Germany’s Proposed “New Self-Employment” – Key Takeaways for HR, Clients and Freelancers 

Germany is preparing significant reforms to the way self-employment is assessed under social security law, with a new optional “self-employment” status proposed from 1 January 2028. 

Our German member firm, Keller Menz, explores what these changes could mean for HR teams, businesses and freelancers navigating contractor relationships in Germany. 

The key points covered in this article are: 

• Why the current German system creates legal uncertainty around freelancer status  

• The proposed “new self-employment” regime and who may qualify  

• Mandatory pension insurance under the new framework  

• Practical opportunities and risks for businesses using freelancers  

• What employers and contractors should prepare for ahead of the proposed 2028 implementation date 

1. Status quo: Why is reform needed? 

In German social security law, the decisive question is whether someone is in dependent employment or genuinely self-employed, as this determines insurance obligations in all branches of social security. Today, this is assessed by the Deutsche Rentenversicherung (DRV) and courts through an overall balancing (“Gesamtwürdigung”) of all circumstances, particularly instruction-bound work and integration into the client’s organisation versus entrepreneurial risk and freedom.  

This case‑by‑case approach has led to significant legal uncertainty, especially in remote work, project‑based knowledge work and the use of high‑skilled freelancers. For clients, a later reclassification as employment (Scheinselbständigkeit) may trigger several years of back payments plus surcharges as well as criminal law risks. The Federal Government explicitly acknowledges these problems and aims to improve legal and planning certainty. 

2. The draft: “New self-employment” as an optional status 

A draft bill dated 26 March 2026 proposes an “Act to Facilitate the Determination of Self-Employment Status under Social Security Law”. Core element is a new, optional form of self-employment in social security law (“new self-employment”), in addition to the existing rules. Under a new § 7(5) SGB IV‑E, an activity shall be deemed self-employed (for social security) if the following conditions are cumulatively met: 

• Joint intent: At contract conclusion, both parties agree on self-employment (e.g. “freelance contract”) 

• Entrepreneurial conduct: 

• Contractor has a contractual right to appoint a substitute (no strictly personal duty) 

• At least two of four criteria are fulfilled: loss risk/profit chance; not essentially working for one client (max. 5/6 of self-employed income from that client); typical business expenses; active market presence (website, ads, etc.) 

• No recent employment: Client (or group company) has not reported an employment termination for this person in the previous six months (anti‑conversion rule) 

• Notification duty: Client must notify commencement to the social security system within six weeks (strict cut‑off) 

• Certain sectors with a high risk of illicit work (e.g. construction, gastronomy, cleaning) are excluded; there, “new self-employment” cannot be used 

If these conditions are met, the usual indicators of employment (instruction, integration, overall assessment) are disregarded for status purposes; otherwise, the traditional system under § 7(1) SGB IV continues to apply.  

3. The “price”: Mandatory pension insurance 

The political trade‑off is clear: more status certainty in exchange for mandatory pension insurance for those using the new regime. 

• Persons working under “new self-employment” become compulsorily insured in the statutory pension scheme (§ 2 sentence 3 SGB VI‑E) 

• This obligation generally takes precedence over other types of self-employed pension insurance, except for coverage under the Artists’ Social Insurance Act  

• No automatic mandatory insurance in health, long‑term care or unemployment insurance follows from this; those branches remain separate 

For contribution purposes, 90% of the contractual remuneration is used as the base, with 10% treated as a lump‑sum deduction for typical business expenses. The client assumes the technical role of “employer” for reporting and payment, while the self-employed person bears the contributions economically. This is intended to enable a largely digital, low‑bureaucracy implementation using existing payroll structures. 

4. What remains unchanged? 

• The classic status test under § 7(1) SGB IV (overall assessment by DRV and courts) remains fully in place for all other constellations 

• Existing categories of mandatory pension insurance for certain self-employed under § 2 SGB VI (e.g. teachers, solo self-employed with one client) continue unchanged and exist alongside the new regime 

• The status determination procedure (§ 7a SGB IV) is maintained but extended so that DRV Bund will also decide, on request, whether “new self-employment” exists 

5. Critical points in practice 

For HR, clients and freelancers, the draft offers opportunities and raises concerns: 

Advantages 

• A more predictable route to classify certain freelance set‑ups as self-employment and reduce Scheinselbständigkeit risk 

• Stronger focus on entrepreneurial features, better reflecting modern project work (IT, consulting, creative). Use of existing payroll/reporting structures may limit additional bureaucracy 

Concerns 

• Emergence of two classes of self-employed: those in the new, insured yet safer regime and those remaining in the old, uncertain framework 

• Perceived “legal certainty against payment”: mandatory pension contributions may burden especially low‑margin solo freelancers 

• Six‑week notification, contract adaptation and system changes add complexity, particularly in environments with many freelancers 

• The fundamental case‑law‑based system is not abolished; many constellations will still be assessed under the uncertain overall test 

6. Timeline and next steps 

The text is currently only a draft bill of the Federal Government (status 26 March 2026). The typical next steps are: 

• Associations’ and stakeholders’ consultation 

• Inter‑ministerial coordination and Cabinet decision 

• Parliamentary proceedings in Bundestag and Bundesrat 

The draft currently provides for entry into force on 1 January 2028 for the “new self-employment” rules, allowing time for software and process adjustments at employers and social insurers. 

Until then, HR departments, clients and self-employed professionals should: 

• map current freelance models and status risks, 

• review whether their business set‑ups could or should meet the criteria for “new self-employment”, and 

• prepare to adapt contracts and internal processes, while closely following the legislative process and potential amendments 

For further information or to discuss any of the issues raised, please contact Stefanie Andrelang (stefanie.andrelang@keller-menz.de) on +49 (0) 89 2422300. 

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