Foreign subcontractors in Germany: How to work together

The use of subcontractors is becoming more and more important for large companies and is already part of day-to-day business for many companies. This often leads to problems due to overbooking of the reginal specialized teams or the lack of subcontractors in the region.

A good alternative is provided by foreign subcontractors, who offer not only comparable quality but also good conditions. There are several reasons for choosing a foreign partner.

Skilled labor shortage in Germany

German industry is growing and with it the demand for well-trained skilled workers. Here too, as in many other areas, growth brings with it new challenges: the German labor market cannot meet demand. In order to compensate for the shortage of skilled workers foreign subcontractors, above all from Eastern Europe, are increasingly being used.

Support from abroad

In August 2012, the German Federal Government decided to grant access to the German labor market for foreign skilled workers, ie academics, and in July of the following year also for foreign skilled workers, who are precisely defined in a list – more details on the homepage www.mangelberufe.de.

This regulation allows skilled workers from all over the world, whether workers or academics to come to Germany and Austria and thus to compensate for the lack of employees. This primarily include engineers from almost all technical fields, academics in the IT sector and technicians for industry and trade, such as electronics technicians, mechatronics engineers, etc.

Contract subcontractors

Because of the freedom of providing services in the EU, German and Austrian companies can now have service or work contracts with all EU foreign subcontractors and thus award them with work orders. The personnel employed abroad then work in Germany and are responsible to complete the agreed to order. The foreign subcontractor is responsible for the employee and for the taxes.

Please note the following:

• Workers of the foreign subcontractor have a legal employment contract and are allowed to work in Germany
• Workers are insured accordingly and have a confirmation of insurance (A1 certificate)
• Employees of foreign subcontractors are to be paid according to the German minimum wage. Subauftrag.com supports you as an intermediary in all legal matters. We undertake the examination of the subcontractors and assess them on the basis of completed contract work and references. In addition, certified contract samples and contracts are provided.

Qualification at the same standards

When one thinks of Eastern European workers, it usually thought that their education is not comparable to the domestic standards. Many are amazed by the fact that the annual Human Capital Report shows the contrary. For example, Slovenia ranks 9th in the world – in terms of capacity, deployment, development and know-how, and is just behind Germany and even ahead of Austria, where they rank 8 and 10 respectively. This assessment clearly reflects the high level of education and helps to dispel the prevailing concerns.
The same applies to the language barriers. In many Eastern European countries, students learn German when they are still very young, preparing them for international activities at an early age.

The labor costs

The wage level in Slovenia, Poland, Romania, Hungary etc. is lower than in Germany. Eurostat compares the average annual labor cost per hour across the European Economic Area. The lowest hourly labor costs are in Bulgaria (€ 4.40) and Romania (€ 5.50). Hungary (€ 8.30), Poland (€ 8.60), the Czech Republic (€ 10.20) and Slovenia (€ 16.20) are also behind the EU average of € 25.40 and even further behind Germany with € 33.00.

When working with foreign subcontractors, however, the Posting of Workers Act, which provides for minimum wages, must be observed. Since 1.1.2015, the German Minimum Wage Law has been in force, introducing a statutory minimum wage per hour per hour as a general lower wage limit. Since 1.1.2017, the new minimum wage is € 8.84.
We therefore recommend that the obligatory payment of the minimum wage be contractually agreed.

In addition, we recommend contracting the subcontractor so that a subcontractor cannot hire another subcontractor. This is important because, according to the Minimum Wage Act, the liability of a principal extends to the entire subcontracting chain. This restriction increases transparency and security.

So make sure you complete the contracts exactly. We are happy to assist you with qualified subcontractors from home and abroad as well as with legal know-how, such as certified contracts.