Social insurance obligation for freelance teachers only from 2027

With its so-called “Herrenberg decision” in 2022, the German Federal Social Court (BSG) caused considerable unrest among universities, vocational training institutions, adult education centers, music schools and other educational institutions. In this decision (decision of June 28, 2022, B 12 R3/20 R), which concerned a freelance music schoolteacher in Herrenberg (Baden-Württemberg), the Federal Social Court saw a case of bogus self-employment. In the BGS’s opinion, the teacher was not self-employed, but employed by the municipal music school and therefore subject to social security contributions.

Educational institutions face additional payments and criminal prosecution

Following this decision by the BSG, the German Federal Pension Insurance (DRV) changed its generally applicable assessment standards for determining the employment status of teachers with effect from July 1, 2023. As a result, educational institutions which had previously based their services on apparently self-employed teachers were confronted with the drastic consequences of an incorrect status determination: the future payment of social security contributions, but above all also a possible obligation to make additional payments as well as consequences under tax and criminal law. 

Following this decision, many educational institutions were quite afraid of negative consequences and possible economic ruin.

Politics under pressure: expert group develops proposed solutions

As thousands of institutions and teachers are affected nationwide, particularly in music and adult education institutions, politicians are under pressure to find a solution. Under the leadership of the Federal Ministry of Labor and with the participation of the German Pension Insurance Fund, professional associations, trade unions and the Standing Conference of the Ministers of Education and Cultural Affairs, a group of experts has been set up to work on a solution and recommendations for legally secure employment models.

As this takes time, the German Bundestag resolved a transitional regulation on January 30, 2025 until the end of 2026, which was approved by the Bundesrat at its meeting on February 14, 2025. Such transitional regulation, which supplements the German Social Code (SGB IV) with Art. 127 SGB IV, as amended, is hidden in the “Act to Improve Rehabilitation Law Provisions for Victims of Political Persecution in the Former GDR and to Amend Other Provisions”. It comes into force on the day after publication in the Federal Law Gazette.

One-off special regulation: social security obligation does not apply until January 1, 2027

According to this transitional solution, it is envisaged that, in the event of an examination by a social insurance provider that establishes an insurance obligation for a teacher, this insurance obligation will only apply from January 1, 2027. In other words: until December 31, 2026, no social security contributions are to be paid by the institutions, even if fee-based teachers are working in an employment relationship.

The regulation is intended to allow a temporary exemption from the otherwise mandatory subsequent payment of social security contributions. Above all, this is intended to give educational institutions sufficient time to change their organizational and business models and adapt them to the requirement of employing teaching staff subject to social security contributions. Thus, educational institutions now benefit from a special regulation that is unique in social security law.

However, please note: many freelance teachers are unlikely to meet the conditions

According to the transitional provision in Art. 127 (1) sentence 1 SGB IV, as amended, exemption from social security contributions until the end of 2026 only applies if the contracting parties unanimously assumed self-employment when the contract was concluded (Art. 127 (1) no. 1) and the concerned teacher agrees (Art. 127 (1) no. 2). 

As many freelance teachers have been working for their institutions for many years, most contracts are currently unlikely to meet this requirement. In order to be on the safe side in this respect, all educational institutions working with freelance teachers are well advised to review their existing contracts and amend them if necessary. Above all, it is also important that the teacher agrees to work on a self-employed basis.

Educational institutions should obtain (retroactive) consent

In the case of new contracts providing for self-employed teaching activities, the institutions must therefore ensure to obtain the teacher’s consent to work on a self-employed basis when the contract is concluded. Such express consent should also be obtained for existing contracts with reference to the new regulation in Art. 127 SGB IV. Companies are strongly advised not to assume that the teacher has given their tacit consent. The new regulation in Art. 127 (1) no. 1 and no. 2 SGB IV makes a clear distinction between the contracting parties’ will when the contract is concluded and the teacher’s consent. The latter should therefore be expressly given in writing. 

If the institution cannot provide evidence of the teacher's consent in accordance with Art. 127 (1) no. 2 SGB IV – for whatever reason – the provisions of Art. 127 IV, as amended, do not apply. Consequently, the insurance obligation for persons providing their teaching activities in an employment relationship will fully apply immediately and not only from January 1, 2027.

The provision in Art. 127 SGB IV, as amended, creates legal certainty (only) for a transitional period. As things stand at present, from January 1, 2027, employed fee-based teachers will be fully subject to social security contributions. The further course of the expert group’s deliberations and legislation will show whether this will continue to apply.

Engagement of freelance teachers: What to do now

Institutions working with freelance teachers should already consider how they want to work together in the future and how they want to organize themselves.

Furthermore, educational institutions should review and adapt existing contracts with freelance teachers and, above all, obtain their written consent to work on a self-employed basis at short notice.

Baker Tilly's labor law team will be happy to assist you in drafting and adapting your contracts as well as with all questions relating to labor and social security law. Please feel free to contact us.

With our labor law update, we regularly inform you about current developments in case law and legislation:

 Jetzt Newsletter abonnieren