The issue of bogus self-employment remains a hot topic in the transport industry. The practices of the main customs offices and social insurance agencies in the legal classification of the legal relationships between freight forwarding companies and their subcontractors continue to contribute to the general uncertainty, as it seems that a social insurance obligation is assumed even with weak evidence.
To avoid exceeding driving times for their core workforce and the resulting sanctions, transport companies are often forced to resort to subcontractors to ensure that freight orders are fulfilled on time and at a reasonable cost. There still appear to be no clear guidelines for transport companies to follow. Nevertheless, some key points can be established based on the highest court rulings on this subject.
Personal, non-economic dependency
Regardless of industry-specific peculiarities, anyone who is personally dependent is to be qualified as a dependent employee within the meaning of Section 7 (1) sentence 2 of the German Social Security Code (SGB IV) and is therefore generally subject to compulsory insurance in all branches of social security. Whether or not there is an economic dependency is not decisive. In the transportation industry, the latter would always be the case if a subcontractor were dependent on being awarded a contract by a particular freight forwarding company, for example because this is the subcontractor's most important client.
The specific assessment must always be based on a comprehensive consideration of all the circumstances of the individual case; numerous criteria have been recognized in case law as eligible for consideration. Whether the subcontractor or its driver is subject to the principal's right to issue instructions plays a major role in this regard. This means that the principal must have the unilateral authority to determine the subcontractor's work with respect to place, time and manner. Furthermore, the assumption of compulsory social insurance is supported by the fact that the subcontractor or its drivers are integrated into the main contractor's work organization; this is particularly the case if the subcontractor works together with the main contractor's employees. One argument against the assumption of dependent employment is if the subcontractor takes a considerable economic risk upon himself, for example if he provides transportation services with vehicles that he has purchased and maintained himself. The employment of the subcontractor's own employees and the issuing of separate invoices for the main contractor are also recognized as criteria that argue against compulsory social insurance.
Special features of the transport industry must be taken into account
As early as 1998, the Federal Labor Court emphasized (see BAG ruling dated 11/19/1997, Az.: 5 AZR 653/96) that the special features of the transport industry must be given special consideration when assessing the social security status. The legal relationship between the freight forwarding company and the respective carrier is characterized by a high degree of "personal unfreedom" according to the legal model; the legislature has classified the carrier as a businessperson and thus as self-employed.
As a rule, the carrier must follow clear instructions from the commissioning freight company; without compliance with these instructions, the freight order is simply impossible to fulfill. It stands to reason that the freight company must be able to instruct the carrier when and where to load and unload the goods; however, this does not necessarily mean that the carrier is subject to compulsory social insurance. The Federal Labor Court has ruled that all those requirements that are necessary solely for the success of the freight order do not in themselves indicate dependent employment. This also applies if, as is often the case, the legal relationship between the main contractor and the subcontractor is intended to be permanent. Rather, according to the Federal Labor Court, compulsory social insurance can only be assumed if the legal relationship between the main and subcontractor has been "densified" to an extent that goes beyond the usual requirements.
Avoiding the "consolidation" of legal relationships
In its ruling cited above, the Federal Labor Court makes it clear when such a consolidation may arise, resulting in an obligation to pay social security contributions. The court explains that a "constant readiness to work" could indicate dependent employment. This would be the case if the carrier always had to be available for trips (see also BAG ruling dated Nov. 30, 1994, Ref.: 5 AZR 704/93). The obligation to coordinate attendance and absence times that go beyond the specific freight order also speaks in favor of such "consolidation". Furthermore, if the freight carrier has virtually no opportunity to accept orders from other freight companies, this may also indicate dependent employment that is subject to social security contributions. The agreement of inspections by the freight forwarder in relation to the carrier, which are necessary for liability reasons, does not generally indicate employment. The drawing up of binding rules of conduct and order, for example, to the effect that the carrier must act politely and in a well-groomed manner towards customers, goes beyond the usual mandatory content of a freight order.
The circumstances described make it clear that a certain degree of skill is required here in order to avoid the obligation to contribute in accordance with Section 28e of the German Social Security Code (SGB IV). It is important that freight forwarding companies are aware of the issue and clarify in advance which individual contractual agreements made with carriers and ultimately implemented are harmless. It should be noted that it is not the designation of the contractual relationship that is important, but how it is actually implemented.
If there is any uncertainty, it may be advisable to clarify the social security status of a potential subcontractor in advance by means of an inquiry procedure with the German Pension Insurance Association (Deutsche Rentenversicherung Bund) in accordance with Section 7a of the German Social Security Code (SGB IV). The advantage of this procedure is that the DRV must communicate the facts on which it intends to base its legal classification before making its decision. In most cases, it makes sense not to proceed against this decision, but to adapt the actual circumstances during the execution of the contract. The inquiry procedure can also be repeated if circumstances change. This approach is often worth considering, especially in cases where newly established transport companies initially want to work exclusively for a freight forwarder as subcontractors.
A more sensitive approach is desirable
Although the above remarks should convince you of the necessity of a precise case-by-case examination, main customs offices and social insurance agencies usually do not take a differentiated approach, although this would be highly desirable in the interest of the freight forwarder, who often works on the edge of profitabilityt working in the interest of the freight forwarder, such an approach would be highly desirable. Nevertheless, there are many cases in which it is possible to successfully defend oneself against contribution assessments from the pension insurance institution or to defend oneself in the context of possible criminal proceedings for non-payment of social security contributions (see § 266a StGB).
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.