Illegal employment undermines the financial basis of the social security systems. The counter fight is thus promoted with more and more emphasis from governmental agencies. With customs a specialized investigation unit is available for this matter.
An employer or a contractor makes himself liable for prosecution due to “illegal employment”, when receiving outputs or services while not fulfilling, the on the service or work performances based, social security notification-, contribution- or recording obligation. The misconduct of the notification and contribution obligation is threatened with severe punishments according to § 266a StGB.
In practice there are cases in which employees are employed evidently and with full intentions, completely or partially, illegally in order to save on respective social security contributions. In addition there is a wide area of potential cases of doubt, within which an employer can become the target of an investigative procedure due to the suspicion of illegal employment even without malicious intent. These cases make up a significant part of the law enforcement.
Difficult differentiation between employees and self-employed
The cause for this development is due to the circumstance that the legislator has not yet been able to clearly differentiate between the (liable to contribution) “employee” and the (not liable to contribution) “self-employed”. Instead the law states “reference points”, for the existence of a non-self employed work and for the employee characteristics, solely criteria concerning the subject of the direction and the integration into labour organizations of the instructor.
Today’s business processes and workflows are coined by the requirements of a high rate of flexibility. The highly differentiated employment models, outsourcing of services as well as the high interlocking of internal and external sub operations lead to an increased blurring of dependent and independent activities. The practice has developed a number of further criteria against this background whose overall view should make a clear distinction between “employee” and “self-employed” possible. Here this classification is also only possible for isolated cases. For the employer this situation leads to legal insecurities that especially when outsourcing of services the risk of accusation of illegal employment may arise.
Lawsuits against employers due to the suspicion of illegal employment are often connected with search measures and can thus lead to significant riots and reputational damages. Next to penal consequences extensive additional contribution charges to the social insurance may be demanded. Further, parallel to the accusation of the contribution reduction, the accusation of evaded income taxes may arise. In light of the potential existence threatening consequences a professional defence by decorated specialists is essential. ECKSTEIN & KOLLEGEN can secure such a defence due to their long-term experience in this area of law.