Even building workers who have registered their own trade businesses are normally obliged to pay social security contributions
Building workers who take over simple tasks on building sites, receive a fixed hourly wage for this and do not discernibly act as contractors in the market should routinely be classified as dependent employees. The Higher Social Court (Landessozialgericht, LSG) of Hesse recently decided this in no less than three cases.
Invoices for the hours worked are subject to social security contributions
In the cases that needed to be clarified, three building companies each employed foreign workers who, in part, had little knowledge of German. On the building sites of the claimant companies, these workers were supposed to carry out, among other things, simple jobs - such as, dry construction, caretaker services, wallpapering and painting, tiling, gardening work, house clearance, cleaning work, furniture assembly, bathroom renovation, etc. - for an hourly wage of approx. €15. The building workers were employed as independent contractors, which was why no social security contributions were paid by the building companies.
Each worker was paid on the basis of invoices for the respective number of hours worked. There were no written agreements or order confirmations. The workers used their own (small) tools in some cases, however, the tools as well as materials were largely provided by the respective building companies.
The Higher Social Court (LSG) of Hesse, in its rulings of 20.2.2025, agreed in all three cases (case references: L 8 BA 4/22, L 8 BA 62/22 and L 8 BA 64/21) with the assessment of the German Federal Pension Scheme, according to which the building workers had to be viewed as being dependently employed and thus, in particular, obliged to pay social security contributions. Self-employment as contractors was denied.
The distinction between dependent employment and self-employment
According to settled case law, dependent employment exists in an external company if the worker is integrated into that company and is subject to its right to give instructions with respect to time, duration, place and type of performance. In contrast to this, the hallmarks of self-employment are, in particular, own business risk, the availability of own business premises, the possibility to have own workers at one’s disposal and freely organised activities and flexible working time management. The relevant criterion is always the overall picture of the work performed.
As part of an overall assessment, the court concluded that the building workers were integrated into the operational organisation of the claimant building companies in that they took over simple building tasks that dependent employees would typically perform. Considering that since the building workers were obliged to follow work instructions and integrate into operational processes, they were consequently subject to the building company’s right to give instructions. The remuneration was paid on the basis of fixed hourly rates. The tools and materials were essentially provided.
Furthermore, due to their inadequate language skills, the respective building workers were not at all in a position to offer their services independently in the market. Moreover, the LSG was not able to ascertain business performance that was based on agreements typical of a work contract.
Conclusion: Contractual designation is not relevant
The rulings of the LSG in Hesse clarify that the crucial factor for the assessment in accordance with social security regulations is not the contractual designation, but the actual work arrangements. Anyone who
- is integrated into the operational organisation,
- performs simple tasks when instructed to do so, and
- bears no business risk
is usually dependently employed - even if their trade business is registered, or there are several clients.
