HR compliance in the energy sector – customs authorities step up the fight against sham-employment

Briefing

The German economy is caught between crisis and a shortage of skilled workers. Companies are reluctant to increase their own staffing levels. Nevertheless, there is a high demand for qualified specialists. This means that flexible staffing models are in demand and external specialists are often called upon. This is particularly true in the energy sector. The ambitious targets for the energy transition cannot be met by energy supply companies without highly specialised external workforce. Engineers, data analysts, developers, external safety specialists or project managers: all these activities are needed, whether for data migration, laying cable routes or the climate-friendly conversion of plants that previously generated energy from coal and gas.

However, the use of external personnel is subject to strict rules in Germany. The activities of external personnel must be clearly distinguishable from those of internal employees. In addition, external personnel may not be included in internal reporting structures. Otherwise, there is a risk of fines, additional social security contributions and taxes, and in the worst case, even criminal liability with prison sentences of up to five years for management. In addition, external specialists may attempt to enforce employment with the company after completing their assignments.

Upgrading the audit authorities

In the past, many legally incorrect assignments of external workers have not been detected because the German auditing authorities lacked the capacity to systematically investigate violations. This is now likely to change. Since 2025, the German Pension Insurance Fund has been conducting test runs for AI-supported audits. From 2026, artificial intelligence for risk-oriented employer audits (the so-called KIRA-AI) will be used to carry out audits at companies (Digitalstrategie | Künstliche Intelligenz entlastet Mitarbeitende und schützt das Sozialversicherungssystem | Deutsche Rentenversicherung Bund). KIRA will scan all digital (audit) data available at companies for patterns that indicate sham-employment. KIRA will be accompanied by an obligation for companies to digitise their documents for auditing purposes in a verifiable manner. The risk of bogus self-employment being detected in regular audits will increase significantly with the use of KIRA.

In addition, customs authorities are now also to be strengthened. In November 2025, the Bundestag passed a reform of the Act to Combat Illegal Employment, which will digitally "upgrade" customs authorities – the Financial Control Unit for Illegal Employment (the so-called “FKS”) – and give them additional powers. Sham-employment – ultimately nothing more than undeclared work – is therefore likely to become an even greater focus of official audits. This creates another "gateway" for official audits. The draft law only needs to be approved by the Bundesrat, and the new law is then expected to come into force at the beginning of 2026.

The draft explicitly defines as its objective a significant increase in the detection of contribution evasion through sham-employment. Contribution revenue is now to be generated to a much greater extent from ad hoc customs audits. AI-supported data analysis is to be used to evaluate large amounts of data efficiently and in a targeted manner. In future, the FKS will be able to investigate on the basis of objective and systematic risk indicators (e.g. employee and wage structure, ratio of personnel expenses to turnover, type of work/service, etc.). The FKS will be able to compare data from the DRV and the tax authorities even more closely with its own database. In future, companies that generate a comparatively high proportion of their turnover from external services will therefore be more likely to come to the attention of customs authorities, which will compare the company's turnover with the number of employees subject to social security contributions reported to the DRV. The lower the wage ratio determined in this way, the higher the probability of a customs investigation.

Outdated compliance systems in companies

The strengthened authorities are encountering compliance systems in companies that are in some cases outdated. Many companies set up appropriate compliance systems in the wake of the reform of the German Temporary Employment Act in 2017. Since then, the social courts and audit authorities have completely changed the criteria for the legally compliant use of external personnel. The focus is now purely on the nature of the work performed. The decisive factors are now the degree of integration into the company's organisation and the interaction with permanent employees. Such integration is particularly likely when commissioning highly specialised experts, e.g. for IT/engineering projects and interim managers, as agile methods are very often used in joint teams in these cases. Simply expanding capacity and/or filling vacancies with external staff also carries a high risk of bogus self-employment. The criteria applied in many companies' compliance processes are often not sufficiently adapted to this "shift" in case law. However, the change in case law does not only apply to the future; it also covers assignments that have already been completed.

Conclusion

The digital upgrade should enable the supervisory authorities to track and detect incorrect use of external personnel much more systematically. In view of the serious consequences, it is essential to establish a compliance process for the deployment of external personnel. It is strongly recommended that existing compliance systems also be reviewed in light of the change in case law and adjusted if necessary. Otherwise, those not acting within the company may be deemed acting intentionally, as the authorities assume that the changes to the demarcation criteria are known.