Employee

Definition and legal classification of the term “Employee”

The term “Employee” (in German: Arbeitnehmer) designates, in an employment law context, a natural person who, by virtue of a private law contract, is obliged to perform work for an employer in return for remuneration while acting in a personally dependent manner. In contrast to self-employed individuals or freelance workers, an employee is subject to the employer’s right to issue directives regarding time, place, content, and execution of the work. The status as an employee is legally significant both nationally and internationally and is subject to numerous regulations at statutory, collective agreement, and individual contract levels.

Distinction from other forms of employment

Employees, Employee-like persons, and Self-employed individuals

The precise distinction between employees and other forms of employment is central for the application of employment law protection provisions. While employees in the classic sense are subject to an employer’s right to issue instructions and are integrated into the employer’s organization, this is not the case for self-employed persons. Employee-like persons are economically, but not personally, dependent.

Essential characteristics of an employee

• Personal dependency: The employee performs their work subject to instructions regarding time, place, and type of activity.
• Integration: The labor is integrated into an organization determined by another party.
• Remuneration: There is a right to payment for the work performed.
• Right to issue instructions: The employer is entitled to give specific work instructions.
• No entrepreneurial activity: Employees generally bear no entrepreneurial risk.

Statutory foundations

National labor law (Germany)

Under German law, the legal definition of employee is established in § 611a BGB. The Civil Code as well as special statutes (e.g., the Dismissal Protection Act) refer to this status. Special rights and duties apply to employees, such as continued remuneration, dismissal protection, leave, maternity protection, temporary employment laws, and company co-determination. Similar regulations exist in German social security law, tax law, and other legal areas.

European law

The European Union specifies and harmonizes the concept of employee through directives (e.g., Working Time Directive) and regulations. Decisive is, among others, the jurisprudence of the European Court of Justice (ECJ), which has developed a uniform understanding of the employee for Union law through various judgments. In cases of doubt, a comprehensive assessment must always be made, irrespective of national designations.

Rights and obligations of the employee

Rights

Employees have extensive rights, in particular:

• Entitlement to remuneration in accordance with the employment contract and the Minimum Wage Act
• Entitlement to leave according to the Federal Leave Act or relevant collective agreements
• Protection against dismissal under the provisions of the Dismissal Protection Act and other labor law regulations
• Participation in workplace co-determination (works council, staff council)
• Continued payment of remuneration in the event of illness, during maternity protection and parental leave
• Protection in mass redundancies and in business transfers

Obligations

Key obligations of the employee include, in particular:

• Performance of contractually owed work
• Compliance with the employer’s right to issue instructions
• Protection of trade secrets and confidentiality
• Non-competition obligation during the ongoing employment relationship
• Notification obligations (e.g., in case of incapacity for work)

Social security classification

Employees are generally compulsorily insured in statutory social security (health, pension, long-term care, and unemployment insurance). The employer is responsible for paying the contributions. A clear definition of employee is essential in social security law, as contribution obligations and benefit entitlements depend on it.

Tax law aspects

For employees, income is considered as employment income (§ 19 EStG). The employer remits wage tax as well as, where applicable, solidarity surcharge and church tax directly to the tax office. The tax treatment therefore fundamentally differs from self-employment.

Establishment and termination of employee status

Establishment of the employment relationship

Employee status arises upon conclusion of an employment contract, for which no special form is required. The essential contents (job, remuneration, working hours) are stipulated individually by contract. Collective agreements and works agreements may be additionally applicable.

Termination of the employment relationship

The employment relationship of an employee ends by dismissal, termination agreement, expiry of a fixed term (for fixed-term contracts), or death of the employee. In case of dismissal, special formal requirements and statutory protection mechanisms apply, such as the written form (§ 623 BGB) and any required consents (e.g., for severely disabled persons).

Special employee groups and protection regulations

Minor employees

Special protection regulations regarding working hours, protection against dangers, and breaks apply for minor employees (Youth Employment Protection Act).

Pregnant women, parents, and severely disabled persons

Employees with special protection needs (Maternity Protection Act, Federal Parental Allowance and Parental Leave Act, SGB IX for severely disabled persons) benefit from additional safeguards, e.g., regarding dismissal and working conditions.

International aspects

In an international context, determining employee status is important for the applicability of the respective national labor law as well as for social security provisions (posting, international employee leasing). Various international agreements as well as European Union law are relevant here.

Summary

The term “Employee” is a central concept in labor law and the framework of social security law. Its precise definition, as well as the resulting rights and obligations, are essential for the correct application of numerous protection provisions and the legal classification of employment relationships. The comprehensive legal consideration extends across national and international levels and has far-reaching practical significance for employers and employees alike.

Frequently Asked Questions

What legal provisions must be observed when hiring an employee?

When hiring an employee, numerous legal provisions must be considered. First, the General Equal Treatment Act (AGG) must be observed, which prohibits discrimination on grounds of gender, age, religion, disability, sexual identity, ethnic origin, or worldview. A written employment contract is not strictly required, but according to the Act on Notification of Conditions Governing an Employment Relationship (NachwG), the employer is obliged to record the essential contractual terms in writing no later than one month after the start of the employment relationship. Social security obligations, such as registration with the social insurance (health, long-term care, pension, and unemployment insurance), must be strictly complied with. In addition, registration with the tax office responsible for wage tax liability is necessary. Depending on the sector, collective agreement, employers’ liability insurance association and, where applicable, special protection regulations, such as the Youth Employment Protection Act (JArbSchG) or the Maternity Protection Act (MuSchG), may apply. Minimum wage requirements according to the Minimum Wage Act (MiLoG) must also be fulfilled.

What duties does the employer have towards the employee during the employment relationship?

The employer has a multitude of duties towards the employee. The most important include the duty of care and the obligation to pay the agreed remuneration. The duty of care includes, among other things, protecting the health of the employee at the workplace, for which the Occupational Health and Safety Act (ArbSchG) sets out extensive regulations on workplace safety and risk assessment. The obligation to pay wages is regulated in the Civil Code (BGB) and, where applicable, in collective agreements. Furthermore, there is an obligation to grant paid annual leave, with the Federal Leave Act (BUrlG) setting out the minimum entitlements. The employer must also inform the employee of all essential working conditions and comply with working time regulations according to the Working Time Act (ArbZG). Confidentiality and data protection obligations in accordance with the General Data Protection Regulation (GDPR) must also be observed.

What statutory dismissal protection regulations apply for employees?

Dismissal protection for employees in Germany is mainly regulated by the Dismissal Protection Act (KSchG), provided the company has more than ten employees and the employment relationship has lasted for more than six months. Ordinary dismissal requires a personal, behavioral, or operational reason. Notice periods are governed by § 622 BGB and may be extended through collective agreements. Special groups, such as pregnant women, severely disabled persons, and works council members, enjoy extended dismissal protection. The employer is obliged to inform the employment agency in the event of mass redundancies. Dismissal without notice is only permitted for good cause and in compliance with the two-week period specified in § 626 (2) BGB. In the event of dismissal, the employee can file a claim with the labor court within three weeks.

How are overtime and additional work regulated by law?

The imposition and remuneration of overtime and additional work is regulated both by the employment contract and by law. Overtime must generally be ordered explicitly or implicitly by the employer; a general authorization to work unpaid overtime is legally inadmissible. Under the Working Time Act (ArbZG), the daily working time may generally not exceed eight hours, but an extension to up to ten hours is possible provided that on average eight hours per day are not exceeded within the reference period. Remuneration for overtime is regulated in the Civil Code (§ 612); if no explicit agreement exists and overtime is usually only performed for additional pay, there is an entitlement to payment. Different arrangements may be agreed in collective agreements. For executives or certain professional groups, special regulations may apply.

What co-determination rights does the works council have regarding employees?

The Works Constitution Act (BetrVG) regulates the co-determination rights of the works council. In personnel matters such as hiring, transfers, job classification, and dismissal, the works council has either co-determination or at least a right to be heard. For hiring and dismissal, the works council may, under certain conditions, refuse to give its consent. In social matters such as working time arrangements, holiday principles, introduction of technical equipment for performance and conduct monitoring, the works council has mandatory co-determination rights (§ 87 BetrVG). The works council must also be involved in the introduction and design of health and safety measures. The rights of the works council ensure that the interests of employees are comprehensively taken into account in the company.

Under what conditions are fixed-term employment contracts legally permitted?

Fixed-term employment contracts are permitted pursuant to the Part-Time and Fixed-Term Employment Act (TzBfG) if there is an objective reason. Typical reasons include a temporary need for staff, cover for parental leave, projects, or operational probation. Without objective reason, a contract can be limited to two years, with a maximum of three extensions within this period. Special exceptions apply to new hires in newly founded companies. If these temporal or substantive requirements are exceeded, the contract is considered unlimited. Successive fixed-term contracts without objective reason are not permitted. Written form is mandatory; non-compliance leads to the invalidity of the fixed term, resulting in permanent employment.

What statutory regulations apply for data protection in the workplace?

The protection of employees’ personal data is governed in particular by the General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG). Employers may collect, process, and use personal data only to the extent necessary for the establishment, implementation, or termination of the employment relationship (§ 26 BDSG). The storage, transmission, and evaluation of data requires a clear legal basis or the employee’s consent. Special data protection provisions must be observed, for example in company data collection, email monitoring, or video surveillance in the workplace. Employees have the right to access stored data and to have unlawfully stored information deleted. Breaches of data protection regulations can result in significant fines.