Working without contract in unusual situation

Question

I work in a company that employs people all around the world (remotely). Since it does not have bases in particular countries, their employees are essentially contractors that renegotiate the contracts when needed. They call us employees, despite the fact that our situation is a bit different. The renegotiation is therefore not really meant to be renegotiation, but just automatic extension, because we are supposedly employed there full time.

For my contract I planned to renegotiate yearly (due to local laws on contractors). However, at the beginning I signed a 6 month contract and then planned to extend. When the time of extension came, I contacted the leadership and they said that they are busy, but will extend. It turned out that they did not want to extend and I got this as a result after a few months without a contract.

The leadership does not know what is your next project, so they are not sure if they should extend the contract. Also, he said I might get an offer in another company that is connected to this one. Also, they seem to be fine with me working without a contract (despite the fact that I am dealing with some of their essential IP).

It seems there is a major disorganization at the top positions at this company. I wonder what are the right things to do from my side. Can I get in trouble for not having a contract with in when it comes to my taxation? I fit in German taxation law. Given that the company is small, if that is the case, should I contact HR? The HR also knows my situation is not standard, but I am not sure if it is able to do anything about it. Some law help would be useful here. Also, I wonder how to communicate this with the bosses.

Answer 1

I'm making a few assumptions here: you are working a normal day job. You get a normal sized salary, not 450€ or less, but you aren't super rich or own a mega corp or two. You are a normal person with a normal job for normal money.

There are three options:

• You can be employed by a German company or German branch of an international company.
• You can be self-employed, work for multiple clients (around the world) and invoice them.
• You can have your own company. That company can do as it pleases inside the law. It might sell services world wide, invoice those that use them, employ you as CEO and pay you a salary for example.

You may notice that "I get money from somewhere regularly and I claim I work for someone" is not one of the three. Why? International money laundering laws. You cannot just have money appear in your account with no paper trail.

Since they won't give you a direct employment contract (never met a company who would directly employ people in a foreign country, it's a mess), you need to be either self-employed or form a company to be able to invoice them for the money they owe you for the services you provide. When you do this, you are on your own. Social security, health insurance, all this is mandatory, but while it is made very easy as an employee (basically, the employer does the paperwork, you never see the money as it goes directly to those institutions), if you are self-employed or you are your own company, you have to do this manually. And since you are employer and employee in one person, for example for health insurance you now pay double the rate, since the employer normally pays half of it.

So... what you need is a lawyer or tax accountant who can guide you through this. You cannot just work and get money for it. There are rules. For example, if you are self-employed, you cannot have a single client. That would be illegal. You are supposed to have multiple clients (like for example a tailor or painter), not work for a single corporation exclusively. Because that would undermine all labor laws. They protect employees, not contractors, so being a contractor to a single company is... seen as dodging labor laws. If you are making good money it seems weird, but as soon as you see that every guy who delivers mail to you has suddenly become their own contractor, you know why it makes sense. Self-employment was never meant to avoid things like minimum wage. And being a contractor with a single client is exactly that.

Summary: You need guidance, more than just an internet post. Hire a consultant to guide you through this and set it up according to German laws and regulations. I guarantee you that if you don't, you won't even know if the money you get is worth it or if a regular job would pay better in the end, because of the money that reaches your account you are supposed to pay various fees and taxes. Not doing so will only mean that you will get a huge bill from the Finanzamt at some point.

Answer 2

It depends how you're getting paid (If you're being paid into a paypal account or something similar then it's under the radar anyway.) and if you want a contract.

Check if this work could fall under the rules governing informal work. I'm unsure about Germany but in countries I am familiar with there is a threshold under which you are not required to declare the work or pay tax on it.