Significance of the Distinction Between Dependent and Independent Employment

In social insurance law, the distinction between dependent and self-employed activity has significant importance in certain areas. Generally, it can be said that employees are more often subject to social insurances than self-employed individuals.

Distinction not always easy to make

The distinction between dependent and self-employed activity is not always easy to make in a concrete case. Additionally, social insurance law criteria differ from labor law criteria. In social insurance law, one assumes self-employed activity if the person contributing is involved through the use of work and capital in self-organized management and visibly participates in economic transactions. The purpose is to provide services or create products for which a financial consideration is demanded in return. A decisive factor in assessing self-employment is also who bears the specific entrepreneurial risk.

On the other hand, dependent employment is assumed under the following criteria: lack of significant investments, no substantial decision-making power, obligation to follow instructions, binding to a work schedule or working hours, or regular work for the same employer. A clear distinction between the two forms cannot be made. Rather, it depends on which characteristics predominate in a concrete case.

Dependent persons are more often subject to social insurances than self-employed individuals. Only employees are insured for unemployment insurance. Furthermore, it should be noted that self-employed persons are not automatically insured for occupational pensions (BV) or accident insurance (UV). However, they can voluntarily join both insurances.

   
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