Labour / Employment Law

The field of labour law – also named employment law – is a broad term which defines the relationship between a company (the employer) and the individual, working for this company (the employee). Rights and obligations descending from this relationship are usually defined in the employment contract. German labour/employment law is known for providing a very high level of social security to employees. This includes regulations on:

  • Protection against dismissal
  • Minimum salary requirements (MiLoG)
  • Minimum holiday and vacation periods
  • Limitations in weekly and daily working hours
  • Regulations on sick and maternity leave
  • Restrictions in the field of temporary employment (body leasing), also known as AÜG (Arbeitnehmerüberlassung)
  • Payment obligations in regards of social contributions (health insurance, pension fund and unemployment insurance)
  • Payment obligations in regards of income taxes

In order to ensure that all employees are treated following the above regulations, the German authorities allow freelancer or contractor agreements, only if the freelancer/contractor can prove that he is fully working on his own behalf, and that he is not bound to others’ intructions. If the authorities come to the conslusion, that a freelancer is actually working as an employee (which means under a company’s instructions), then they will force the company to convert the freelancer contract to an employment contract, will define penalty payments and will oblige the employer to retroactively pay the relevant income taxes and social contributions of the last 4 years.

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