Temporary Employment or Freelance Contract? How Companies Choose the Right Model

Two Models, One Goal: Leveraging External Expertise

When companies want to engage external IT experts, they face a fundamental decision: temporary employment (Arbeitnehmerüberlassung - ANÜ) or a direct contract with a freelancer (Werkvertrag or Dienstvertrag)?

Both models have their merits – but the wrong choice can be costly. We illuminate the differences from the perspective of companies and freelancers.

Temporary Employment (ANÜ): The Essentials

How does ANÜ work?

In temporary employment, the freelancer is formally employed by a staffing agency, which "lends" them to the client company. The client has the right to give technical and disciplinary instructions – the freelancer works like a temporary employee.

Advantages of ANÜ

For Companies:

• Maximum legal certainty regarding bogus self-employment
• Right to give instructions, similar to own employees
• Flexibility: Assignment can be terminated at short notice
• The staffing agency handles administrative duties

For Freelancers:

• Social security coverage (health, pension, unemployment insurance)
• No risk of bogus self-employment
• Regular income without acquisition effort

Disadvantages of ANÜ

For Companies:

• Significantly higher costs (staffing agency margin of 20-40%)
• Less choice: Not all top freelancers work under ANÜ
• Maximum assignment duration of 18 months (with exceptions)

For Freelancers:

• Lower net income due to social security contributions and agency margin
• Loss of self-employed status and entrepreneurial freedom
• Often less room for negotiation on fees

Freelance Contract: The Essentials

Contract for Work (Werkvertrag) vs. Service Contract (Dienstvertrag)

Contract for Work (Werkvertrag): The freelancer owes a specific result (e.g., a finished software component). The risk of achieving the goal lies with the freelancer.

Service Contract (Dienstvertrag): The freelancer owes the activity itself, not a specific result. They must perform their service professionally.

Both variants are legally permissible, but the contract for work (Werkvertrag) tends to offer more protection against accusations of bogus self-employment.

Advantages of a Freelance Contract

For Companies:

• Lower overall costs (no agency margin)
• Access to the entire freelance market, including top experts
• Result-oriented collaboration possible
• No time limit as with ANÜ

For Freelancers:

• Higher income (full hourly rate)
• Entrepreneurial freedom (working hours, location, method)
• Tax planning opportunities
• Multiple clients possible simultaneously

Disadvantages of a Freelance Contract

For Companies:

• Risk of bogus self-employment with incorrect contract design
• No direct right to give instructions
• Own compliance effort

For Freelancers:

• No social security coverage (must make own provisions)
• Entrepreneurial risk (gaps in assignments, payment defaults)
• Independent acquisition necessary

Decision Aid: Which Model Fits?

| Criterion | ANÜ | Freelance | |---|---|---| | Need for instructions | ✅ | ❌ | | Budget-sensitive | ❌ | ✅ | | Long-term (>18 months) | ❌ | ✅ | | Maximum legal certainty | ✅ | ⚠️ | | Access to top talent | ⚠️ | ✅ | | Result-oriented | ❌ | ✅ |

ANÜ is recommended if:

• The external expert needs to be integrated into daily operations like a team member
• The company requires maximum legal certainty and is willing to pay more for it
• It is a temporary assignment for less than 18 months

A freelance contract is recommended if:

• There is a clearly defined project or work package
• The expert can work independently
• The budget does not allow for an agency margin
• Specialists are sought who only work as self-employed individuals

The Hybrid Approach

More and more companies are using both models in parallel: ANÜ for operational roles that require deep integration, and freelance contracts for specialized project work. This mix optimizes both costs and legal certainty.

Conclusion

There is no universally better model – it depends on the specific application. It is crucial that the chosen contract form matches the actual collaboration. On frelani.com, companies can specify whether they prefer freelance or ANÜ when posting a project – ensuring the right partners are found from the outset.