Currently, there are at least 31,500 freelancers working across Europe, and the freelance market is set to grow by almost 17% by 2032. This rise is driven by a variety of factors, including employers’ need for highly specialised skill sets and workforce agility, and freelancers’ desire for remote work, a healthier work/life balance, and attractive rates for experienced professionals. Freelancers have become embedded in many organisations’ workforces and contribute to growth and innovation across sectors such as technology and engineering.
We take a look at the employment models that freelancers must choose from and what employers must do in order to attract and retain specialist talent.
The different employment models
The freelance market in the UK is well-established, with several employment routes including Sole Trader, Limited Company and Limited Liability Partnership (LLP), each with its own pros and cons. However, in Europe, it’s very different, with each country offering distinct definitions, taxation, social security rules, and protections. Let’s look at the three main types of employment models for freelancers who may be considering working in Europe.
AUG
Arbeitsnehmerüberlassung (Temporary employment) is most commonly used in Germany, Austria, and the Netherlands, where strict labour laws limit the use of traditional freelance models. These temporary worker arrangements mean that freelancers are on a client’s payroll or are engaged through a licensed provider or agency for specific assignments.
An AUG arrangement offers:
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Clarity on compliance and a high level of security for employers
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Stability, simplified tax arrangements, guaranteed payments and statutory protections, as well as social benefits for freelancers
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The ability for freelancers to undertake work without the risk of misclassification, which might otherwise exclude them, reduces international barriers to employment.
However, AUG arrangements also mean less autonomy and independence for freelancers and can reduce their earning potential, resulting in lower take-home pay. For these reasons, AUG is not the automatic choice for those seeking access to long-term projects in a highly regulated market.
LTD
LTD (Limited company or sole-trader arrangements) are popular and widespread throughout Ireland, Eastern Europe and some parts of Scandinavia. This method of working means freelancers operate through their own limited company or a registered self-employment structure. It is analogous to the UK’s LTD/Sole Trader model, but the practical implications and terminology of this model will vary from country to country, as well as by market.
LTD arrangements offer:
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A versatile, ambitious talent pool for employers that reduces employment liabilities
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Flexibility for freelancers, with greater control over how and when they work and the potential to retain more of their earnings after tax has been paid
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The ability to work for multiple clients and across different markets.
However, with compliance under increased scrutiny across the EU, comparable to IR35 in the UK, freelancers must be able to demonstrate that they are genuinely self-employed or face restrictions on certain roles.
Hybrid arrangements
Increasingly, employers across Europe are adopting a third, hybrid model which combines flexibility, security and compliance. These usually take the form of managed service providers, umbrella arrangements or project-based contracts, arranged through an agency which both pays and protects them.
Hybrid arrangements offer:
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Employers have the opportunity to engage freelancers on a project-specific basis while maintaining compliance with local employment laws
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Greater autonomy for freelancers, giving them the opportunity to work across multiple roles in a variety of locations
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A reduction in administrative and compliance burdens for freelancers.
What freelancers want
Freelancing offers skilled professionals in the technology and engineering sectors a unique opportunity to apply their expertise, further develop their careers, and expand their knowledge base. Freelancing is ideal for individuals who thrive in fast-paced, innovative environments, who wish to work with new technologies and in new sectors and who can offer employers adaptability and flexibility. On a personal level, freelancing can also contribute to a more equitable work-life balance, with the potential to work remotely or on a reduced-hours basis.
Most freelancers, however different their roles, have similar expectations from employers:
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Flexibility and autonomy – freelancers tend to choose this way of working because they want control over the hours they work, where they are based and who they work for. Employers that try to micromanage their freelance staff will inevitably lose out to those who don’t enforce rigid schedules or unacceptable working conditions
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Fair, clear contracts – freelancers expect clear terms and conditions and specific deliverables in their scope of work. They should also receive transparent pay information and defined payment terms (most contracts specify payment in 30 days or less), as well as unambiguous IP and confidentiality terms
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Clear compliance – freelancers want the reassurance that the model they work under is compliant, especially if they’re working in countries such as France, Spain or Germany that have stringent labour laws. Compliant arrangements protect workers from tax issues and unfair treatment and offer employers peace of mind
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Support and recognition – freelancers offer employers access to niche and highly sought-after skills and expect to be treated as valuable partners, not temporary place-holders. Employers who offer them access to the tools and technology they need to fulfil their roles, outline clear deliverables, and provide training opportunities that enhance their capabilities will be best placed to attract and retain the most talented individuals.
What employers must offer
European employers looking to bridge the ever-widening skills gap with specialist freelance talent must offer:
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Clear contractor classification and strict compliance – all engagements must adhere to local classification rules, which differ by country and will affect how contracts are structured. Compliant models will offer transparency around contract terms, duration and the potential for renewal
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Competitive, transparent pay – unclear fee structures, opaque remuneration offers or payment delays will not attract the talent that organisations need in the long term. Conversely, those employers that offer early payment incentives or performance bonuses will differentiate themselves and gain a reputation as an employer of choice
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Flexibility and respect – employers that offer remote and flexible working conditions, adaptable deadlines and a choice of how freelancers complete the work will attract a wide range of candidates. Freelancers should also be considered to be part of the wider workforce, rather than ‘gap-fillers’, and offered training and development opportunities, regular mental and physical health check-ins and the possibility of work in the future.
Employers who treat their freelancers with consideration and respect and ensure that they are legally protected will benefit from a wider talent pool than those who don’t, as well as enhancing their reputation among the freelance community.
How JAM can help
As a specialist engineering and technology recruitment partner, we have extensive experience supporting both freelancers and employers across Europe.
We assist our clients in navigating local compliance requirements, helping them avoid freelancer misclassification and potential country-specific regulatory issues, and offering advice on suitable engagement models, whether that’s AUG, LTD, or hybrid. We provide sector-specific market insights and up-to-date salary benchmarks to help employers understand what freelancers expect in terms of job specifications and remuneration. We also advise on how to position a role to attract the very best and most relevant talent.
We also ensure freelancers are offered a wide range of rewarding, challenging opportunities that comply with all applicable legislation, protecting them wherever they work.
JAM specialises in connecting engineering and technology freelance talent with European employers who need access to high-quality, niche skills. Contact us to discuss how we can support you, whether you’re a freelancer looking for your next opportunity or an employer looking to source the freelance talent you need.
