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Parent Category: Business Legalities
Created on Sunday, 04 November 2012 14:54
Last Updated on Sunday, 17 February 2013 17:41

Managing Directors in Social Security

Due to dwindling trust in the statutory scheme of social security, it might be a good idea for a CEOCEO = Chief Executive Officer (Geschäftsführer = managing director [for companies]) to go “private” and be self-responsible for the full social security package. If you are not a major shareholding director then you will often hear conflicting information on your status.

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What does your entry remark relate to? Why can I choose between the schemes?

All employed persons are subject to the statutory social security system (§7 I SGBSozialgesetzbuch [I – XII] (Social Code Book [I – XII) This code is subdivided into ten books. The books are referred to by Roman numerals. Book I:   General Provisions Book II:   Welfare for the Workforce Book III:  Grants for Employment (employees and employers) Book IV:  General Provisions for Social Security Book V:   Statutory Healt Insurance Book VI:  Statutory Old-Age Pension Book VII:  Statutory Accident Insurance Book VIII:  Children and Yout Support Book IX:    Rehabilitation and Participation of Handicaped Book X:     Social Administrative Proceedings and Data Protection Book XI:    Social Nursing Insurance Book XII:    Welfare (for those not able to work) IV) but not self-employed persons (in terms of social security law). Employment exists if the worker is necessarily integrated in another person’s company and is subject to the employer’s management powers regarding time, place and kind of performance. Either or scenario (employment vs. self-employment) can be legally constructed.
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What is then self-employment when it comes to social security?

You have to

  • own entrepreneurial risk,
  • invest your own capital (for shareholders their participation in the company),
  • disposal of one’s working capacity,
  • possibility to determine place and time of work.
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Okay. I will decide to go as self-employed.

Well, that is not so easy. If you’re found to be employed but actually wish to be self-employed, you will need a good lawyer. The social courts have a wide discretion in determining whether or not. Case law shows a multitude of decisions in such “clarity” that they sometimes contradict another.
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Click here to find your lawyer for social security law!