Self-employed person as an economically dependent person: what does this mean in practice?

Definition of economically dependent person (Employment Relationships Act (ZDR-1), Article 213)

Economic dependence means that a person earns at least 80% of their annual income from one client, and the rest from other clients or through self-employment.

In practice, in addition to a civil contract, a business/mutual cooperation contract is often concluded between a company (doo/dd) and an economically dependent sp, which regulates the rights and obligations of both parties in more detail.

The right of an economically dependent person (according to Article 214 of the ZDR-1, an economically dependent person has limited labor law protection)

The provisions of ZDR-1 apply to it:

• prohibition of discrimination,
• minimum notice periods,
• prohibition of termination without just cause,
• comparable payment for the type, scope and quality of work (taking into account collective agreements and acts binding on the client, as well as taxes and contributions),
• liability of the client.

Claiming the status of economically dependent person

The status of economically dependent person is not automatic .

• After the end of each calendar or business year, the self-employed person must notify the contracting authority in writing and provide proof of income so that it can be assessed whether they are truly economically dependent (80%).
• If he/she does not provide notification, he/she cannot exercise the rights arising from the status, even if he/she actually meets the criteria for economic dependence.

In the event of violations, an economically dependent person can assert their rights before a labor court , similar to an employee in an employment relationship.

Difference to (disguised) employment relationship

Article 4 of the ZDR-1 stipulates that an employment relationship is one in which the employee voluntarily participates in the employer's organized work process and, for payment, personally and continuously performs work according to the instructions and under the supervision of the employer.

Essential elements of an employment relationship:

• voluntary inclusion in the employer's organized process,
• payment for work,
• personal performance of work,
• continuous work performance,
• work according to the instructions and under the supervision of the employer.

Additional typical indicators that it is actually an employment relationship (and not a "cooperation" with a company):

• sp and the client are registered for the same activity ,
• the work is performed on the client's premises without a rental agreement,
• the work takes place during the same working hours as employees ,
• the client's equipment is used,
• The work is carried out according to the instructions and under the direct supervision of the responsible person .

If these elements exist, the work may not be performed on the basis of civil law contracts, but the client must employ the worker and conclude an employment contract.

Disguised employment and fines

If the inspection determines that the work is formally performed as a private limited company, student work or other civil contract, but in substance it is an employment relationship, it is a disguised employment relationship. This is one of the most common violations of labor law and is punishable by very high fines - in practice, the range is stated to be up to EUR 20,000, with the lower limit being around EUR 3,000.

Author: Danijela Uran, RRA Koroška doo – SPOT Consulting Koroška