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Restrictive laws for side hustles in Germany - mental and legal hurdles

Discussion in 'The Unscripted Entrepreneurial Mind' started by 4symmetry, Feb 12, 2018.

  1. 4symmetry
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    4symmetry Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    So I‘ve broken my promise to myself to delay the start of my entrepreneurial journey to after 1) my semi-annual progress presentation at work (which is today) and 2) finishing my submission for a 5000€ science comm prize (money that would go into my business, deadline end of Feb.

    I was listening to an audio book called „The 4-hour Startup“ on side project start-ups in Germany.

    And now I‘m scared.
    The audio book mentioned my contract type as a scientist in the public sector and I also checked it out separately and its true: I have to alert my boss before (!) I start a business.

    This might sound like action-faking, but it’s not, and yes I‘ve read this thread: What Color Ferrari Should I Buy? (I Have Twenty Bucks)
    GOLD - What Color Ferrari Should I Buy? (I Have Twenty Bucks)
    Maybe in the US figuring this out is step 25 but in Germany it seems to be step 2 or 3).
    (Step 1: decide on an idea. Step 2: soft-proof. Step 3: tell your boss.)

    As I‘m working as a passionate biomedical researcher at a highly competitive institute my boss would hate me coming to him to tell him about a side project. Around here, you can always work harder, and acc to him, you should. He can’t outright do anything against it, but he could find a fake cause to fire me with 3 months notice. That’s unlikely though. What’s more likely is that announcing my side hustle will be harakiri on my career here. The big boss can be very subjective in judging your progress and he‘s influential enough to kill your career globally, if he sets his mind to it. Most likely though I‘ll suffer over the next 2 years while I‘m working at this institute.

    Also, the contract law stated that you are not allowed to earn more than in your job (I‘ll cross that bridge when I get to it) and that the employer‘s interests must not be violated or otherwise you can be terminated immediately. These interests include your full mental and physical performance. So the boss can basically just argue that you’re tired at work because of your side hustle and immediately cut you off.

    Has anyone had a similar situation and wouldn’t mind sharing their strategies and advice?
    What‘s it like in the US, are there no rules like these ones?

    Any help and/or inspiration is appreciated.



    PS: If it has to happen, and there’s no way around it, this dumb law won’t stop me from pursuing entrepreneurship. I just might have to change my strategy.
     
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  2. Knugs
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    Knugs Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Can you link me the actual law around this because I'm sure there is a way to "be on the safe side". And I would like to see how that's written up in your contract.

    I don't think your boss would insta-fire you. I don't think there is anything worse for a boss in a research lab to fire an employee who performs well and then having to find an equally educated scientist for that position who he then has to bring up to speed without knowing if they are high-caliber enough for the job. Sounds stressful.

    This is why Germany is so piss-poor in start-ups compared to other countries. They force us people in employment and make it extra hard to break the chains. Over-regulated, contractual clauses, financial and regulatory hurdles for opening a GmbH and at the same time you open a limited company in less than 10 minutes for pocket change in the UK whilst on your phone. Taxes and employee contributions are a joke. Its pretty much mandatory to have an account because things are so complicated.

    Honestly, in your case I would just DO IT anyway. I don't think they will ever find out because how would they? Do they even know that themselves that you aren't supposed to open a company without telling them? With Germany's crazy privacy law I don't see how an employer even has the right to gather data from other institutions.

    If you really want to be on the safe side, research a lawyer who specializes in employment contracts (I think they understand that best), pay them 150 euros for an hour consultation and you will know what your best options are. They work under "Schweigepflicht" so your secrets are safe too. You don't have any other "safe" option than this. Other dodgy and bad ideas are to open a company abroad, open a company under relatives name, use your partner for a business, accept only cash payments etc.

    Good luck with your presentation.


    Luke
     
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  3. RisingStars
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    RisingStars Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    Hi @4symmetry

    I am from Germany, too and I am aware that this law exists.
    In my opinion you should just go for it and apologize later.
    Just make sure that your side hustle is not anywhere near the field of the business you are employed by right now.
    Think about the worst thing that could happen and decide if you are okay with it.
    Technically you even have to tell your landlord if you live for rent, that you are going to start a business using your private address as a business address.
    But again, whats the worst thing that can happen and whats the best thing that can happen if you start your side hustle "under the radar" and become a great entrepreneur in a few years?

    In Germany I think it's nearly impossible to accidently do something wrong one day in your entrepreneurial career.
     
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  4. jpn
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    I'm based in a neighbouring country (NL) with somewhat similar "laws".

    My main question is why do you want to have a side hustle? You seem to love your job. Why not focus on having an amazing career as a researcher?

    Before I share my experience you need to make a decision. What is more important to you, your research career, or your entrepreneurial career?

    If research, great! I have many friends who are academics, they love their contributions to society and the work they do. It's not an easy career. But it can be rewarding (but usually not financially).

    If you want an entrepreneurial career and if you want to have the chance to make some real money, why do you care if you would get caught? Why do you care if you got fired? If the reason is that you cannot cover your expenses now, save up or take another job and make sure that you do not have that clause in your employment contract there.

    Now on to my personal experience

    The difference
    In NL it's not actually in the law that someone is not allowed to start a side business. But it is extremely common in employment contracts to require an employee to disclose any side jobs (self-employed or otherwise) and receive permission from the employer for that. Please double check if it really is a law, or just in your employment contract, very different things with a very different impact.

    What I did
    In my job I had a similar clause. I had to receive permission from my employer to start any kind of side hustle. I asked once, my request was denied.

    So f*ck it.

    I started my hustles without their knowledge. As an employee, you are entitled to have a life and hobbies outside of work. Hobbies may actually make you some money (for example you love woodworking and sell the artwork to friends and family). A hobby that makes money is not a business. At least not until your hobby makes the same amount of income as your job. And at that point, why would you care if you got fired? If you don't get to that point, it's not really a business, is it? Just a hobby that doesn't make (a lot of) money.

    In the end, I quit my job before any of my side hustles took off. I saw that selling my time for money wasn't going to get me what I want out of life. That and by reducing my lifestyle expenses I can actually afford to not work for a while and focus on my ventures.
     
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  5. 4symmetry
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    4symmetry Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Yes that’s a problem and depends on how broadly the law would be interpreted in the end. Best case, I would want my side project to be science related ant that’s my current field of employment, too. -_- But I think that might be less of a problem/more easily defended than the general side hustle-tell your boss-problem.


    The worst case would be being fired, publically „hung“ in the science world and having to pay back my salary dated back to the start of my side hustle/my first sale or sth like that. Apparently, these things can happen. And I‘m not sure I‘m cool with that -.- feeling really hogtied here >.<

    what do you mean by that?

    Thanks for the answer! And the encouragement :)
     
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  6. Patrickg
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    In my opinion your gonna have to just do it. You have to decide what you want long term. If you want to be unscripted then you have to be willing to give up your cushy job in the pursuit. Not saying you should.

    My argument would be instead of a 401k or whatever the German equivalent. I invested in a startup. I'm sure they allow for you to invest and make interest in the stock market. That is ownership, owning stock is being a stakeholder. And making money.

    So again I would do it and if any one questioned me I would say this is my retirement. I am meeting all of my obligations at work. How I invest my retirement is none of your business.
     
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    I think that your side project is in the same space as the company you are employed in is a much bigger problem then just not telling them that you do something on the side.
    They might could sue you for stealing sensitive information or using the information from their company to build a potential competitor.
    This in combination with hiding the side project from your employer might not look good in a lawsuit.
    But I am no expert in this but my gut tells me that you should consult a lawyer about starting a company in the field of your employer.
    After school I was working in a factory to earn some money to start my business.
    In the contract was a line that I am banned to start a business in the industry for atleast 5 years after working for them.
    Something like this in your contract?


    I mean that it's very likely that you do something against the law at some point. Most entrepreneurs I know did something against the law some time in their career and realise that they did it wrong only much later (if not caught).
    I don't mean the BIG things you do wrong, but small errors in bookkeeping or for example asking your landlord if you are allowed to use your address as a business address ;)
     
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  8. 4symmetry
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    4symmetry Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Thanks for all the answers I‘ll get back to you all once my science workday is finished for today and my entrepreneurial one starts didn‘t manage to reply to any except the first comment I saw :)
    This is such a great forum, awesome people! Bbl
     
  9. 4symmetry
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    4symmetry Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Gosh sorry guys, I got sick. Am now at home sipping chicken soup. It's something :D
     
  10. 4symmetry
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    4symmetry Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Hey Luke,
    sorry for the late answer... First of all, a huge THANKS for the thoughtful and motivating post. This is the kind of answer that gives me hope. You take safety concerns etc seriously and encourage and inspire to find a way around them instead of throwing all caution to the wind and diving right in. Probably because you live in Germany, too. Extremely helpful, thanks for taking the time!

    Öffentlicher-Dienst.Info - TVoeD/Bund
    This is the official site I found. I have yet to find the actual verbatim content of the general TVöD contract underlying mine.
    I can give you the wording of my specific contract, too, but it doesn't say much, as it starts of with something like "this constitutes a contract according to the TVöD".

    You're right. I'll take that into account.

    I completely agree, I was shocked to find out how over-regulated and complicated stuff is here. Austria is even worse, though.

    Well according to what was in that audiobook as a small business you basically have to use your last name as your official registered company name. So if they googled my name, it would show up in the "impressum"/contact details of the web page (if there were one). :/


    Thanks for the tip! This sounds like the perfect way to be on the safe side. I'll do some more research on the TVöD and try this!! (Obviously the dodgy ideas are not an option :) )



    Thanks. I aced it, big daddy (boss) likes me and my most senior colleague now looks at me like she wants to catch me in a dark alley with a sharp knife. Time to build a plan B :D But also, this reinforces: probably the boss man wouldn't insta-fire me. :)
     
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  11. 4symmetry
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    4symmetry Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    I do love my job, except for the fact that I have no control in the big scheme of things. Details are in another post of mine: Scientist - How do I get out of the slowlane while still doing what I love?

    Only 5% of PhD holders in my field reach a permanent, leading position. In a recent career seminar I attended, the jolly advisor stated that even though highly competitive, it's quite easy, you only need to score a prestigious scholarship (yes, after you graduated with a PhD...) which despite the same post-tax payout may not pay for your health insurance like a normal job in Germany, but hey, once you have the prestige you have a good chance of getting a fixed position. IF you secure follow-up grants. IF you spent at least 2 years abroad. IF your science ventures are successful, you don't get "scooped" (someone else publishes the same thing 2min before you do), and if you manage to publish in one of the ~5 high impact journals out of hundreds.
    No big deal, right? *sarcasm*... I'm competing exclusively with smart, driven, almost workaholic scientists. I've seen the 3 most promising and respected scientists in my lab fail to get one of those grants/scholarships, even though one even had one of those coveted high impact publications (in Nature Medicine). Another one had been chasing a high impact publication for 5 years only to find out upon resubmitting that the editor who asked him for another revision and promised they were still interested in the story had resigned. The new editor didn't give two sh*ts about what her predecessor said - career: done.

    And of course, in business, you might also fail. Maybe the success rate is even as low as 5% there, too. But in business, you get multiple chances. In science, you get one.
    To score one of the high prestige scholarships and grants, you have 4-5 years post PhD. These are hard deadlines. Besides your own efforts, which have to be sky-high as a prerequisite to even trying, you depend things you can't control, like what nature tells you in response to your inquiries (i.e. whether your experiments yield interesting findings). You can try to ask good questions, but that doesn't guarantee fruitful answers. It's necessary, but definitely not sufficient.
    Which is fine, if you believe like Joschua Schemel writes in his book, Writing Science, that as a scientist, your job isn't to be right. "It is your job to be thoughtful, careful, and analytical; it is your job to challenge your ideas and to try to falsify your hypotheses; it is your job to be open and honest about the uncertainties in your data and conclusions. But if you are doing cutting-edge work, you are not always going to be right."
    You know who doesn't give a sh*t about the reality of research? The people reviewing your grant application. They don't care if you asked good questions if there's not a high-impact publication showing that you also got the right answers.

    So you have one shot. If you fail, hope and pray for a soul-sucking industry job. If you don't, congratulations. Here's your ticket to the 5% lottery, 60-hour work weeks and no job security. Good luck!

    In summary, to losely quote @MJDeMarco: Hope is not a plan.

    I want to keep doing research or something research-related, because
    • my degree isn't just "sunk cost" - it has endowed me with proficiency in a field that is rare enough to be valuable to society, and because the fields main purpose is to further society and give long-term value.
    • it's fun and I'm good at it.
    • given the two statements above, I think it would be a waste to do something else as this will be how I can be of greatest possible value to society.
    I just refuse to do it for free.


    Currently, I live on the outskirts of Munich, 30min from the city center where all the fun happens. Rent + utilities amount to 1000€ = 1230USD per month. I earn 2350€ = 2890 USD per month after tax. This limits the amount I can possibly save. I followed the slowlane diligently for a year, cutting expenses wherever possible. I maxed out my savings. Then I did the maths. Even if I continue like this forever and don't take into account inflation, I'll never ever hit financial freedom. I'm slaving away for the good of society but trading away my own life in the process.
    I would literally have to choose between having kids and being financially free/not in debt in the future.
    Sorry, that's not how I choose to live.
    That's why I see no future for me in academic research, at least the way it's now.

    Sorry for the extremely long post. This kind of stuff clearly hits close to home.
     
  12. 4symmetry
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    I think that part has been covered above.

    Just taking the plunge with no precautions isn't in my nature. I prefer to plan, then execute. It has served me well so far.
    Apparently, all the jobs in Germany have this clause in the contract. -.-"
    That's why I asked about starting a business as a side hustle in another post on this forum. That's the way I'd like to get started.

    Thanks for the pointer, I keep mixing up stuff in my employment contract with the law itself, as I'm not an expert. The way I understand it right now, it's a law underlying all employment contracts here though.
    I have a coworker from NL who's trying to get VC for a company he wants to start with his friend. He basically already started it on the side. I asked him how he does it tax-wise and such and he winked and said, what side business? Right now it's just a legal trust. :jawdrop:

    The problem with starting it as a hobby is that you have no legal protection in case anything goes wrong. You're one lawsuit away from being parted from your money, or facing a more serious sentence. I won't risk that, even though it went well for you.

    Glad to hear that it worked out for you. Thanks for all the impulses for reflection and the advice! :smile2::blush:
     
  13. 4symmetry
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    As stated above, just jumping off a cliff and learning to fly on my way down with no safety net isn't quite my style. I'd rather start it as a side business as apparently have a few people on this forum.

    So you are suggesting instead of starting a start up or side hustle, to just invest in a start up? Am I getting that right, @Patrickg?
     
  14. 4symmetry
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    Thanks a lot for your concern. :)
    Nothing like that is in my contract. For scientists, it's extremely common to move somewhere as a postdoc and take your project with you to the new boss as long as your old boss stays involved/on the final output (publication).
    My employer is a state research agency, not a private cooperation.
    Also, the way I'd like to start something research-related is way to general and broad for even a German lawyer to restrict this. I wouldn't wander into the specific fields we are researching at my institute. So I won't repurpose any specific knowledge gained there, but just my general training as a bio scientist. But thanks for the pointers, I'll go and check with a lawyer before I start.


    LOL I'm sure you're right!
    Regarding the business adress thing though: if this gets out, you can at worst get a fine and evicted. Which will be hard for the landlord, with Germany's laws around protecting home renters. Even if so, big deal, get a new appartment.
    In contrast, if I lose my job because of a hidden side hustle, I lose all my income, I don't qualify for any help from the state even though I pay ~40% taxes, and I have 1000€ rent + 400€ food to cover per month, from my 15k savings. Not a good outlook... If my side business had taken off already in that hypothetical scenario, great. If not, I'd be f*cked....
     

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