In Germany, the distinction between employees and independent contractors (also referred to as freelancers) is particularly important. For example, the question of whether a person is an employee or an independent contractor determines whether they are protected against unfair dismissal and also affects how they are treated for statutory social security and income tax purposes. The key factor which indicates that an individual is an independent contractor is that he performs the agreed services working independently. By contrast, an employee is characterised by his dependency on the employer. An employee performs his work in accordance with the employer’s instructions and within its work organisation.
The German Federal Labour Court recently decided that an employee can be employed as an employee and as a freelancer by the same company (BAG, 27.03.2017 – Az: 9 AZR 852/16). The precondition for this is that the employer’s right to give instructions further to the employment contract must not include activities which are part of the services agreement as a freelancer. An employee may enter into multiple employment contracts with the same employer and also is not precluded from entering into both an employment contract and a contract for services as a freelancer from the outset.
In the case, the Court decided that a music teacher was working as an employee and as a freelancer at a music school. According to the German Federal Labour Court, teachers who do not teach at universities are generally employees due to their training curriculum. In contrast, music teachers at music schools can work as freelancers, because there is no compulsory school attendance, there are no formal school leaving qualifications and the music school has less control over how they carry out their duties.
