> If you asked about it, the manager would say "we can't give Jim things directly because that might be like compensation and they'd be like an employee."

While extending it to things as small as a team lunch is going a bit far, it's understandable that they don't want to open up a slippery slope of it looking too much like an employment relationship. In many European countries that can result in false self-employment and get both the company and the contractor in legal trouble.