Contract for Work or Employment: When Is an Independent Contractor Considered an Employee?

Substance Matters, Not the Title

Describing an agreement as a contract for work, independent services or employment does not bind the parties. Courts and competent authorities assess the nature of the agreement on the basis of the actual facts and the conditions under which work is performed, as labour law provisions are mandatory. Thus, even if a written agreement states that it is a contract for work, if the relationship is dependent in practice, it will be treated as such.

What Distinguishes a Contract for Work from Employment

Under a contract for work, the contractor undertakes to deliver a specific result for a fee, without being bound by the employer’s instructions on how to perform it. In employment, what matters is the provision of work, irrespective of a specific result. The crucial element is personal dependence: the employer’s right to give instructions about the manner, place and time of service provision and to exercise supervision and control.

The Indicators of Dependence Examined

Indicators that a collaboration is in practice employment include:

• Fixed working hours and a specified workplace
• A fixed fee paid periodically rather than based on the result
• The business provides the means of production (equipment, software, office)
• Integration into a hierarchically organised structure, with defined duties and an obligation to follow instructions
• Working exclusively or mainly for the same employer rather than allocating time to multiple clients
• Personal performance of the work by the same individual, without the possibility of substitution

These indicators need not all be present, nor is there a fixed hierarchy among them. The court examines the quality of the commitment rather than simply counting the indicators: whether the particular relationship warrants the protection provided by labour law.

The Nine-Month Presumption

Labour legislation provides that, even where a services or work agreement has been concluded, particularly where payment is made per unit of work, it is presumed to conceal an employment relationship if the work is performed personally, exclusively or mainly for the same employer for nine consecutive months. This is a presumption: the business can rebut it with evidence, but the burden of proof shifts to the business.

Remote Working Does Not Change the Rules

The absence of physical presence on business premises does not negate dependence. Control and subordination to instructions can be exercised just as effectively through digital means, and ties of dependence can exist even when work is performed from home or another location. A contractor working remotely with mandatory hours and daily instructions can be considered an employee just as much as someone working in the office.

The Consequences of Reclassification

When a relationship declared as independent is classified as employment, the business may face:

• A fine for undeclared work: according to e-EFKA, a fine is imposed for each employee found working without prior digital notification of the start of employment in ERGANI II, amounting to €10,500 per employee, regardless of age or specialisation
• Unpaid employer and employee social security contributions, with the relevant surcharges
• Employment rights that were not applied, such as leave, festive bonuses and compensation on termination of the collaboration

Important: the fine is imposed by e-EFKA inspectors without a prior invitation to provide explanations, if employment without prior digital notification is established.

An Example: Two Graphic Designer Collaborations

8 Review Questions for Every Collaboration

1. Who determines the working hours and workplace?
2. Who provides the equipment and tools?
3. Is the fee paid for a specific result or as a fixed monthly amount?
4. Does the contractor also work for other clients?
5. Do they receive instructions on how to perform the work or only specifications for the result?
6. Can they be replaced by another person or subcontract part of the work?
7. Are they integrated into the company’s organisational structure (company email, attendance at internal meetings, mandatory participation)?
8. How long has the collaboration continued without interruption, and how much of their income comes from you?

The more answers indicate control and integration, the higher the risk of reclassification.

How to Organise a Collaboration Correctly

1. If the relationship functions as employment in practice, declare the contractor as an employee in ERGANI II before work begins and include them in payroll.
2. If the collaboration is genuinely independent, define the scope, result, fee and deliverables in a written agreement, without working-hours terms or subordination to instructions.
3. Do not provide company equipment or a role in the company hierarchy unless this is consistent with the independent nature of the collaboration.
4. Periodically assess long-term collaborations, especially those approaching or exceeding nine months.
5. Ask your accountant to review the arrangement before starting a new long-term collaboration.

The Most Common Mistakes

1. Assuming that signing a “contract for work” is enough to make the relationship independent
2. A long-term collaboration with a fixed monthly fee, hours and instructions, invoiced as services
3. Providing company equipment, email and a position in the organisational chart to an external contractor
4. Ignoring the nine-month presumption
5. Assuming that remote working is enough to rule out dependence
6. Employing a worker without prior digital notification in ERGANI II