BAG [Bundesarbeitsgericht – German Federal Labor Court] of June 26, 2019 - 5 AZR 178/18
Should the employee status of an alleged freelancer be established retrospectively, the employer can reclaim the fees paid. Generally speaking, it can be assumed that the remuneration of a freelancer is higher than that of a dependent employee.
The defendant was employed by the plaintiff as an IT employee without fixed hours on the basis of a service contract. For the "maintenance tasks”, the parties agreed on a reaction time on working days of four hours and as remuneration "a fee of EUR 60.00 plus VAT at 16 % per hour incurred". After the termination of the contractual relationship, the Deutsche Rentenversicherung Bund [German Pension Insurance Association] determined, at the request of the defendant, that he was subject to compulsory insurance in all branches of the statutory social insurance during his entire work with the plaintiff. The plaintiff was required to repay social security contributions. Subsequently, the plaintiff filed legal action and demanded the repayment of "excess" fees paid as well as the reimbursement of employer's shares in the total social security contribution, as it was not a freelance but an employment relationship. Consequently, the defendant can only claim the normal remuneration of an employee.
According to the court rulings of the BAG, the employer can make use of Section 812(1) old law 1 BGB [Bürgerliches Gesetzbuch - German Civil Code] and demand the repayment of overpaid fees if the employee status of an alleged freelance employee is retrospectively determined. The concept of an employee is not congruent with the social security law concept of dependent employment in the context of the status determination procedure. However, should the parties still dispute the employee status, this can also be determined indirectly in the legal proceedings for repayment of overpaid fees.
If remuneration for work is to be paid on the basis of the (retrospectively) established employee status, the claim for repayment shall only exist in the amount of the difference between the fee payments less the remuneration for work owed. In the absence of specific indications, it should not be assumed that the hourly rate agreed between the parties for the allegedly freelance relationship was also decisive in the employment relationship. Otherwise, the fact that the fees paid for freelancers also cover the risks of the lack of employee protection would be ignored. If there is no other starting point for a calculation, the normally applicable remuneration is to be used as a basis for the remuneration for the employment relationship pursuant to Section 612 BGB. In so doing, the employer had also allowed the employer's social security contributions to be taken into account.
A third party notice to the allegedly freelance employee is out of the question within the framework of social court status proceedings due to the different subjects in dispute (social insurance law concept of dependent employment vs. employee concept within the meaning of Section 611 a (1), Sentence 1, BGB) Instead, the employee status can be determined in the context of a claim for repayment of overpaid fees.. The claim for reimbursement is justified if the remuneration owed for the employment relationship, including social security contributions, is less than the fee paid for the freelance work. Should no comparable permanent employees be employed by the employer, the usual remuneration can be provided on the basis of job advertisements, comparable tariff regulations, etc.