A study on the distinction between contracts for work and employment contracts

Recently, in Germany, subcontracting of work through freelancers has been occurring frequently. At this time, whether the performance of work can be independently evaluated as a result called ‘completion of work’ has been debated for a long time. In this regard, the German Federal Labor Court evaluated that if the form of ‘completed work’ as a result can be conceptualized specifically and quantitatively, it is qualified as the subject of a subcontracting contract.<br/> At this time, it goes without saying that this ‘completed work’ as a result must have been determined in advance at the time of concluding the subcontracting contract. Originally, as the purpose of the subcontracting contract, work must be conceptualized very specifically and in detail in terms of individual matters related to ‘scope of performance, shape and quality of goods, time and place’. The remaining issue is how specifically and precisely the pre-determination as the purpose of the subcontracting contract should be determined. This is because if the work as the purpose of the subcontracting contract is determined in excessive detail, it can easily be evaluated as an employment contract rather than a subcontracting contract. Therefore, in order to be the purpose of a subcontract, the ‘completion of work’ needs to be specifically and quantitatively determined in advance as the purpose of the payment, but if the work is subdivided into extremely detailed tasks as the subject of the subcontract, the evaluation may be different. In the case where very small tasks performed over a 〈very short period of time〉 are divided into detail and made into 〈one unit〉 as the subject of the subcontract, the compensation for the performance of the task can be viewed as compensation for the provision of labor itself rather than compensation for the result. So-called atomized tasks cannot be the purpose of a subcontract from the beginning. On the other hand, there are cases where the subcontract includes an obligation to report partial results or all matters related to the performance of the work to the subcontractor. In principle, the method, time, and location of the work should be guaranteed wide discretion to the subcontractor. However, even so, if the post-facto reporting obligation is limited to providing simple information, it is permitted in a subcontract relationship. The way to judge this is whether a new task is derived from the reporting obligation. If a new task is imposed based on the contents of the report after the report is made, it should be considered an obligation under the employment contract. In conclusion, it is difficult to judge whether a so-called employment contract relationship in which the purpose of the contract is to perform work is a disguised contract. In my judgment, when interpreting the judgment indicators for disguised contracting, it is necessary to keep in mind the duality of the indicators and reflect the uniqueness of the industrial sector and work method to increase the specific validity of the judicial judgment.