Customer wants me to not disclose my company to the final customer where I should work on site

Question

This question is close to Must the customer mention the existence of my own company to the final customer? but with a big difference: The customer wants me to work onsite at the final customer.

Long story: I was approached by Headhunter A from the UK, she wanted me to give her my CV as a .doc-file. Then she forwarded me to Headhunter B, which she said was a colleague but in reality is a different company (in germany). Now B wants me to introduce myself to the final client (Company C, also germany), but in the name of a different company: IT Consultant D (germany). If I would go through with that contract, I would work fulltime as a freelancer for Company C for almost a year, at Company C in the name of Consultant D and will have a contract with Headhunter A.

I am pretty sure that I won't take this offer, because of Scheinselbständigkeit (german equivalent of Misclassification of employees as independent contractors) and the obvious reason: That this is not normal.

I am from germany but in all my projects until now, I worked for companies outside of germany.

So my question: Is this normal, am I overreacting? Is this maybe normal for german companies? Headhunter A wanted my CV as .doc, she promised not to change anything, but I am pretty sure, she redacted my contact-info. Or is there another reason why someone would prefer .doc over .pdf?

Thanks for the responses so far.

I ask Headhunter B for clarification and the constellation would be like that:

Freelancer F will have a contract with Headhunter B (from germany). This contract will state that F has to tell Customer C that F works for D (IT consultant that work for C). F has to work for 12 month full time at the office of C and will do every work D gives him.

B also told F that D has a lot of freelancers working in such a constellation.

Answer 1

In a Danish context, what you describe happens now and then; probably most often when foreign recruiters are involved.

I have had one contract that explicitly stated that I had to present myself as an employee of the recruiter/consultancy and NOT as a freelancer.

Having said that, when an employee of the end client asked whether I was a freelancer, I told the truth - which in principle actually violated the terms of the contract.

If I ever see such a clause again, I would actually want it removed. At the very least, I would ask the consultancy whether they really want we to lie when asked. If they do, I would consider it a 'red flag' and perhaps not sign the contract.

Most Danish clients do not seem to care whether their 'external hires' are employees elsewhere or freelancers; to them it makes no difference - except when they drag their feet extending a contract and discover that the 'externals' who are more pushy, are the freelancers.

Answer 2

I'm not a lawyer - I have 20+ years contracting across EU with my UK Limited Company, more than a couple of dozen contracts. I like to think I know something to help here.

The heading of your contract references who the parties are - you (service provider), the recruiting/pimp/agency/consultancy in the middle, and possibly the end client (where you work onsite).

If the reference to the end-client is not the name of the company you will work onsite with, then you have no commercial relationship nor any legal responsibility to them. Your work on any customers site is legally described/contained within the parties named on the contract.

There are several reasons why your pimp might ask you not to mention that you are an external consultant.

• Sometimes the end client is specifically not named because it could change. Sometimes this is the real reason, sometimes its to avoid the implication that you have employee/employer relationship. Many tests have to be passed to prove employee/employer relationship and one such test is a fixed place of work (desk, benefits, non-project related work are all factors).
• Some clients are concerned about continuation and knowing that they are paying someone to pay someone who pays someone else to find you means their perceived risks are higher.
• Sometimes pimps plan on growing their business brand, and if you were to emphasize you were not direct with them, it does not help their efforts (it probably does not go against it either).
• Another reason (of greater importance in Germany) is hireing consultants requires a special license that not every consultancy will have. I've found big name IT recruiting companies being forced to go under a German competitors books purely because the UK recruiter did not have this license and did not want to undertake risk to infringing the laws. I once had two guys work under my UK company onsite in Germany and an employment lawyer (husband of a friend of mine) told me I was breaking the law but duration of my contract (less than a year) and with only two working for me, it would be unlikely I get caught.

I've had a combination of contracts over the years that made various stipulations - most though not all clients knew I was a sub-contractor.

Answer 3

I am pretty sure that this would be a case of Scheinselbständigkeit.

In the end I refused the offer and told B to never contact me again.

I did some research, I am not a lawyer, so please be critical and tell me if I misinterpreted things:

What would happened if Freelancer F had worked in this constellation for 12 month and got caught in the end:

F has to pay the VAT of his business expenses for the time of the project and and the employee part of the social insurance (pension, health, nursing care and unemployment insurance). Also the last three month of the employer part (in germany the tax for the social state is split between employer and employee). Also he has to pay income taxes (up to 42 %) for the whole income he cannot subtract business expenses. Headhunter B has to pay the employer part of the social taxes and the income tax for the last 12 month (up to four years).

Worst Case: Headhunter B declares bankruptcy, because he had more than on freelancer on contract when he got busted. He does not pay the last invoices and he does not pay his part of the social taxes. I am not sure of this part: German law defines the income tax as a joint liability of employee and employer, this means: If B declares bankruptcy, F has to pay the whole amount of taxes on his own + does not get the last payment.

In my opinion it is not worth the trouble, there are enough other clients.

I am thinking about forwarding the conversation to the authorities or at least to C (who seems to be unaware that his contractor is allegedly breaking the law).

Any thoughts or improvements, please feel free to comment.