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Subcontractor: definition and compliance

Subcontractor deliver contracted work – with liability risks of their own for the client. This entry explains the term, the risks and the compliance duties.

Key facts
  • Delivers services on the basis of a Werkvertrag (§§ 631 ff. BGB).
  • The client can be jointly liable for minimum wage and social security breaches.
  • Minimum wage breaches can be punished with fines of up to €500,000.
  • Protection through continuous checking of records.

Definition and classification

A Subcontractor (a contractor for work) is a company that, under a Werkvertrag delivers a delimited service and owes a result for it – unlike Staff Leasing, where labor is leased.

Subcontractors are often used alongside staff leasing, for example for delimitable pieces of work. In law, the rules on contracts for work apply to them and – through the supply chain – increasingly duties of care.

What risks are there for the client?

The client can be jointly liable for a subcontractor's breaches – for example on minimum wage (fines up to €500,000), missing social security registrations or occupational safety. Breaches of occupational safety can even lead to criminal proceedings with personal liability for management. Protection comes from continuous, automated checking of clearance certificates and other records.

How do you check subcontractors efficiently?

A fixed list of required records makes sense, requested from every subcontractor automatically, read out and filed with versioning. That gives each subcontractor a compliance status that makes missing or expiring documents visible – the basis for keeping the liability risks manageable.

Frequently asked questions

What is the difference between a subcontractor and agency work?

The subcontractor owes a result under a Werkvertrag and works free of instructions; with agency work labor is leased and the hirer has the authority to instruct.

Is the client liable for the subcontractor's minimum wage?

Yes, they can be jointly liable for minimum wage breaches; such breaches can be punished with fines of up to €500,000.

Which records should you require from subcontractors?

Among others clearance certificates and evidence on social security and occupational safety – checked continuously, not just once.

Related terms

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