- Why CIP defuses the time bomb of bogus self-employment before bogus solutions lead companies into financial disaster
In the interview with Gernot Labs.
What to do when politics and bureaucracy fail? You develop your own solution.
Silicon Valley Europe has the privilege of conducting an exclusive interview with one of Germany’s most prominent thought leaders on self-employment and entrepreneurship: Gernot Labs, founder and CEO of CIP Certified Independent Professional GmbH and Managing Partner of excim Management Consulting GmbH in Munich. With over 40 years of professional experience—including more than 29 years as a self-employed interim manager and business consultant—he understands the challenges of self-employment in Germany like few others. In an exclusive interview with Silicon Valley Europe, he openly discusses a topic that affects millions but has remained politically unresolved for years: bogus self-employment and its far-reaching consequences for our economy.
Gernot Labs has personally experienced how paralyzing legal uncertainty can be for freelancers and their clients. This experience—both as a freelancer and as a client in corporations and public institutions—motivated him to create his own solution together with an interdisciplinary team of self-employed professionals, entrepreneurs, lawyers, and association representatives. This led to the founding of CIP Certified Independent Professional GmbH—a private-sector initiative aimed at enabling self-employed professionals and their clients to collaborate as securely and trustfully as possible. The CIP certification addresses all relevant questions about bogus self-employment before the assignment and remains up-to-date throughout the service delivery—effectively protecting against back payments, penalties, and compliance risks. It functions like a “digital TÜV for freelancers,” a pragmatic workaround in an era where legislative clarity (legal certainty) continues to be lacking.
CIP was recently recognized by the magazine FOCUS as INNOVATIONS-CHAMPION 2024—among over 25,500 nominated companies. This award underscores the initiative’s significance for Germany’s economic standing, as the consequences of the general suspicion of bogus self-employment are severe: the decline in self-employed professionals from 4.3 to 3.8 million highlights how much this employment model is under pressure. Many contracts are no longer awarded, expertise is lost, and innovation is stifled—with dramatic consequences for competitiveness.
In the interview with Silicon Valley Europe, Gernot Labs explains why CIP addresses this issue precisely. He shares the personal motivation behind its founding, his journey through corporations like Ruhrgas, OSRAM/Siemens, and Roland Berger to self-employment—and how the inaction of policymakers prompted him to take matters into his own hands. He describes how the CIP certification builds trust, secures contracts, and removes freelancers and companies from legal gray areas.
Silicon Valley Europe: Mr. Labs, you have been active in the business world for over 40 years—including more than 29 years as a self-employed interim manager. How has your view of self-employment in Germany changed over this time?
Gernot Labs: I can still very well remember the moment when, in 1996, together with a consultant colleague, I swapped a well-paid position at ROLAND BERGER for a self-employed partnership in a management consultancy. At the time, we could offer our services freely on the market and were happy when the first consulting project was extended several times. There were no market access restrictions because our clients were afraid of potential bogus self-employment.
Current reports speak of a 10-year high in corporate insolvencies and a worrying slump in the number of self-employed people in Germany. This has various causes. With CIP, however, we have succeeded in solving the problem of the “No. 1 order killer” in Germany.
Because with “bogus self-employment”, it’s not “just” about protecting contractors and clients from (in individual cases five-figure) back payments and penalties, but also from the – many unknown – consequences of the general suspicion that exists against the self-employed. This leads to the fact that many of the 3.8 million self-employed people, freelancers and founders are commissioned less or not at all.
Many entrepreneurs also underestimate the risks and are completely surprised when they suddenly have to defend themselves in court. That is why this issue affects all self-employed people, freelancers and founders – especially those who are actually self-employed – and all companies that directly or indirectly commission external service providers for longer periods in all sectors and with public clients… so everyone.
Why is “Cipping” the externals so interesting for SVE members?
Clients of external service providers benefit from our certification services free of charge. They can effectively protect themselves from often undetected pitfalls of bogus self-employment, save high legal and court costs and enormous internal costs, and finally commission externals without hesitation again, tick off a complex risk topic and save money at the same time.
Silicon Valley Europe: Was there a specific moment when you realised: “This can’t go on with bogus self-employment – we need our own solution”?
Gernot Labs: Yes – when I conducted interviews with those affected who got into existential distress due to back payments. These were very emotional moments when experienced self-employed people – partly in tears – described how they got into existential distress through no fault of their own. Many could no longer sleep at night because they didn’t know whether they could repay social benefits claims for themselves or their externals. These proceedings sometimes dragged on for years. It became clear to me that there is a flaw in the system when official status determination procedures determine a “self-employed status” individually for every new order and usually only during the performance of the service. This means that the sword of Damocles of bogus self-employment hangs over every new commission. In court, defendants usually lacked conclusive evidence to prove their innocence and not every lawyer or judge is specialised in this topic.
We have turned this suboptimal process, which officials surely devised with good intentions, on its head with the CIP certification.
(Note: The interviews can be read here: https://cip-scheinselbststaendig.de/interviews-mit-betroffenen/)
For years, I have been volunteering in several expert groups advocating for legislative changes at an association. Yet, all petitions, panel discussions, letters of demand, poster campaigns in Berlin, meetings with politicians at the Federal Ministry of Labour and Social Affairs, and another working group to which I was invited as an expert by the party chairman of a political party have failed to bring about any improvement over the years.
At some point, you have to move from talking to taking action – that’s how CIP came into being.
Silicon Valley Europe: You began your career at Ruhrgas and later worked at OSRAM, Siemens, and Roland Berger. What ultimately drove you to take the path of self-employment?
Gernot Labs: The SVE members are all entrepreneurs. Our mindset sets us apart from a civil servant or employee career. Self-employed individuals and entrepreneurs are convinced that they can do something particularly well or better. We have a vision of how we can make the world a little better. As an interim manager, consultant, and private individual, I have never accepted grievances as unchangeable but have advocated for change. That’s why, instead of waiting for others to change state procedures and laws, we offer a private-sector digital transformation solution for contractors and clients in the meantime.
Silicon Valley Europe: The idea behind CIP Certified Independent Professional GmbH sounds exciting at first glance. What specific problem does it solve for freelancers and their clients?
Gernot Labs: Let’s assume that bogus self-employment is known. The CIP certification works like an “TÜV for self-employment,” but instead of every four years, it ensures that the status of self-employment is kept permanently up to date. Freelancers can identify risks of bogus self-employment and eliminate them – discreetly – without posing a compliance risk to their clients. Clients can (literally) meet their statutory monitoring obligations with a single click, provide evidence in court, and thus avoid accusations of (grossly) negligent or intentional breaches of the law. Before developing the certification, we surveyed clients and their legal departments about what characteristics a certificate against bogus self-employment risks would need to have so they could confidently re-engage freelancers. That’s exactly what we’ve created with the CIP certification as a shared platform.
For freelancers, CIP certificates essentially solve the following problems:
- First and foremost, the risk of back payments to social security funds and high legal and court costs, which can quickly reach existential dimensions. Many lack verifiable evidence that they were indeed self-employed.
- Many are simply unaware that many decision-makers no longer hire external contractors due to the fear of the ticking time bomb of “bogus self-employment.”
- Solo freelancers also misjudge their risk potential for clients and face competitive disadvantages in tender processes compared to other freelancers – for example, from other EU countries.
Clients benefit from external contractors with CIP certificates primarily by
- Because they can refer to a permanently up-to-date self-employed status according to a nationwide uniform standard and to their external service providers' duty to provide evidence in court. They receive proof that they can also use in court as evidence of fulfilling their statutory control obligations.
- But also because CIPs optimally protect their clients from the accusation of having violated their statutory control obligations. These are the prerequisites for penalties that can even lead to imprisonment.
- Many clients told us that they would also be liable for changes in the environment of the self-employed that they could not check at all. We have solved this problem with CIP as well.
- And then there is the effect of improving results. Clients can not only use the benefits of CIP certificates free of charge, they also save internal expenses and high margins when commissioning through third parties.
Silicon Valley Europe: Why is the issue of bogus self-employment such an unsolved chronic problem in Germany – and, in your view, why is politics failing to address it?
Gernot Labs: I’ve often asked myself that question too. Many party and association representatives want to solve the problems of bogus self-employment – but for years, the market situation for the self-employed has not only failed to improve, the examination options for government inspectors have even been expanded by the latest legislative reform. The risk of “getting caught” has therefore risen significantly. As in other Western countries, Germany is also facing demographic change. Everyone knows: fewer and fewer people of working age have to finance more and more pensioners according to the generational contract. It’s no wonder that many refer to this issue as a Herculean task that affects many economic sectors.
For years, some have therefore been calling, looking beyond our southern borders, for civil servants and the self-employed (including freelancers and entrepreneurs) to be required to pay into the state pension system. Let’s consider the implications of that: anyone who only pays in for a short time in the future would not be entitled to adequate payments later and, viewed retrospectively, would have received no benefits. How are politicians supposed to explain to their voters that they should shift their retirement provision from a higher-interest private provision to a lower-interest state benefit? Financial experts and ministers advocate an “equity-based pension”, as practised in other countries. Overall, the debate is, in my view, being reduced to self-employed income only. Many people have created real estate and other assets as retirement provision. What impact would such a decision have on the multi-billion-euro insurance and real estate markets? The majority of self-employed people and entrepreneurs already provide for their retirement today, but with private providers. Would that lead to more or fewer apartments being built?
In developing CIP, we took into account that we needed to create an overall solution that as many parties in the Bundestag as possible could agree to. CIP is socially just, does not conceal criminal offences but prevents them through appropriate measures. Self-employed people with high incomes behave in solidarity towards self-employed groups with lower incomes.
You can assume that we have been observed by government institutions for years and have already been audited several times. There has never been any cause for complaint, and I have the impression that the benefits of CIP certification also bring advantages for the DRV, customs authorities, increased tax revenues, and relief for the courts.
Silicon Valley Europe: How does CIP certification work in practice? What steps does a self-employed person go through to obtain certification?
Gernot Labs: They register at www.cip-scheinselbststaendig.de, complete an online questionnaire consisting of over 80 questions in about 30–60 minutes. All questions come with clear explanations and, if necessary, practical examples. Those who fail initially do not pay anything. Our customers are by no means fake self-employed. You can create a “self-employment profile” and gradually eliminate any existing risk factors, regenerating a CIP certificate at any time.
Those who provide the correct answers upfront can optionally upload a photo and download the certificate as a PDF 24/7. The self-employed person alone decides whether and to whom they provide their CIP certificate. All data is stored confidentially and is only accessible to the self-employed person. Clients only have access to the contents of the CIP certificate—as provided by the self-employed person—not to individual questionnaire responses. Of course, government agencies also have no access to this data. CIP is a solution for contractors and clients, not for government institutions—but everyone benefits from CIP certificates.
Our customers attach their CIP certificate to their bids, allowing them to be commissioned without concern.
Clients only need to click the identity code on the cover page of the CIP certificate every three months to fulfill their statutory monitoring obligations. All of this is explained in detail in explanatory videos.
Silicon Valley Europe: What concrete benefits does certification offer clients? Does it also provide protection in critical audit situations—such as by pension insurance providers or customs authorities?
Gernot Labs: I’ve already mentioned the key benefit. Certification acts like a discreet early warning system. Both contracting parties can only respond if they identify risk factors in time. Problems can be resolved discreetly. If a status determination procedure indicates fake self-employment, the damage is already done. Some clients rightly pointed out that meeting their statutory monitoring obligations would require setting up an entire department. A CFO once told me on the phone that CIP certificates couldn’t save them this effort because their company had no controls of this kind. That’s true. Anyone who identifies internal security/monitoring gaps can discreetly close them within 48 hours and at no cost. Failing to recognize and act on such deficiencies is certainly the worst possible course of action.
CIP certificates cannot replace (state-authorized) status determination procedures, but they eliminate all chances of success for such procedures against clients—which is what matters.
Silicon Valley Europe: How does your model differ from other approaches, such as those offered by insurance companies or status determination procedures?
Gernot Labs: CIP works preventively and provides a permanently up-to-date self-employed status for each new contract, instead of a one-time point check in the status determination procedure, which can lead to immediate sanctions. Insurance policies cannot cover financial damages and penalties resulting from criminal offenses. CIP helps avoid these risks from the outset.
The CIP Certified Independent Professional GmbH is the only provider in Germany and the EU, and likely worldwide.
Experts advise against using the option of a voluntary status determination procedure. The proportion of "positive" decisions against which allegedly self-employed individuals must then appeal is too high. Only someone with little knowledge of the free market, such as a civil servant, could suggest obtaining approval from an authority for every contract.
Silicon Valley Europe: In recent years, Germany has lost hundreds of thousands of self-employed individuals. What macroeconomic risks do you see if this trend continues?
Gernot Labs: Fewer self-employed individuals, freelancers, and business startups mean less innovation, less readily available expert knowledge, less dynamism to respond to global challenges, reduced competitiveness, fewer contracts, and ultimately lower tax revenues. Those who generate no revenue because clients fear bogus self-employment cannot build retirement savings either.
The self-employment rate or business startup rate in Germany is alarmingly low compared to other major European economies. Germany ranks among the lowest.
Imagine how many resources (tax funds) could be freed up at the German Pension Insurance, customs authorities, tax audits, and overburdened labor and social courts if CIP certificates were used nationwide for more important tasks.
Silicon Valley Europe: Do you believe the German economy could remain competitive today without self-employed individuals, freelancers, and interim managers?
Gernot Labs: Absolutely not! How is the German economy supposed to tackle challenges like digitalization and AI in an increasingly fierce international competition without independent knowledge workers?
Regulation-enthusiastic civil servants and politicians must finally understand that we do not live on an island. Not only production but also knowledge work can easily be outsourced globally. Instead of fewer, we need more flexibly deployable experts—and this does not work with collectively agreed employment contracts and long notice periods, as some envision. We should finally remove these self-imposed barriers and allow self-employed individuals to work for their corporate clients. At CIP, we offer a solution for these dedicated, clever people and their customers.
Silicon Valley Europe: You were named an Innovation Champion 2024 by FOCUS magazine for CIP. What does this recognition mean to you personally and for your company?
Gernot Labs: FOCUS magazine and the Hubert Burda Media Group set an exemplary standard in supporting companies and innovations. CIP is one of 200 winners out of 25,500 companies individually nominated by FOCUS. This is a special recognition for a digital transformation solution that is unique in its form.
Perhaps I should briefly explain the innovation that is unique so far:
Our team analyzes judgment-relevant information from court proceedings and updates this new knowledge into an existing algorithm. Our online questionnaire offers the opportunity to discreetly examine each individual order and all relevant influencing factors – including changes during the performance of the service – for any risks and thus to react before any damage has already occurred. Some lawyers in legal departments who have tested CIP initially reacted cautiously. That’s new, but it works!
We found it suboptimal that status determination procedures only take place in the middle of the performance of the service (i.e., during the execution of the order) and that so many individual questions in thousands of individual proceedings have to be laboriously reviewed by lawyers and judges in files. Instead, we simply pull these many questions forward into a certification in our online questionnaire and create a (private-sector) self-employed status. This turns the process upside down.
It is simply not fair to let self-employed individuals and their clients act in good faith in such situations without them even suspecting that they might be employed as bogus self-employed. This is neither “socially just” nor unbureaucratic.
Silicon Valley Europe: From your point of view, what would need to happen politically to finally create more legal certainty for self-employed knowledge workers?
Gernot Labs: Politics should recognize CIP as the standard and restrict status determinations to justified cases of suspicion.
Silicon Valley Europe: What three pieces of advice would you give to young self-employed people who are just starting out?
Gernot Labs: Yes, absolutely.
1) Deal with bogus self-employment early on and don’t make the mistake of thinking the issue doesn’t concern you or your external service providers.
2) Realistically factor in days without assignments in your pricing and do everything you can to ensure you don’t have to look for a follow-up order for too long. With CIP certificates, you’ll win new orders faster!
3) Protect yourself and your customers professionally against liability risks instead of relying on checklists or luck.
Silicon Valley Europe: If you could make one wish come true – what would need to change overnight in the German labor market or self-employment law?
Gernot Labs: The existing regulations should be replaced by a simple, fair system that doesn’t stand in the way of entrepreneurs. Politics should create a framework for the economy instead of placing entire groups under general suspicion. CIP certifications would certainly be a proven contribution in practice.
Silicon Valley Europe: Finally, why is it so important for companies and self-employed individuals to rely on a solution like CIP right now?
Gernot Labs: Because ignorance on this issue unfortunately doesn’t protect against back payments and penalties. Hardly any other issue combines such a high risk with a high probability of occurrence and such low time and cost expenditure for the self-employed (€29 per month).
Therefore, it is important for freelancers to realize that it is irrelevant whether they themselves know (or believe they know) that they are not bogus self-employed. Put yourself in the position of the client, who could be held personally liable and faces severe penalties.Do something for your own marketing: Make yourself visibly different from BONA FIDE self-employed individuals! Make it clear to your customers that they can hire you without hesitation or show your clients that you are not ticking time bombs but only use CIPs!
Silicon Valley Europe: Thank you very much for your time and the fantastic interview with insights into your daily work.