Higher Social Court (LSG) - Hesse, Decision as of 3/26/2009
File number L 1 KR 3331/08 B

Key issues

Proceedings before the Social Court regarding the obligation of prostitutes to make social security contributions; extensive comments on classifying prostitution as a dependent employment relationship (i.e. regular employer/employee) or as self-employment.

Summary

The main issue dealt with in this decision was the obligation to make social security contributions in the case of prostitutes. In dependent employment relationships, there is always an obligation to make contributions to the government social security plan. Such contributions are paid in part by the employer. In connection with this issue, the court looked at the German Prostitution Act (ProstG) and decided that prostitution can be carried out on either a dependent employment basis or on a self-employed basis.

Section 7 of the fourth Social Security Code (SGB IV) contains general reference points for determining whether a dependent employment relationship exists. The essential elements of such a relationship are basically the right of the employer to issue instructions and the integration of the employee in her or his business operations. The court was of the opinion that these principles were modified by the Act Regulating the Legal Relationships of Prostitutes (ProstG). Section 3 of the ProstG states that the restrictions imposed on an employer’s right to issue instructions to a prostitute (i.e. employee) who is working for such employer in a dependent employment relationship does not negate the presumption of a dependent employment relationship within the meaning of social security law. However, the court held that this does not mean that there is a basic presumption that a dependent employment relationship exists. Instead, a review must be made to determine which elements predominate in light of the working arrangement as a whole. Such a review is not to be based on the sexual act itself; it must be based on the prostitute’s making of her/himself available for such acts for a certain period of time in exchange for an agreed upon remuneration and on the agreements that were entered into for this. The court was of the opinion that the main requirements of a dependent employment relationship were satisfied by a wage agreement that also provided for payment for the “stand by” time and for a certain degree of integration in the business operations. Such remuneration did not, in the opinion of the court, have to be the payment of a wage but could also take the form of such benefits as free room and board.

Decision in full text:

LSG_Hessen_26_03_2009 (PDF, 164 KB, not barrier-free, in German)

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