In order to avoid exceeding driving times for their core workforce and the resulting sanctions, transport companies are often forced to use subcontractors, including individual "independent" drivers. In practice, there still appear to be no clear guidelines for transport companies to follow.
Despite years of discussion on the subject, there is general uncertainty about the question of whether individual drivers can be employed as "self-employed" by freight forwarders as subcontractors. The practice of the main customs offices and social insurance agencies in the legal classification of the legal relationships of the freight forwarding companies to their subcontractors aims at the highest possible social security contributions; it is difficult to draw reliable conclusions from the reasons given in the contribution assessmentsNevertheless, according to the supreme court's case law on this subject, some notes can be made.
Personal, non-economic dependency
Apart from industry-specific peculiarities of the freight forwarding business, the latter is to be qualified as a dependent employee within the meaning of § 7 paragraph 1 sentence 2 SGB IV and is therefore generally subject to compulsory insurance in all branches of social security. Whether or not there is economic dependence is not the deciding factor. 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 company is the subcontractor's most important client. The specific assessment must always be made by weighing up all the circumstances of the individual case. Numerous criteria have been identified in the relevant case law as being capable of being taken into account. The question of whether the subcontractor or the driver is subject to the so-called right of direction of the main contractor is of great importance. This means that the main contractor must have the possibility to determine the work performance of the subcontractor unilaterally with regard to place, time and manner.
Another indication for the assumption of "pseudo self-employment" is if the subcontractor or their drivers are incorporated into the main contractor's work organization. This is particularly the case if the subcontractor works together with the main contractor's employees. It also argues against the assumption of dependent employment if the subcontractor himself takes a considerable economic risk, for example if he provides the transport service with a vehicle that he has purchased and maintained himself. Employing one's own employees and issuing one's own invoices for the main contractor are also recognized as criteria that argue against compulsory social insurance. A strong indication of dependent activity is if no own truck or a truck leased specifically by the main contractor is used. If the driver is in fact "simply renting out himself", the courts tend to assume an employed activity (e.g. LSG Baden-Wuerttemberg, decision of November 21, 2008, Az.: L4 4098/06). There may be individual cases in which, after full consideration, the result "self-employed" can be arrived at. However, we strongly advise against the use of drivers without their own trucks as supposedly self-employed drivers without a thorough legal examination, because a correct and realistic overall assessment will practically always come to the conclusion of "pseudo self-employment".
Special features of the transport industry
As early as 1998, the Federal Labor Court emphasized (see BAG ruling dated November 19, 1997, reference: 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 legislator has classified the carrier as a business operator and thus as a self-employed person.
As is well known, the carrier usually has to follow clear instructions from the commissioning freight forwarding company; without compliance with these instructions, the freight order is simply impossible to fulfill. It is understood that the freight forwarding company must be given the opportunity 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. In its landmark decision, the Federal Labor Court established that all those requirements that are necessary solely for the success of the freight contract 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, a social security obligation can only be assumed if the legal relationship between the main and subcontractor/driver has been "consolidated" to an extent that goes beyond the usual requirements.
No "consolidation" of legal relationships
The Federal Labor Court further clarifies when such a consolidation with the consequence of a social security obligation may exist. The court states that a "constant readiness to work" can indicate dependent employment. This is the case if the carrier always has to be available for trips (decision of the Federal Labor Court dated November 30, 1994, ref.: 5 AZR 704/93). Likewise, the obligation to coordinate times of attendance and absence that go beyond the specific freight order would also speak in favor of such "densification". Furthermore, if the freight forwarder has virtually no possibility of taking on orders from other freight companies, this may also indicate dependent employment subject to social security contributions. However, 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 rules of procedure, 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.
Overall, it is clear that knowledge of the subject and a certain creative skill are required to avoid liability for contributions in accordance with § 28e SGB IV and possible criminal proceedings. It is important that the freight forwarding companies are aware of the problem and clarify in advance which individual contractual agreements that are made with carriers and ultimately implemented are harmless. It should not be overlooked that it is not the designation of the contractual relationship that is important, but rather how it is actually implemented. No matter how carefully a contract is drafted, it is worthless if a contrary practice is actually followed.
If uncertainties remain, 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 in accordance with § 7a SGB IV. An application for the procedure to be carried out must be submitted up to one month after the start of the activity. 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 the majority of cases, it makes sense not to proceed against this decision, but to adapt the actual circumstances when executing the contract. The inquiry procedure can also be repeated if circumstances change. Such a procedure should often be considered, especially in cases where newly established transport companies initially want to work exclusively for a freight forwarder as a subcontractor.
Conclusion
Although the above discussion shows that a precise case-by-case analysis is necessary, main customs offices and social insurance agencies usually do not take a differentiated approach, although such an approach would be desirable in the interest of the freight forwarder, who often works on the edge of profitability.After all, in many cases there are opportunities to successfully defend oneself against contribution notices from the pension insurance institution or to defend oneself in the context of possible criminal proceedings for non-payment of social security contributions (Section 266a of the German Criminal Code).
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.