Latest Case Law on (Bogus) Self-Employment – Explanations and Implications for Practice

October 2026 – Authors: Attorney Volker Mauch, Attorney Till Heinrich

The question of when self-employed or freelance workers are to be classified as employees—and thus subject to social security contributions—is a perennial issue, and not just for shareholder-managing directors. This question also leads to significant uncertainty in other areas of business.

On July 23, 2026, the Federal Social Court handed down several rulings in various scenarios. We summarize these for guidance and highlight their practical relevance.

The case B 12 BA 10/24 R involved two managing directors, each of whom held a 50 percent stake in a GmbH. In the event that they could not reach an agreement, the articles of association provided for a decision by a neutral third party.

The BSG concluded that neither managing director could permanently block resolutions on their own legal authority. The 50 percent stake held by each therefore did not constitute sufficient, legally enforceable veto power (blocking minority). The court consequently classified the managing directors as employees. The decisive factor was not solely the size of the stake, which in and of itself would likely continue to be sufficient to constitute a necessary blocking minority under regular decision-making rules requiring a simple majority. Rather, it was the effect of the specific provision in the articles of association in the event of a tie—a provision that, while making perfect sense from a corporate law perspective, effectively nullified the blocking minority (BSG, judgment of July 23, 2026 – B 12 BA 10/24 R; see also Thüsing/Mantsch, “The Definition of ‘Employee’ on the Rise,” beck-aktuell, July 24, 2026).

A 50 percent ownership stake does not automatically exempt the company from social security contributions. The decisive factor is whether the managing director can, based on the articles of incorporation, actually and reliably prevent resolutions from being passed through his voting shares. A provision that resolves a deadlock through the decision of a third party will generally preclude such a blocking minority that actually exists due to the distribution of voting rights. The ruling is therefore particularly relevant for two-person GmbHs and companies with tie-breaking or comparable conflict-resolution provisions.

If an activity is classified as employment, it may trigger social security contributions for both managing partners, which can lead to substantial back payments.

Case B 12 BA 9/24 R, also decided on July 23, 2026, concerned a limited partner holding 16 out of a total of 97 votes. Based on a verbal agreement, she assumed management duties for the limited partnership.

The decisive factor for classification under social security law was that, with her clear voting minority, she could not determine shareholder resolutions. Nor did the power of attorney and individual power of procuration granted to her alter this fact. These were effective only in relations with third parties, leaving the distribution of power under company law unaffected. Furthermore, they were revocable. Finally, her compensation was based on the number of hours worked and did not depend on the company’s profit or loss. The fact that she actually managed the business largely independently therefore did not establish any legally enforceable authority. Rather, she was integrated into the company’s organizational structure and did not bear any significant entrepreneurial risk in the course of her activities (BSG, Judgment of July 23, 2026 – B 12 BA 9/24 R).

A managerial role or additional powers of representation do not, in and of themselves, establish an independent status. The decisive factor is whether the person can independently determine the nature of their work based on their legally established position within the corporate structure.

In the case B 12 BA 3/25 R, a surgeon held an exemption notice from the German Federal Pension Insurance (Deutsche Rentenversicherung Bund) that exempted him from the statutory pension insurance obligation for his work at a hospital in favor of the professional pension scheme. However, it also stated that the exemption applied to “other profession-specific employment/activities,” provided that mandatory membership in the pension fund and the professional association continued and that contributions in the appropriate amount were paid.

The physician later took on additional medical work at the clinic of a private-practice physician. The German Federal Pension Insurance Agency deemed this activity subject to pension insurance contributions because the original exemption notice had referred only to the specifically designated hospital employment. A separate application for exemption would therefore have had to be filed for the secondary employment.

In its reasoning, the Federal Social Court interpreted the decision to mean that the addendum did not contain an independent provision but merely a general and unspecified note. Rather, the exemption applied only to the activity specified in the application.

In practice, this means that even an additional, secondary, or clearly medical secondary activity generally requires a separate application for exemption. Existing mandatory membership in the pension fund and the medical association is not sufficient to exempt the secondary activity from the statutory pension insurance obligation.

In the case B 12 BA 7/24 R, the Federal Social Court (BSG) had to assess the classification under social security law of a neurosurgical on-call duty.

Two neurosurgeons, who worked in a joint practice and provided care on a hospital ward as affiliated physicians, had additionally agreed with the hospital operator to provide on-call duty. They ensured neurosurgical availability, which they rotated among themselves internally. The physician on duty at any given time was required to report to the hospital within 30 minutes upon the hospital’s request.

The BSG recognized the on-call service as an independent duty within the hospital’s organizational structure. The duty did not apply only to the physicians’ own patients under their care as affiliated physicians, but also to other inpatients at the hospital. The physician on duty at any given time was included in the hospital’s duty rosters and was required to comply with unilateral requests from the hospital. The hospital thus determined when the physician had to perform duties and which patients were to be treated. Nor was the specific location of service—such as a ward or the emergency room—left to the physician’s discretion. The internal distribution of duties between the two physicians did not alter this integration, as it did not eliminate the relationship with the hospital operator.

In addition, the BSG drew upon its principles regarding the assessment of fee-for-service physicians under social security law. The regulatory and organizational framework of hospital operations generally indicated that physicians employed there were integrated into the hospital’s organizational and command structure. The physician did not bear any significant entrepreneurial risk. Unlike in the case of affiliated physicians, he did not have to cover any substantial standby costs and did not have to fear any significant loss of earnings. He received a fixed monthly remuneration as well as a lump sum per shift—regardless of whether he was called in during on-call duty.

Taken as a whole, therefore, the characteristics of dependent employment predominated.

The assessment under social security law may treat individual areas of activity or separate contractual relationships differently. Consequently, the fact that a physician’s primary medical activity is performed on a self-employed basis does not necessarily mean that any additional on-call duty undertaken is also self-employed.

In case B 12 BA 12/24 R, the Federal Social Court (BSG) assessed the work of an instructor at an adult education center on July 23, 2026. The content and structure of the classes were determined by school regulations and curricula. The instructor was integrated into the organizational structures of the operating agency, used its facilities as well as its personnel and equipment, maintained attendance lists, and verified eligibility for participation. She was compensated on an hourly basis, which also included a cancellation fee. Since she neither had her own place of business nor bore any significant entrepreneurial risk, the characteristics of dependent employment prevailed. The contractual agreement that she was working as a self-employed individual did not alter this.

The ruling shows that freelance work can be contractually agreed upon and the teacher can have professional autonomy without this precluding classification as employment under social security law. The assessment depends on the specific activity and how it is actually carried out.

The social security law distinction between self-employment and dependent employment remains difficult to determine on a case-by-case basis. However, there are clear distinguishing criteria that must be strictly observed in practice:

• Instructions and freedom of decision-making: The decisive factor is the extent to which the client specifies working hours, work location, content, and workflow, and the degree of autonomy the worker has in making decisions. Legal, regulatory, or technical requirements must be taken into account, as must additional internal instructions.
• Integration into the business: Employment is indicated if the work is integrated into an overall concept for which the client is responsible and if there are attendance, documentation, or reporting requirements, regular coordination, and control or monitoring measures.
• Organization of one’s own work: Consideration must be given to whether assignments can be declined, substitutes arranged independently, one’s own work tools used, and methods or procedures determined autonomously. Personal expenses, entrepreneurial risk, and other opportunities for autonomy are also relevant.
• Contractual terms and actual performance: The decisive factor is not solely the wording of the contract, but rather, in particular, how the work is actually performed. Emails, work schedules, service descriptions, and internal guidelines may also be used to assess employment status.