The most important facts in brief

• Employer and entrepreneur duties are used synonymously in the law.
• In order to enable your employees to work in a safe and healthy manner, the employer's obligations stipulate appropriate measures.
• The payment of wages is the main duty that employers have to take care of. In addition, there is a whole range of so-called secondary obligations.
• Managing directors are liable for breaches of employer obligations - criminal consequences and fines can be the consequence.
• You must make laws that are required to be posted as well as the escape and rescue plan available to your employees for permanent inspection. The best way to do this is digitally.
• You want to know which obligations and laws affect your company in particular? Use our free Business Analyzer directly!

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Employer and entrepreneur duties - what is the difference?

While entrepreneurs do not necessarily employ people, employers do not necessarily own a company. This may seem confusing at first glance, but it quickly becomes clear with a simple example:

Seventy-year-old Herbert lives all alone in a four-room flat. To manage the household, he hires Birgit to clean for him and cook a meal now and then. Herbert does not own a business, but he is an employer. Conny, who has just started her own business as a graphic designer, lives in the same house. Even without employees, she is an entrepreneur.

For the legislator and the question of which obligations affect you, it is primarily of interest whether and how many employees you employ in your company. While the employers' liability insurance associations use the term "entrepreneur" in the Social Code (SGB), the legislator focuses on employers. As soon as the first employee is hired, there is no longer a difference between these two terms. Employer and entrepreneur duties are thus used synonymously.

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Occupational safety and health

In order to enable your employees to work in a safe and healthy manner, the employer's obligations specify the appropriate measures. The exact measures depend on individual circumstances such as the size and type of your company. Employer's liability insurance associations and accident insurance funds issue accident prevention regulations, also known as DGUV regulations. These are legitimised by the Social Code. Failure to comply can result in fines of 5,000 to 10,000 euros. In severe cases, even up to 250,000 euros(DGUV, § 209 SGB VII para. 3).

Basically, observe the following regulations on the subject of occupational health and safety:

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1. care for safety (§ 2 DGUV).

Prevent occupational accidents, occupational diseases and work-related health hazards. Ensure that your employees are not exposed to hazards while at work. You can do this with the help of modern, safe technical equipment, first aid kits, protective clothing, impeccable hygiene on site and, in particular, regular training of your workers on all safety precautions.

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2. assess and document the working conditions and provide information about them if necessary (§ 3 DGUV).

Regularly check the working conditions in your company for possible hazards. Of course, your employees should also keep their eyes open and point out hazards such as defective equipment or cables. Document these conspicuous features and inform the accident insurance institution about the occupational safety measures on request.

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3. instruct and instruct your employees with regard to health protection (§ 4 DGUV).

Your employees are also the insured persons of the accident insurance. Educate them at least once a year about health and safety.

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Communicate the safety requirements to contractors (§ 5 DGUV).

If your company contracts out work, inform them in writing about your company's security requirements.

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5. cooperate with other entrepreneurs and employers in occupational health and safety (§ 6 DGUV).

If your employees share a workplace with workers from other companies, you must work together with their employers to ensure health and safety. This is particularly relevant in the case of special hazards such as assembly work, work involving a fire hazard or on construction sites with earth-moving machinery.

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6. ensure the necessary qualifications (§ 7 DGUV).

Not all employees have the same skills or the same level of knowledge. When assigning tasks, make sure that your workers have the necessary qualifications. You are responsible for ensuring that they are competent for a task and can comply with safety measures. Illness, medication or fatigue are also considered disqualifying if they limit the ability to work.

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7. in the case of dangerous work, provide for a qualified supervisor (§ 8 DGUV).

If several people carry out dangerous work together, for example during assembly, you must provide a qualified supervisor.

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8. ensure that there is no danger from external persons (§ 9 DGUV).

Visitors enter your company during summer or Christmas parties, open days, company tours or construction site inspections. Make sure that unauthorised persons do not pose a risk to health and safety - for example, if employees are distracted while working on machines.

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9. allow your accident insurance institution to visit your company (§ 10DGUV).

It may happen that your accident insurance institution wants to inspect your company. In this case, allow them to inspect your company and hand over all requested documentation, otherwise you will create mistrust. Also, make sure that you always comply with new orders regarding occupational health and safety.

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10. care for the elimination of defects (§ 11 DGUV).

Eliminate all sources of danger as quickly as possible - your employees may only return to work when it is safe to do so. Defective machines must remain at a standstill for as long as possible.

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11. ensure that your employees have access to the occupational health and safety regulations at all times (§ 12 DGUV).

Make the accident prevention regulations available to your employees for permanent inspection. Good places for this are, for example, stairwells, entrance areas or cafeterias.

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Good to know: Employees in the home office and field service must also be able to view all regulations at any time. The easiest way to do this is with a digital solution. This way, you can easily make the relevant documents available via app or browser and save a lot of time and effort at the same time.

Our tip: Systems like Sawayo have another ace up their sleeve: They ask your employees to confirm their acknowledgement by signature. This allows you to prove at any time that you have fulfilled your obligation and also protects you from liability risks.

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12. delegate tasks to experts as required (§ 13 DGUV).

You may also delegate all of the above tasks to qualified employees. In this case, they fulfil your accident prevention duties. Record the delegation of tasks in writing and have your experts sign it - this can also be done digitally and easily with software such as Sawayo.

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13. observe exceptions in individual cases (§ 14 DGUV).

In individual cases, you can apply to your accident insurance institution for exceptions - for example, if you use other, equally effective measures in special cases.

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Primary and secondary obligations - what do I have to pay attention to?

Duty to pay wages

Paying your employees on a fixed date is your main obligation as an employer. The amount of remuneration depends on the agreed employment contract or collective agreement. If you do not comply, you may be threatened with refusal of work, the right of retention, interest on arrears (currently 8.12%), extraordinary dismissal, claims for damages and lump-sum compensation for late payment(§ 614 BGB, § 288 BGB).

In addition, you have to pay taxes on wages, social security contributions and church taxes if you belong to a religious denomination. Your obligation to pay wages also includes continued payment of wages in the event of holiday or illness, the provision of pay slips and compliance with the Minimum Wage Act. If you do not fulfil these obligations, you will be prosecuted, especially if you violate the minimum wage regulations.

ATTENTION: Minimum wage violations are punishable by fines of up to 30,000 euros, in serious cases even up to 500,000 euros (legal basis: MiLoG). Especially when employing part-time workers on an hourly basis, the risk of unintentionally committing a violation is high. In order to protect yourself from risks at an early stage, it is recommended to use a time recording system.

In addition to your primary duty to pay your employees, the Occupational Health and Safety Actrequires you to fulfil a number of secondary duties in § 10 para. 1.Specifically, the following rules apply within the framework of the OSH Act:

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Firefighting and evacuation

Part of fire protection is the escape and rescue plan. It enables people to find their own escape routes in an emergency. Therefore, post escape plans in your offices. Good places for this are, for example, stairwells, entrance areas or cafeterias. For even more comprehensive protection, it is advisable to make the rescue plan available digitally. If you fail to comply with your obligation, you may be fined up to 2,000 euros(§4 Para. 4 Sentence 3 ArbStättV in conjunction with ASR A2.3 §9 and ASR A2.3 §9). ASR A2.3 §9 and LV56 Bußgeldkatalog zur ArbStättV).

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First aid

Accidents happen faster than expected - make sure that first aid can be provided quickly in your company. Create the necessary organisational and personnel conditions for this:

• train company first aiders,
• The first-aid kits and first-aid posters are available,
• conduct regular first aid briefings .

If you employ at least two employees, you must appoint a first aider. In the event of an accident in the company, first aiders take care of the injured until the rescue service or emergency doctors take over. The number of mandatory first aiders increases proportionally to the size of your company. If you have more than 20 employees, 5% (in the administration and trade sector) or 10% (in other companies) of the employees present must be qualified as first aiders. It is best to employ more than one first aider even if you have fewer than 20 employees: This way, there will always be enough first aiders on site, even in case of illness or holidays.

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The accident prevention regulations also require you to provide a first aid kit. The size and number of first aid kits depends on the size of your business, the potential hazards present and the structure of your business. Place your first aid kit at eye level so that everyone can reach it within 30 seconds or 100 metres. Clearly mark the location. Check the first aid kit twice a year and refill it immediately after taking it out.

In addition,instruct your employees at least once a year on first aid facilities and the correct behaviour in the event of accidents, in particular on possible hazards and their prevention. If you do not comply with the legal requirements for first aid, you may be fined up to 10,000 euros (DGUV Rule 100-001 "Principles of Prevention" (§ 26), DGUV Information 204-022 "First Aid in the Workplace", § 10 ArbSchG).

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Other collateral duties

• Employment obligation: Employ your workers in accordance with the contract and their skills.
• Occupational health and safety and duty of care: Design the working conditions in such a way that they do not endanger your employees. This applies, for example, to compliance with the maximum permissible working hours.
• Leave: You may only refuse leave requests for relevant, operational reasons.
• Works council: Employees with a workforce of five or more employees of full age, of whom at least three have been working in the company for six months or more, have the right to establish their own works council. You must allow a works council election to be held.
• Personal rights: These are part of fundamental rights. The right of personality protects us from encroachment on our life and freedom. As an employer, you have to protect them. If there are violations, you can be held liable.
• Data protection: As soon as you employ staff, you process personal data - for example when you create a personnel file. Pay attention to the necessary data protection and make your employees aware of it. If you process particularly sensitive data or personal data on a business basis, you must appoint a data protection officer. You also need this person as soon as you employ 20 people.
• Reintegration: When employees return to work after a longer break due to illness, you have to integrate them well into your company. The company reintegration management provides the necessary steps.
• Job reference: Give your employees a correct, qualifying job reference.

If you violate the Occupational Health and Safety Act, you must expect fines of 5,000 euros up to 25,000 euros and, in the case of serious violations, imprisonment for one year(§ 22, 25 and 26 ArbSchG).

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The obligation to post

The provisions laid down in the Occupational Health and Safety Act are only fully effective if your employees know their rights. For this reason, employers are obliged to post notices. This also serves to protect the manager. As an employer, you are liable for damages in the event of an accident at work.

You must make the following laws available to your employees for permanent reference:

• Working Hours Act (ArbZG)
• General Equal Treatment Act (AGG)
• Section 61b of the Labour Court Act (ArbGG)
• Complaints Office for Discrimination
• Youth Employment Protection Act and the supervisory authority (if you employ at least one young person)
• Working time and break regulations of underage employees
• Maternity Protection Act (if you employ at least three women)

In the event of a dispute, you should be able to prove that you have informed your employees about the regulations. You can do this by posting notices in the company - but even better digitally, such as with Sawayo. You can find more information on the correct implementation of posting obligations in our Blog article on the topic.

Our tip: Brochures and law books are expensive and exclude mobile workers. Make the laws available in digital form via an app. You can download the relevant templates free of charge from our homepage.

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The financial obligations

While you are taking care of your staff, don't forget your financial duties such as bookkeeping. If you are not comfortable with numbers, you can outsource bookkeeping to qualified staff or service providers.

If you earn income, you have to pay income tax. The amount of profit serves as the basis for taxation. For natural persons and partnerships, the basic tax-free amount remains untouched: Everything above an amount of currently 24,500 euros is taxed. Corporations are not entitled to a tax-free amount. You must also make a quarterly advance payment of income tax from the second business year onwards.

Section 238 of the German Commercial Code (HGB) obliges you to keep systematic and complete records of your commercial transactions. The obligation to keep records can also be derived from tax law - § 140 of the German Fiscal Code (AO).

The following five areas belong to accounting:

1. Financial accounting
2. Accounts Receivable
3. Accounts payable
4. Fixed asset accounting
5. Payroll accounting

If you make mistakes in your bookkeeping - whether intentionally or unintentionally - you are committing tax evasion and will be prosecuted. You face fines or imprisonment of up to five years, in serious cases from six months to ten years(§ 370 AO).

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Who is liable for breaches of duty?

Losing track of your duties and laws can be dangerous. If you do not comply with your duties, you may be subject to heavy fines - in some cases you may even be personally liable under criminal law. You can find out who is liable in which form of business in the following.

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Sole trader

Sole proprietors are freelancers or businessmen or businesswomen. They assume unlimited and personal liability, i.e. they bear the entire entrepreneurial risk alone and are liable with both their business and private assets.

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Partnerships and corporations

Among the company forms, a distinction can be made between partnerships and corporations.

Partnerships include the Gesellschaft bürgerlichen Rechts (GbR), the offene Handelsgesellschaft (OHG), the Kommanditgesellschaft (KG), the Partnergesellschaft (PartG) and GmbH & Co. KG or GmbH & Co. OHG. Corporations include the limited liability company (GmbH), the entrepreneurial company (UG), the public limited company (AG) and the rare partnership limited by shares (KGaA).

Partnerships are not considered legal entities in their own right. Rights and obligations are borne by the individual partners - personally, jointly and unreservedly.

Corporations, on the other hand, are considered a separate legal entity. In the event of a breach of employer obligations, however, the managing directors who were appointed by shareholders' resolution are liable. So-called de facto managing directors can also be prosecuted. These are persons who, with the knowledge of the company, perform the duties of managing directors - even if they were never appointed as such. For this reason, careful training on the various duties of managing directors is recommended. If several managing directors are appointed, they are usually jointly liable. Even the allocation to certain departments does not protect managing directors from liability for breaches of duty from other departments.

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Liability for entrepreneurial decisions

Entrepreneurial decisions are always associated with risks. In order to nevertheless not fall into stagnation and to continue to lead the company into the future, the decision-makers of a company have a certain scope of discretion. The so-called Business Judgement Rule is intended to protect managing directors and board members from fateful risks. Business risks are calculated in compliance with certain preconditions and are therefore taken lawfully and without breach of duty. The following five conditions must be met in order not to be held liable after all:

1. Entrepreneurial decision
2. Welfare of society
3. No special interests
4. Appropriate information
5. Good faith

In order to be able to prove all requirements in the event of a dispute, you should document all decision-making bases continuously and comprehensibly.

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Future obligation: The recording of working time

The Working Hours Act sets binding requirements for breaks and maximum working hours. To prove compliance, you should document working hours. Missing records already have a negative impact on employers - even though there is no general obligation to record all working hours under German law. This is due to a ruling by the European Court of Justice (ECJ): On 14 May 2019, it ruled that the complete recording of working hours must be introduced throughout Europe. German labour courts are already referring to this ruling in disputes. This is also shown by an example from our practice. Proper documentation of working hours therefore already serves as a safeguard for you today.

ATTENTION: If your company belongs to the so-called "black labour susceptible industries" or if you employ mini-jobbers, the obligation to record working hours already applies to you. You can find detailed information on this topic in our article on the obligation to record working time.

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Conclusion

Employer obligations are extensive. It is impossible to keep them all in mind, but it is easy to lose track of them. Nevertheless, as an employer you have to deal with your duties and follow them thoroughly. Violations result in fines and compensation payments, which not only burden your company financially, but can also lead to considerable competitive disadvantages. In the worst case, you may even be personally liable under criminal law.

With our blog article we have given you a first overview of your obligations. You want to know which obligations and laws affect your company in particular? Use our Business Analyzer now and receive your risk analysis directly in your email inbox. Without obligation and free of charge.


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