The modern German enterprise often does not only engage employees but also contractors (workers who are paid a fee for service on a consultancy or individual independent contractor basis) to perform business functions.
Incorrectly classifying workers as contractors when they are truly employees can lead to serious tax and legal implications for employers. Should a tax audit reveal that an alleged contractor is actually an employee, a company could be liable for social security contributions and can face severe penalties.
Most companies are not even aware of the risks. They focus on their core competencies and hire external contractors for other services, assuming that they are acting within the law. Often the fine line between employment and self-employment is crossed unintentionally and even if both parties think they are acting correctly, it could prove very expensive.
ContractorCheck is an effective and quick tool designed to assist organisations in navigating what can be a structural headache. It is an innovative online system that enables businesses to accurately characterise their people to manage risk, so that contracts truly reflect a contractor or employee status.