How do §§ 7 and 7a SGB IV determine the social-security status of freelancers?

Section 7(1) SGB IV identifies employment as non-self-employed work, particularly within an employment relationship. The provision expressly identifies instructions and organisational integration as indicators of employment.

Relevant instructions may concern:

• the content and method of the work;

• working time;

• the place of performance;

• availability;

• reporting requirements; and

• the sequence in which tasks must be completed.

Organisational integration may exist where the Vendor works within the Client’s operational structure, uses internal processes, reports to internal managers or performs functions forming part of the Client’s ordinary business organisation.

Indicators of self-employment may include genuine freedom to organise performance, entrepreneurial decision-making, responsibility for operating costs, exposure to commercial risk, the ability to work for other Clients and the use of the Vendor’s own business organisation.

No single factor automatically determines the outcome. The indicators must be assessed together and weighted according to the nature of the Assignment.

The parties to an Assignment may apply in writing or electronically to DRV Bund for a decision under § 7a SGB IV on whether the relationship constitutes employment or self-employed activity.

The procedure is generally available unless a health-insurance collection body or another social-security institution has already started proceedings concerning social-insurance liability arising from the same relationship.

The Client and Vendor do not necessarily have to submit the application together. DRV Bund obtains information from the relevant parties and identifies the documents required for its assessment. Before issuing an adverse decision, it informs the parties of the intended determination and permits them to comment.

A mandatory procedure applies in specified cases where an employer’s social-security notification identifies the worker as:

• the employer’s spouse or registered partner;

• a descendant of the employer; or

• a managing shareholder of a limited liability company.

The procedure considers both the contract and the practical organisation of the Assignment.

Section 7a permits a Prognoseentscheidung, or prospective decision, before an Assignment starts. DRV Bund bases this decision on:

• the executed agreements; and

• the circumstances under which the parties state that the Assignment will be performed.

If the actual circumstances materially depart from those presented, the parties must notify DRV Bund. A prospective decision is therefore reliable only where the description of the intended working arrangements is accurate and subsequently followed.

Section 7a also permits a Gruppenfeststellung, or group determination, for multiple equivalent contractual relationships. Following a decision in an individual case, DRV Bund may issue an expert opinion concerning comparable Assignments where the activities, contractual terms and practical circumstances are substantially uniform.

A group determination is an expert opinion rather than an individual binding decision for every Vendor. Its usefulness depends on whether the relevant Assignments genuinely match the model assessed.

Under the legislation currently in force, the special provisions governing prospective determinations, group determinations and certain third-party cases are scheduled to expire after 30 June 2027 unless the legislation is amended or extended.

If DRV Bund finds that the Vendor is employed, the relationship may create social-insurance obligations concerning health, long-term care, pension and unemployment insurance, subject to the rules governing the applicable insurance branches.

A decision may affect:

• employer and employee contributions;

• payroll and social-security reporting;

• contribution arrears;

• late-payment surcharges;

• employment-law exposure; and

• the future organisation of the Assignment.

An application submitted within one month after the start of the Assignment may, under the conditions in § 7a(5), permit insurance to begin when the decision is announced rather than from the original starting date. This treatment is not automatic. It requires, among other conditions, the Vendor’s consent and equivalent protection against illness and for retirement during the intervening period.

Objections and court proceedings against specified § 7a decisions have suspensive effect. Nevertheless, the parties should obtain case-specific advice on contribution obligations while proceedings remain unresolved.