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Real estate broker - self-employed, or employee?
The fallout from the December 2024 raids on broker group Engel & Völkers continues to ripple through Germany's real estate industry. While the public prosecutor in Bielefeld has now dropped its investigation into the company’s Hamburg headquarters, stating there is no evidence of a centrally organised scheme of bogus self-employment, the reprieve has done little to calm industry nerves.
Instead, attention has shifted to individual franchisees within the Engel & Völkers network, who remain under investigation. The core issue: whether freelance brokers working under these licensees were in fact operating as employees, subject to instructions, internal workflows, and day-to-day control, without appropriate social security contributions being made on their behalf. The model, long accepted as standard in Germany’s estate agency world, now faces acute legal scrutiny.
The Engel & Völkers case has triggered a wave of pre-emptive legal reviews across competing brokerage firms. Many rely on similar franchise structures, including Dahler & Company, Remax, Evernest, Century21, Falc Immobilien, and Von Poll. None has yet faced formal allegations, but most are reportedly examining whether their agent contracts could fall foul of the same criteria: economic dependency, integration into business operations, and lack of entrepreneurial freedom.
Troubled McMakler’s employment model comes under legal scrutiny
In parallel, McMakler—once heralded as a digital challenger to the traditional broker model—is now facing its own investigation by the Berlin public prosecutor. Unlike E&V, McMakler does not operate a franchise network; its agents are employees. Yet former staff allege the company failed to comply with rules requiring continued commission-based payments during periods of holiday leave, potentially breaching social security laws.
The accusation is more technical, but potentially just as damaging. If commissions were unpaid during leave, social security contributions tied to those payments may also have been missed. The case, still at an early stage, includes reports of former employees scheduled to testify before the courts in 2026. McMakler has not commented publicly, but it has been locked in legal disputes with ex-staff over back payments.
This legal pressure lands at a precarious moment. McMakler has endured three waves of layoffs in 2025 alone, following heavy cuts in 2023. Investor confidence has dwindled. A once-premium valuation has been slashed. Critics are now openly questioning whether the hybrid brokerage model, combining salaried agents with centralised lead generation, is viable under German labour and tax law.
What unites these two high-profile cases is the blurring of employment boundaries in a sector under cost pressure. The reliance on freelancers in a tightly managed environment is not unique to Engel & Völkers. The use of fixed-salary agents paid via opaque commission structures is not unique to McMakler. Both models have delivered scale and brand consistency. But both now face the same fundamental question: where does independent contracting end and de facto employment begin?
Legal boundaries draw sharper lines around employment status
The legal criteria are well established. An agent who uses the company’s systems, follows instructions, is economically dependent on one source of income, and cannot freely delegate or choose clients is very likely an employee under German law—irrespective of what the contract says. When misclassified, the employer becomes liable for retroactive pension, healthcare, and unemployment contributions, going back as far as four years, with penalties.
The financial impact can be substantial. The reputational impact is arguably worse. Companies seen to be freelancing the law in a bid to reduce labour costs face reputational damage that undermines both recruitment and client trust. The property sector’s image problem—fuelled by poor service, high churn, and stories of amateur agents—is not helped by the widespread use of what some describe as legal fictions.
IVD, the German real estate association, has urged its members to take the issue seriously. Its president, Dirk Wohltorf, has acknowledged the "signalling effect" of the investigations and warned that tighter enforcement is inevitable. Legal experts agree. With the pension system under pressure, the state has every incentive to pursue underpaid contributions more aggressively.
There is no single model under attack. Commercial agency agreements, franchise licensing, and full employment all remain legitimate paths. But as the legal boundaries tighten and public scrutiny grows, firms now know that their contracts need to reflect actual working practice—not simply what suits the business model. As the Engel & Völkers and McMakler episodes suggest, failure to do so now carries a price.