Even though lawmakers seem to have relaxed their interest in the Temporary Employment Act since it was last revised, employee leasing and contractor compliance continue to keep practitioners busy.

This is primarily driven by the increasingly restrictive review practice of the authorities, which makes it even more important that existing forms of using outside personnel are in order and that new models are guided into controlled channels. Industries such as IT and, increasingly, interim management are coming under increasing scrutiny and are well advised to choose the framework of their assignments with care to reduce the risks of employment, social security, tax and criminal law risks.

In the following, we would like to inform you of the major developments in this field and of the activities of our law firm.

Our specialists are Dr. Thilo Mahnhold and Dr. Daniel Klösel, who have published a book on the deployment of outside personnel,  “Contractor Compliance, Haftungsprävention und Fallmanagement beim Einsatz von Fremdpersonal” (Contractor Compliance. Liability Avoidance and Case Management when Using Outside Personnel).

  • Client Newsletter 07/23 One-Person GmbH – Federal Social Court in Evasion Models in the Case of False Self-employment
  • Klösel/Klötzer-Assion/Mahnhold (Editors), Contractor Compliance – Liability Prevention and Case Management When Using External Staff
    Heidelberg, 2nd Edition 2023 (only in German)
  • Federal Labor Court: Crowdworkers can be deemed employees

In a notable decision last Tuesday, the Federal Labor Court has taken a stand on the question of whether crowdworkers are employees. It is hardly surprising that they can be deemed to be employees and that this was also the view of the Federal Labor Court.

The detailed grounds of the judgment have not yet been released, but a central, important issue in this case was evidently the circumstance that the specific setting of the crowdworking platform, including its job acceptance and compensation mechanisms, resulted in a de facto performance duty, and the processing of the jobs thus solidified into ongoing and narrowly prescribed performance requirements.  In its press release, the Court stated:

“It is not until a higher level on the rating system is reached after a number of jobs are performed that the users of the online platform are able to accept several jobs at the same time to complete them on a route and thus attain, de facto, a higher hourly wage. Through this incentive system the person in question was induced to attend to ongoing control activities in the district of his usual place of residence.”

Briefly stated; crowdworkers may be employees, but this will depend on the specific design of the platform and the job acceptance and compensation mechanisms. Although the mechanism in dispute in this case was viewed uncritically by the lower labor courts (Labor Court of Munich: File no.: 19 Ca 6915/18 and Superior Labor Court of Munich: File no. 8 Sa 146/19), the Federal Labor Court has now tightened the reins somewhat, and individual platform hosts will have to quickly adapt to this. The even more critical issue of social security duties and their related risks lurks in the wake of this determination of crowdworkers as employees. Even though new legislative parameters are currently being developed, it cannot yet be seen how they will be implemented and what their specific content will be.

Further information on the topic of crowdworking can be found here.

  • Klösel/Klötzer-Assion/Mahnhold (Editors), Contractor Compliance – Liability Prevention and Case Management When Using External Staff
    Heidelberg, 2016 (only in German)