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06.05.2025 | KPMG Law Insights

Social insurance obligation for teachers – transitional rule creates time

Educational institutions do not currently have to pay social security contributions for teachers, even in the case of bogus self-employment, if both parties originally assumed that the teacher was self-employed and the teacher agreed to this. This transitional rule in Section 127 SGB IV has now been extended until December 31, 2027. The decision takes pressure off the ongoing audit procedures and gives public institutions and private academies, providers of further education measures and other educational institutions more time to reorganize their models for the employment of teachers.

In the long term, however, the employment of honorary staff remains challenging. The Herrenberg ruling sets strict standards and the German Pension Insurance is reviewing the social security status of teachers and lecturers more and more frequently.

Anyone employing freelancers should use the additional time to review contracts and processes and set the course for the time after 2027, especially as Deutsche Rentenversicherung will soon be able to check much larger volumes of data and many more processes with its own AI (“KIRA”).

What applies now

Honorary staff remain exempt from social security contributions for the time being, despite a different status determination, if

  • both parties assumed self-employment when the contract was concluded
  • and the teacher expressly agrees.

This protective effect was previously valid until the end of 2026, but the latest extension postpones the deadline to December 31, 2027, giving training providers time to review existing structures and develop viable models for the time after that.

The Herrenberg ruling has confirmed the social security obligation of teachers

The German Pension Insurance generally examines fee-based activities intensively. It is increasingly relying on the ruling of the Federal Social Court of June 28, 2022, which became known as the Herrenberg ruling . In this case, a music teacher worked for a music school on a fee basis. She taught in fixed rooms at set times and was involved in internal processes. The court deemed the activity to be dependent employment despite the fee-based contract.

The ruling clearly shows which factors speak in favor of compulsory social insurance: personal work performance, fixed lesson times, specified rooms, little personal creative power, participation in school events. Those who work in this way are generally not considered self-employed.

This had tangible consequences for training providers: They had to reckon with demands for additional contributions, often in considerable amounts.

 

The transitional arrangement gives educational institutions more time

Following the ruling, the leading social insurance organizations discussed new standards for status assessment in May 2023. The guidelines were clarified, but uncertainty remained. Many institutions still do not know which criteria prevail in individual cases and how they should structure their models in a legally compliant manner.

The introduction of the transitional regulation on March 1, 2025 was intended to cushion this uncertainty. It gave educational institutions time without the immediate threat of additional demands. The extension that has now been agreed confirms that politicians still see the problem as unresolved.

 

How educational institutions benefit from the extension

The extended deadline gives many providers a real advantage:

  • Planning security for fee models until the end of 2027
  • Protection against additional contribution claims if the formal requirements are met
  • Time for structural adjustments, such as new contract models or a realignment of personnel deployment

Providers should use this time. Despite corresponding demands from interest groups, the legislator is making no attempt to create a legal regulation that would allow a clear decision to be made on the existence of self-employment. On the contrary: in discussions with the German Pension Insurance (Deutsche Rentenversicherung), one repeatedly encounters references to the fact that teachers are already subject to compulsory insurance in the statutory pension insurance scheme in accordance with Section 2 No. 1 SGB VI.

 

Vagueness of the transitional regulation

The wording of § 127 SGB IV leaves questions unanswered. For example, it remains unclear:

  • To whom does the teacher give consent?
  • What exactly does this consent cover?

The legal materials provide guidance:

  • If a status determination procedure has been carried out, the approval is directed at the insurance provider.
  • Without a procedure, a declaration to the educational institution is sufficient.

It also remains unclear whether the consent must also cover the actual job description or only the contractual situation. There is no clear legal definition.

 

What educational institutions should do now

The extension of the deadline is an invitation to leave everything as it is. That would be risky. Insurance providers will check carefully after the end of the transition period whether the requirements were met. Above all, however, they will check whether the requirements that will apply to the activities of self-employed teachers from January 1, 2028 have been met. Adapted structures must therefore be implemented and effective by this time.

Recommended now:

  • Analyze business model
    Some activities are easier to organize as self-employed than others.
  • Check contractual relationships
    Are tasks, processes and organizational structures clearly defined? Are they consistent with self-employment according to the current legal situation? Are they documented and adequately monitored?
  • Keeping an eye on legal developments
    Further clarifications are still possible. The coalition agreement announces reforms to the status determination procedure, such as faster decisions and more transparency.

The transition rule provides protection, but it is no substitute for a clean structure. The clearer the contractual and deployment models are today, the smoother the transition to the period from 2028 will be.

 

 

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