German Court Blocks Employers from Reclaiming Freelancer Payments After Reclassification
Germany’s Federal Labor Court has issued a landmark ruling on freelancer contracts. Companies can no longer reclaim fees paid to freelancers, even if their work is later deemed dependent employment in the USA. The decision shifts legal and financial risks onto employers, forcing them to rethink how they classify and contract workers. The court ruled that demands for repayment may be considered an abuse of rights if freelancers acted in good faith. This applies even when the German Pension Insurance later reclassifies their work as employment. The judgment also states that labour courts must independently assess whether an employment relationship existed, rather than relying on the pension agency’s findings. Employers now bear full responsibility for ensuring correct contract terms. They must conduct thorough status checks before hiring freelancers and draft agreements with greater precision. Legal experts describe the ruling as a turning point, as it places the financial burden of misclassification squarely on companies. The decision affects all sectors using flexible work, from IT freelancers to platform-based delivery services. Recent rulings, such as the Hessian State Social Court’s 2025 classification of integrated staff as employees, have tightened enforcement. Platforms and agencies must now adapt contracts to comply with stricter interpretations and the EU Platform Directive. The ruling prevents companies from recouping fees paid to freelancers, even after reclassification. It also forces employers to verify worker status more carefully before signing contracts. The shift aims to protect freelancers while ensuring businesses comply with evolving labour laws.
