Sham contracts with Romanian nationals to circumvent the social insurance obligation

The plaintiff X-GmbH is one of the leading manufacturers of concrete products as well as design elements for the design of gardens, terraces and outdoor facilities. It has various concrete plants.

For years, mostly Romanian nationals have been working for X-GmbH and are regarded by it as self-employed entrepreneurs. The Romanian nationals founded numerous companies under civil law (GbR), each consisting of two or more persons. All the partnership agreements have the same wording and the identical typeface. It is stipulated there that the partners do not contribute in kind or cash, but they do contribute their entire labour. All GbRs have the same business address, which is identical to the residential address of all Romanian partners in the collective accommodation.

X-GmbH concluded framework and work contracts with these companies. An intermediary acted as the contact person for negotiations between it and all GbR. X-GmbH provided equipment, resources and accessories for the work. In October 2015, X-GmbH applied for a status determination of the partners of the GbR, including V-GbR, of which the respondent is a partner. It stated that the contractors were self-employed. They were allowed to delegate the orders, were only paid for proper performance and were otherwise liable for non-performance or poor performance as well as for damages. The execution of the orders was not controlled, but only the finished work was accepted. Shortly afterwards, the partners of V-GbR, among others, also applied for status determination. They stated that they employed workers and worked for two other clients in addition to X-GmbH.

With notices dated 24 April 2017, the defendant determined vis-à-vis X-GmbH and the Romanian national and partner of V-GbR, who had been invited to join, that the work of the invited person for X-GmbH from 19 October 2015 onwards was within the scope of dependent employment and that there was an obligation to be insured under all branches of social insurance: there were no essential characteristics for self-employment. The work was carried out on the premises of X-GmbH with its machines and working materials. The working hours could not be freely chosen. There was no own entrepreneurial activity with corresponding opportunities and risks and no own capital investment with the risk of loss. The Social Court dismissed X-GmbH’s complaint against this. The 8th Senate of the LSG now confirmed the judgement of the first instance:

A serious legal commitment on the part of the defendant to exercise his activity in the legal form of a GbR could not be inferred from his statements at the oral hearing before the Regional Court. Due to his lack of language skills, the defendant had not been able to grasp the scope and circumstances of the formation of the GbR. He had also confirmed that he had only wanted to work and had simply signed what was presented to him by X-GmbH and the intermediary M. He had not been able to understand this. The complainant had neither grasped his legal position as a partner nor the fact that the GbR had been involved in the legal relationship between him and X-GmbH in order to avoid the obligation to pay social security. In this respect, the GbR had been an empty shell, which had only been founded as a sham. Accordingly, all the GbRs had agreements with the same content and the residence of the Romanian workers had been given as the business address. It was therefore a construct drafted by X-GmbH, which was presented to the Romanian workers for signature unilaterally and without their participation in and influence on the drafting. The Romanian workers were only interested in working without being able to understand and influence the legal circumstances of the employment. The defendant had also been integrated into the business of X-GmbH and had been subject to its instructions. He had not borne any entrepreneurial risk and had not had his own business premises or operating resources. Even according to the partnership agreement, he had not contributed any cash or material resources, but only his labour. The defendant had also not been able to provide any concrete information about the employment of workers by the V-GbR. Since the prices were the same for all the joint ventures, it was obvious that X-GmbH had set and structured prices uniformly for all the joint ventures. According to all this, the V-GbR was a sham construction that was ineffective according to § 117 BGB, in which the defendant had merely acted as a puppet of M and X-GmbH (judgement of 25.10.2021 – L 8 BA 3118/20).

This ruling once again shows how important contractual constellations are under the scrutiny of the auditors. Especially in the area of contracts for work and services, companies should pay close attention to how the cooperation is structured in order not to slip into bogus self-employment. The liability of the client must also be taken into account here. We will be happy to assist you with any checks or arrangements for contractual cooperation beyond the borders of Germany. Please do not hesitate to contact us.

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