In Germany, the term “employee” is defined in section 5 of the Labour Courts Act (Arbeitsgerichtsgesetz, ArbGG), which states, “For the purposes of this Act, “employee” shall refer to persons in dependent employment (salaried employees, workers) and persons employed for the purposes of their vocational training.” This means that employees differ legally from other types of employment, such as contractors or freelancers. Their status comes with various benefits, e.g. specific protections against dismissal, sick pay, and entitlements to parental leave and paid annual leave. The courts have added further criteria to this definition, focusing more on the actual circumstances of the employment and less on the contractually agreed arrangements. For this reason, a person who is defined as a freelancer in his or her contract might actually be a de facto employee – and be entitled to the associated rights.
Employees perform specific duties in exchange for remuneration. Whether they do this part time or full time is irrelevant. They are subject to direction by the employer, meaning that the employer gives them instructions, such as to wear particular work clothes, perform their duties in particular places or carry out certain tasks. Employees are embedded in their employer's work organisation and are economically dependent on their employer. They use the equipment and resources and usually (but not always) the premises of the employer to carry out their work, must agree their annual leave with their managers and colleagues, and assume no entrepreneurial risk.
Employees owe duties of confidentiality and fidelity to their employer. This duty of fidelity requires employees to take account of their employer’s interests and show loyalty to their employer.