The Federal Labour Court (Bundesarbeitsgericht, BAG) ruled on 11 August 2015 (docket number 9 AZR 98/14) that where an activity agreed by contract may typically be performed in an employment relationship as well as by an independent contractor, the decision of the parties regarding the type of contract has to be considered as part of the necessary overall balance when assessing the employment status. Individual aspects of the performance of the contract may only change its legal character contrary to the wording of the contract, if they are representative of a different employment status, rather than being an exception to the agreed working relationship.

In the present case, a group of artists and a circus company concluded a “contract for freelance work”, according to which the artists presented a “Hochseil- und Todesradnummer” in circus shows. According to the BAG, the artists provided their performances as independent contractors, not as employees. In general, the degree of personal independence is decisive for the difference between the two relationships. In the present case, the company’s right to give instructions – which is characteristic for an employment relationship – was excluded by contract. The contract allowed the artists to choose which 4 persons would perform in the show and which work materials they would use. The fact that the work had to be done during the circus show was due to its nature and it was therefore not appropriate to deem it to be an “integration of the artists into the organization” of the circus company, according to the BAG. Further, a prohibition on the artists participating in an event was also not appropriate for questioning the legal nature of the contract. Such individual aspects of the performance of the contract may only change its legal character contrary to the wording of the contract, if they are representative of a different employment status (rather than being an exception to the agreed working relationship).

With this decision, the BAG is in line with its previous case-law regarding the differentiation between an employment relationship and a self-employed activity. The decision shows, once again, how important it is for employers to ensure that the necessary requirements of the intended work relationship are fulfilled. It remains to be seen what impact the proposed Law amending the Temporary Employment Act and other Laws (“Gesetz zur Änderung des Arbeitnehmerüberlassungsgesetzes und anderer Gesetze“) will have on this issue.