Ask a lawyer on the topic of Labor law

Termination of contract for freelance worker

April 20, 2011 | 35,00 EUR | answered by Jan Wilking

Dear Lawyer,

I am sending you my case, which I have now submitted to the field of labor law, but may also fall under contract law:
I work as a self-employed business owner in Clinical Research as a Consultant.
I have had a freelance employee contract with a company since 2006, which I fulfill myself and which was initially valid until 31.12.2006 and then annually extended in December of each year for another year until 31.12. of the following year. This extension was documented in writing in a contract amendment signed by both parties, in which only the duration of the contract was adjusted again with a deadline until 31.12. of the following year. Nothing else was changed.
In this employment relationship, I always submit a summary invoice at the end of the month, based on the hours worked in the month, the amount of which fluctuates depending on the services provided.

At the moment, there is a fixed-term freelance employee contract in place until 31.12.2011 as an amendment to the Jan 2006 contract.

Furthermore, the original contract from 2006 stated that both parties have the right to terminate with a notice period of 4 weeks at the end of the month.

Now, the following has happened: I was verbally informed that my contract is to be terminated as of 31.05.2011, as the company wants to utilize internal resources better and no longer needs me and my services. I do not accept this termination.

After researching, I have found that my freelance employee contract is considered a service contract and is therefore governed by the German Civil Code. Section 620 states that the service relationship ends when it was entered into. And: "if the duration of the service relationship is neither determined nor can be inferred from the nature or purpose of the services, each party may terminate the service relationship in accordance with §§621+622 of the German Civil Code."

My questions are as follows:
1. Which law applies here? Do the signed contract terms override the basics of the service contract under the German Civil Code? Does the German Civil Code bind in cases of fixed-term service contracts where early termination is not allowed, as long as the duration is specified in the contract, or does the additional clause signed by both parties in the contract, stating a mutual notice period of 4 weeks at the end of the month, apply? Would the inclusion of the notice period in the fixed-term service contract potentially have been improper back in 2006?
2. Can I "reject" the termination with this reference and insist on the fulfillment of the service relationship until the specified date of 31.12.11, also considering that I had planned my services for this client until then and now need to rearrange?
3. Is it advisable to insist on the fulfillment of the service relationship and consider whether to proceed and seek a settlement through legal means for the loss of the unfulfilled 7 months of service time

Jan Wilking

Dear advice seeker,

I am happy to answer your inquiry taking into consideration the facts you have described and your input as follows:

Freelancers are usually in an employment relationship, so the contract is likely to be classified as a service contract. Such an employment relationship generally ends at the expiration of the time for which it was entered into, § 620 paragraph 1 BGB. In your case, this would be December 31, 2011. An ordinary termination according to § 621 BGB is excluded for fixed-term service contracts, so there is no legal possibility of termination.

However, the parties to the contract can agree on the permissibility of ordinary termination. This is likely to be the case here. Since the contract amendments only changed the duration of the contract, it can be assumed that the other agreements made in the original contract should still apply. Since an ordinary termination right was agreed upon in this contract, the company has the possibility to terminate you by observing the notice period. Since § 623 BGB only provides for written termination in employment relationships, termination can also be made orally if nothing different was agreed upon in the contract.

Therefore, based on your description, unfortunately, a termination effective by May 31, 2011, so you cannot insist on contract fulfillment until December 31, 2011.

Something else would only apply if you were classified as an employee due to the contract content and the actual structure of the employment relationship, especially if there is circumvention involved. This could particularly be the case if you cannot freely determine the time, place, and duration of the service. Continuous fixed-term contracts may be void for an employee and the protection against dismissal law may apply. Whether you are classified as a freelancer, an employee, or a quasi-employee cannot be conclusively determined within the scope of this online legal advice. Therefore, it may be advisable to commission a colleague specializing in labor law locally to review this with access to the documents.

I hope to have provided you with some helpful initial guidance. If you have any uncertainties, please use the free follow-up function.

Please note that within the scope of an initial consultation without knowledge of all circumstances, I cannot provide a definitive advice. If you wish for a conclusive assessment of the situation, I recommend contacting a lawyer and discussing the situation with them while having access to all documents.

Kind regards