §§ 1 ff. BUrlG and § 3 I 1 Entgeltfortzahlungsgesetz (Continued Remuneration Act) and are regularly found among employees. However, continued payment of wages must be put into perspective: if wages continue to be paid even in the case of pure absence or mere non-attendance, it is irrelevant whether this is due to illness or vacation, or for other reasons. Consequently, continued payment is only suitable as a criterion if, as a matter of principle, no continued payment of wages takes place in the event of absence, but wages continue to be paid only in the event of vacation and illness.
Another criterion to be considered is whether the contract players have to complete additional training units compared to the pure amateurs, since in this respect there is a bond that goes beyond the extent of the club-legal bond. Contractual agreements that are only valid for a relatively short period of time, e.g. only for one season, would speak against the existence of an employment relationship. In such cases, the player in question could make his services available elsewhere relatively quickly and therefore has a fairly free disposition of his labor. Furthermore, the turnover rate among players can be significant: the higher it is, the more likely it is to be an employment relationship. If, on the other hand, players have been associated with the respective club since "early childhood", this tends to argue against an employment relationship, since any contractual payments tend to serve to bind the player to the club. The type of remuneration can also be significant: if it is a performance- or success-related bonus, the player bears a kind of entrepreneurial risk, as he directly experiences success or failure. This is typically not the case for an employee.
e) Foreigners. In principle, there are no special rules for foreign athletes. The regulations concerning compulsory social security apply to all persons employed or self-employed within the scope of the SGB IV, provided that they require employment or self-employment in accordance with § 3 No. 1 SGB IV. Section 6 of the SGB IV states that a different situation applies if there are regulations under supranational or international law.
Furthermore, when employing foreigners, it should be noted that they are not automatically entitled to work in Germany (§ 4 III AufenthG). In order to obtain a residence permit that also allows the pursuit of an occupation, the consent of the Federal Employment Agency is required in accordance with § 39 AufenthG.
However, this does not apply to EU citizens, since according to § 11 of the Free Movement of Persons Act (FreizügG/EU), only certain standards of the Residence Act are declared applicable, but not the decisive § 4 III of the Residence Act. This means that EU citizens may, in principle, pursue an occupation without a work permit. However, there is a counter-exception for so-called new EU citizens. According to § 284 SGB III, citizens of the states listed in § 284 I SGB III may only take up employment if they have been granted a permit by the Federal Employment Agency. Anyone who employs a foreigner whose employment has not been approved in advance by the Federal Employment Agency is committing an administrative offense according to § 404 II No. 3 SGB III. Such behavior can therefore result in a fine.
However, if more than five foreigners who do not have the required authorization are employed at the same time, such behavior constitutes the criminal offense of § 11 I No. 1 of the German Act to Combat Clandestine Employment (SchwarzArbG). The same applies in accordance with § 11 I No. 2a of the Act to Combat Clandestine Employment (SchwarzArbG) in the event of willful, persistent repetition. Furthermore, in cases of assignment, criminal liability under § 15a of the Employment Promotion Act (AÜG) must also be considered.
2. employer status
Since § 266a StGB is a special offense, only those who are employers can be perpetrators. The persons named in § 266a V StGB are equated with employers. An employer in the sense of the norm is the person to whom the activity is owed in accordance with § 611 BGB, i.e. the person entitled to the service. If the employer is a legal entity, criminal liability is initially ruled out. However, it should not be overlooked that the organs of legal entities can also be held criminally liable in accordance with Section 14 I No. 1 of the German Criminal Code. If someone acts as an authorized representative or member of such an organ, they will be treated as an employer. In the case of associations, the body authorized to represent the organization in accordance with § 26 II 1 BGB is the board of directors, whereby the composition of the board of directors is regulated by the articles of association of the association. Since the articles of association of an association often stipulate that a certain person is part of the "board of directors" but is not authorized to represent the association, it should be noted that, according to the BGB, only those persons who are authorized to represent the association according to the articles of association belong to the board of directors. If the articles contain no provisions regarding the composition of the board, it consists of only one person, since § 26 I 2 BGB states that the board "can" consist of several people. The provisions of the BGB and § 14 I No. 1 StGB are therefore concurrent, since the right of representation is linked.
It follows that the association officials can also be held criminally responsible. Incidentally, the addition in § 14 I 1 StGB "or as a member of such a body" makes it clear that in the case of collective bodies, not only the chairman of the association can be held liable, but all members of the executive boards who are authorized to represent the association.
III. Offense of § 370 AO
The focus of the above discussion was on the social law terminology and the related criminal liability. In addition, it should be noted that if the employee status exists, the payroll tax must also be regularly declared, withheld and remitted (Section 38 EStG et seq.). If this is not done, the employer may also be liable to prosecution under § 370 I No. 2 AO if he acts intentionally, 2 AO, since it often constitutes a case of knowingly leaving out tax-relevant facts (employment/employee status) in violation of duty, thereby causing a tax shortfall. If the employer is a legal entity, criminal liability may also apply to the persons named in § 34, 35 AO, i.e. according to § 34 I 1 AO in particular the legal representatives, in the case of associations therefore the board of directors.
It should be noted that the concept of employment is ultimately important in this context. This arises from § 38 I 1 in conjunction with § 19 I 1 no. 1 EStG. A definition of this term can be found in § 1 I and II of the Wage Tax Implementation Ordinance (LStDV). It should be noted that the tax law definition according to § 1 II LStDV is not completely congruent with the social law definition. The BFH also draws a connection to the intention to generate income, which is already deemed to exist if the payments made to the player exceed the actual financial outlay not only to a very minor extent. If this should be the case, the intention to generate income would have an indicative effect in the context of the overall assessment, which would also have to be carried out. It can therefore be said that the BFH tends to apply a stricter standard than the BSG.
IV. Liability under §§ 69, 34 AO
In addition to the criminal consequences, a false assessment of the employee status of contract players can have further consequences for the club's officials. Pursuant to §§ 69 1, 34 I 1 AO, the legal representatives, in the case of associations the board of directors, are liable if claims arising from the tax debt relationshiptax liability are not assessed or not fulfilled in time as a result of intentional or grossly negligent violation of the duties imposed on them. This means that association officials can also be held personally liable for the tax debts of the association if they have acted with intent or gross negligence. A defense lawyer should definitely point out this consequence to the client he is representing.
V. Liability according to § 823 II BGB in conjunction with § 266a StGB
With regard to social security contributions, it should first be noted that there is no corresponding liability provision for social security contributions under § 69 AO. However, the governing bodies of legal entities can be held liable for damages in accordance with § 823 II BGB in conjunction with § 266a StGB, since § 266a StGB is a protective law in the sense of § 823 II BGB. This means that the board members of the association can be held personally liable with regard to the social security contributions. A client should also be made aware of this by their defense counsel.
VI. Defense options
1. When considering the options available to the defense lawyer when prosecuting association officials under Section 266a of the German Criminal Code (StGB), it should first be noted that the elements of the offense are strictly accessory to substantive social security law. This means that punishable behavior can only be considered if an employment relationship subject to social security contributions exists and contributions are actually to be paid. Therefore, it depends on the particular circumstances of each player. It must be clarified whether he must be regarded as an employee, whether there may be an exemption from insurance in individual branches of social security, etc.
When deciding whether an employment relationship exists, a comparison with other club members may be considered if equal treatment exists in all material respects. However, this does not release from the obligation to clarify exactly what the specific circumstances of each player are (student status, minor employment, pensioner, etc.). This is because the objective facts of the case require that contributions to social security be withheld, as per Section 266a II of the German Criminal Code. However, withholding can only be assumed if contributions are actually to be paid, which at the very least requires the existence of an employment relationship and the non-existence of an exemption from compulsory insurance. This illustrates that, despite a possible group comparison, a separate presentation of the special, specific circumstances of each player is unavoidable. Furthermore, this question is also important for the assessment of the penalty, since the amount of damage caused depends on whether an employment relationship existed at all and, if so, in what periods of time.
However, since not all case workers are necessarily familiar with the intricacies of social security law, it is conceivable that (for example, due to the heavy caseload of the public prosecutors) not sufficiently clearly stated on the basis of which criteria the existence of an employment relationship is affirmed; it is also conceivable that only the assessment made by the social security institutions is used.
In view of the fact that a defendant must be given the opportunity of an effective defense, such an unclear presentation can lead to the circumscribing and informing function of the indictment not being fulfilled. Whether this leads to the invalidity of the indictment depends, by its nature, on the individual case.
2. The defining and information function comes into play – also in the context of sentencing – from a different perspective: § 14 II 2 SGB IV creates a so-called net wage agreement. If, in the case of illegal employment relationships, social security contributions have not been paid, it is assumed that a net wage agreement exists between the employee and the employer. Although there are also such agreements in the legal area, which have the effect that the employer has to bear the contributions. However, in the context of social law, this means that the gross wage must first be calculated that corresponds to the net wage paid, because social security contributions are calculated on the basis of gross earnings (accrual principle). This must be taken into account when calculating damages for the purposes of sentencing, insofar as social security contributions are concerned.
In tax law, however, the inflow principle applies, i.e. the tax debtor, usually the employee, only has to pay taxes on the amount of his or her inflow of funds. However, since there is no corresponding norm in tax law, section 14 II 2 SGB IV, the gross salary cannot be used as a basis for calculating the tax damage – and thus for determining the penalty under section 370 AO – but the net amount must be used. Since this is usually lower, the damage is likely to be lower. Therefore, a separate presentation in the indictment must be ensured. The type of damage calculation can also be significant with regard to the example in the regulations of § 370 III 1 No. 1 AO (tax evasion on a large scale). If this has not been taken into account in the indictment and judgment, an attack using the usual means may be promising.
3. With regard to the status assessment, to which the criminal consequences are ultimately linked, it is important to note whether, in addition to the contractual agreements, the actual design and handling of the network of relationships has been determined and presented. Since the actual circumstances are crucial in the event of a deviation from the contract, it is essential to investigate how the network of relationships is actually handled. If this cannot be clarified or is in doubt, the benefit of the doubt applies!
VII. Conclusion
In particular, the question of whether or not there is sufficient evidence to bring charges under Section 266a of the German Penal Code is heavily influenced by substantive issues of social law. Since not every case worker has extensive knowledge, it may happen that indictments do not contain sufficient information on the facts relevant to social law on the basis of which the distinction is to be made. As a result, the indictment may not fulfill its defining and informational function, so that the indictment may be invalid under certain circumstances. It may also be advantageous to examine the representations of the judgment in this regard closely with regard to the imposition of sentence and the revisability of a judgment.
It is still not possible to make a uniform assessment of the status of semi-professional contract athletes. However, a distinction based on the "standard criteria" is not helpful. The criteria presented under II 1 d are to be used additionally. However, the fact that a team athlete is more closely integrated into the organizational (club) processes must not ultimately lead to the (early) assumption of an employment relationship – and thus to criminal liability.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.