Bogus self-employment: ‘New self-employment’ dead, new pathway alive

 A change of course in the reform of the status determination procedure: as recently as spring 2026, the Federal Ministry of Labour and Social Affairs (BMAS) intended to create a third employment status through ‘new self-employment’. The key points presented on 26 October 2026 by the Federal Ministry for Economic Affairs and Energy (BMWE) and the BMAS move away from this concept. The core of the proposal is now an additional route to self-employment under Section 7(1) of Book IV of the Social Code (SGB IV), which dispenses with the criteria of integration and subordination to instructions and instead focuses on five positive criteria for entrepreneurial activity. For companies working with freelancers, interim managers, fee-paying lecturers or IT specialists, the reform could make the status issue significantly easier to plan for.

Background: Why the status determination procedure is being reformed

The status determination determines contribution and registration obligations, as well as liability and criminal liability risks. Following many years of strong criticism from those in the field, the ministries now also acknowledge that the previous criteria for distinction – working under instructions and integration into the employer’s organisational structure (Section 7(1), second sentence, of Book IV of the Social Code) – do not lead to legally certain outcomes in all circumstances. The key issues paper cites remote working, flatter hierarchies and the increasing use of highly qualified freelance staff in project work as reasons for this.

Added to this is the much-discussed Herrenberg judgement of the Federal Social Court (BSG) of 28 June 2022 (B 12 R 3/20 R), in which a music school teacher was classified as an employee. In response, the umbrella organisations for social security amended their assessment criteria for teachers on 4 May 2023 and have been applying them since 1 July 2023 at the latest. Against this backdrop, the coalition agreement between the CDU, CSU and SPD had already announced plans to make the status determination procedure “faster, more legally certain and more transparent” and to prevent bogus self-employment.

The original plan: ‘new self-employment’

The BMAS’s draft bill ‘to facilitate the determination of self-employment status under social security law’ provided for a third employment status in a new Section 7(5) of SGB IV. The decisive factors were to be not the actual circumstances, but the agreed intention of the parties and formal criteria: a contractual right of representation as a mandatory feature, as well as at least two out of four further characteristics of entrepreneurial activity. The ‘price’ was compulsory insurance under the statutory pension scheme, calculated on the basis of turnover minus a flat-rate deduction of 10 per cent. Registration and the payment of contributions were to be the responsibility of the client; registration within six weeks was even a prerequisite for the classification as the new form of self-employment to take effect. The legislation was scheduled to come into force on 1 January 2028. Critics saw this as a model in which self-employment is ‘bought’.

The new key points: ‘Three out of five’

In addition to the existing comprehensive assessment under Section 7(1) of Book IV of the Social Code (SGB IV), a further approach is to be introduced in future: entrepreneurial activity is deemed to exist if at least three of the following five criteria are met. The contractor

• faces risks of loss and opportunities for profit,
• has the right to appoint a representative,
• does not work primarily for this one client,
• bears expenses typical of an entrepreneur,
• and promotes their services on the market.

In these cases, integration into the workforce and being subject to instructions are not taken into account. Self-employment is thus to be possible even if some of these characteristics are missing, for example if someone works exclusively for a single client over a prolonged period, has no employees or business premises of their own, incurs only minor expenses, or does not have a contractual right of representation. Unlike in the draft bill, the key points explicitly clarify: No third social security status is being created; the distinction between employees and the self-employed remains in place.

Exclusion of certain sectors under Section 2a of the SchwarzArbG

The new approach is, in principle, open to all sectors; however, it is not intended to apply to the economic sectors listed in Section 2a(1) of the SchwarzArbG, insofar as the activities are characteristic of those sectors. These include, amongst others, the construction industry, the hospitality and accommodation sector, the passenger transport sector, the freight forwarding, transport and associated logistics sectors – including platform-based delivery services – the building cleaning sector, the meat industry, the hairdressing and beauty sector, and the security and guarding sector.

Special provision for part-time teachers

A special provision is envisaged for freelance lecturers: in addition to a main occupation, it should be legally permissible to undertake self-employed teaching work for a client amounting to up to 1,170 minutes of teaching time per month (26 teaching hours of 45 minutes each). This is likely to replace the transitional provision for teaching activities in Section 127 of Book IV of the Social Code (SGB IV) – currently limited until 31 December 2027 – with a permanent provision.

Pension insurance obligation to be decoupled from the status question

Contrary to what was provided for in the draft bill, the pension insurance obligation for self-employed persons will not be linked to the status question, but will instead be implemented separately within the framework of the recommendations of the Pension Security Commission. Self-employed persons subject to pension insurance are to pay their contributions themselves to the German Pension Insurance (DRV); there are no provisions for reporting obligations, withholding of fees or the payment of contributions by clients.

Procedures: Deemed determination, removal of time limits, protection of legitimate expectations and digitalisation

• Deemed determination: The employment status applied for by mutual agreement shall be deemed to have been established three months after the submission of complete documentation to the DRV Bund.
• Permanent status: Provisional decisions, group determinations and the clarification of triangular relationships (Section 7a(2), sentences 2 and 3, and Sections 4a to 4c of SGB IV) – previously limited until 30 June 2027 under Section 7a(7) of SGB IV – are to apply permanently.
• Protection of legitimate expectations: For ongoing employment relationships, the prospective commencement of compulsory insurance under Section 7a(5) of SGB IV is to apply even to applications submitted within three months of the Act coming into force, unless there is intent or gross negligence. Under current law, Section 7a(5) of SGB IV also requires an application to be submitted within one month of commencing work, the employee’s consent, and alternative cover for sickness and old age.
• Digitalisation and evaluation: The procedure is conducted digitally via the DRV Bund customer portal with a BundID connection; the implementation of the Act is to be evaluated.

Brief assessment

The key points are on the right track. However, whether the reform of the status determination procedure actually creates legal certainty depends on its specific implementation. Above all, it remains unclear whether fulfilling the ‘three out of five’ model will lead to a binding determination of self-employment or whether it will merely remain a further factor in the overall assessment. Furthermore, terms such as ‘risks of loss’, ‘expenses typical of an entrepreneur’ and ‘promotional activity’ are open to interpretation. There is a risk that the interpretation of these terms will once again lead to a case-by-case overall assessment.

We would be happy to provide you with our detailed response to the key issues paper on request.

Please do get in touch – our Employment and Social Security Law team will assist you with your status assessment.