Same in Germany. It is risky for the company, not for the "disguised employee", because the company can find that the freelancer subsequently demands back-payment of entitlements.
I've never actually heard of this happening, but I've encountered difficulties as a freelancer because a company was scared this could happen.
True ridiculous story: a German bank I did a consulting gig at for several months would not allow consultants to have their names on the office doors, unlike employees. They thought that having our names on the doors could be enough to turn us into "disguised employees".
No is not ridiculous at all: having your name on a door means that you are "forced" to work there, thus rendering you in a employee since you cannot determine for yourself the place and location of work, the cornerstones of beeing a freelancer.
I do consulting for a big technology company in Munich and they have special freelancer areas where you can have any place you want, since there is no concept of "office" for a freelancers like. Some colleagues always have to chase me, since I can choose to take another place than they are used to :).
Also, you have to bring your own coffee machine, water, you are not allowed to use the ones from the kitchen, since they are only for employees. But I just don't care :), and use them anyway.
PS. i had some other crazy contract where I had to show them proof I am working also for another client, otherwise not able to take the gig. Germany is quite special :)
I heard this has to do with the fact that once social services prove that you are not actually self employed the employer would have to pay back a significant amount to social services AND a fine on top of that.
I understand that these laws should prevent abuse of employees by big corporations, but it's hilarious that they go after self employed consultants that make several 100k Euros per year and already pay the maximum amount of social security that is possible.
And it's not like these companies have 2 or 3 consultants, they will likely have 10, 100 or even more. We are talking about fines that could be as high as many millions for these companies.
In Germany you need to make about 60000€ a year to get private health insurance (better service, lower price) OR you have to be self-employed, where it doesn't matter how much you make. (500€ private, 750€ public)
Yes, this doesn't matter for an engineer who makes about 100000€ a year. :)
But!
If you're an employee, you have to pay into a government-controlled retirement fund, if you're self-employed you don't.
If you make about 100k, you (and your employer) would have to pay more than 10k a year.
So, no, if you're self-employed and make good money, you don't necessarily have to pay "the maximum amount of social security" :)
For the retirement fund only the first 74,400€ (west) or 64,800€ (east) of your income is used (2016 numbers, different rules if you work in mining). For anything over you don't pay into the retirement fund.
There are some self-employed that need to pay into the retirement fund, including teachers (which is applied broadly, e.g. training supervisors and moderators), journalists, and artists.
Also don't forget about the unemployment fund into which employees must pay.
> lower price, 500€ private
Heavily depends on your health and age. Additionally family members are insured for free in public but not private insurance which might tip the scale. Also important to note is that it's close to impossible for most to switch back to public insurance once they decided to go private (e.g. if the premiums rise in the future).
It's similar in The Netherlands. If you are self-employed and have more than one customer it's pretty demonstrable that you are autonomous, can decline work, and the relationship is not solely to avoid an employment contract.
Contrary to popular (Dutch) belief, you do not have to have more than one customer... it's just that if you do it can be difficult to prove that you are autonomous. One test is if you are doing the same type of work that other employees in the company are doing.
I'm not sure how this works for for international agreements (self-employed in NL but only customer in DE).
I'd assume the rules are the same in principle but you would be more likely to be considered autonomous in practice if audited. Also because you're probably providing your own equipment, office etc.
I actually did this for a while - self-employed in NO, only customer in NL. After a while I had more than one customer, making the issue moot :-)
The IRS in the US also has regulations regarding single employer contractors/consultants. A company cannot turn its employees into independent contractors to skip out on things such as payroll taxes.
I don't know exactly how that works with foreign companies.
edit: my remark on foreign company is that, by having no nexus in the country of the consultant, going after them seems difficult