Hire subcontractors from Poland, Romania, Hungary, and other Eastern European countries—cost-effectively, in full compliance with the law, and with an experienced staffing provider by your side.
Contracts for Work with Eastern Europe
Contract for Work in Eastern Europe
Against the backdrop of a shortage of skilled workers and growing cost pressures in production, more and more German companies are turning to contracts for work with Eastern European partners. When orders are awarded to external firms, this is often done on the basis of a contract for work—a model that offers maximum planning certainty through clearly agreed-upon deliverables.
For certain activities, it makes sense not to have them performed by your own staff, but to hire a specialized outside company to handle them. Do you have a large project that you’d like to have carried out by an Eastern European subcontractor? If so, a contract for services is the right choice.
A contract for services is a type of contract that provides for the performance of a concrete, verifiable results as its objective. The contractor undertakes to produce a clearly defined work agreed upon in advance—the client pays the agreed-upon compensation only after the work has been successfully accepted.
Contracts for work can be clearly distinguished from other types of contracts:
Contract for Work and Materials
The contractor is obligated to provide a specific Result (Work). Payment is due upon acceptance. The contractor works independently; the client has no right to issue instructions regarding the contractor’s work methods.
What We Offer
Employment Contract
The contractor owes a Activity – with no guarantee of a specific result. Compensation for the work performed, regardless of the outcome.
Temporary Employment
Workers are assigned on a temporary basis. The user company has the right to issue technical instructions. Compensation is paid by the hour, not based on results. Maximum duration: 18 months (AÜG).
Employment Contract
Traditional employment relationship. The employee receives a salary regardless of specific results. Permanent employment relationship with protection against termination.
Contracts for work and services are used in a wide variety of industries and fields of activity. They are particularly common in:
- Industrial Installation & Plant Construction
- Machine Assembly
- Steel Construction & Metal Structures
- Pipeline Construction
- Maintenance & Repair
- Welding work
- Mass production
- Quality Control
- Packaging work
- Packaging
- Solar Industry / Photovoltaics
- Food Processing
- Inventory Management
- Order Picking
- Inventory & Stock Take
- Loading & Transportation Operations
- Freight Forwarding Services
- Fulfillment Projects
- Software Development (Project-Based)
- IT Infrastructure Projects
- Agriculture & Seasonal Work
- Cleaning & Facility Management
- Construction & Renovation
- Electrical Engineering
Contracts for work involving personnel from Eastern Europe also present challenges. However, with the right partner, these challenges can be confidently overcome:
Complex legal framework
For contracts for services with Eastern European partners, both European and German laws apply—in particular, the Posted Workers Act (AEntG). Compliance with all regulations requires expertise.
Our Solution
We have been familiar with the legal framework for over 25 years. We review all requirements and provide legally compliant contracts—including the A1 certificate and social security clearance.
Language barriers
When working with foreign subcontractors, language barriers can lead to misunderstandings. It is important to ensure that the workers hired have a sufficient command of German.
Our Solution
We assess the German language skills of all subcontractors we place and their key personnel. If necessary, we arrange language training prior to their assignment.
Quality Assurance & On-Time Delivery
The client has less direct control over a subcontractor’s work methods than over its own staff. There is a risk of quality defects or missed deadlines.
Our Solution
Clear scope of work descriptions, binding milestones, and acceptance procedures in the contract for services provide certainty. We advise you on drafting the contract and provide ongoing support throughout the project.
Risk of a Sham Work Contract
If a contract for work and services exhibits the characteristics of temporary employment (right to issue instructions, integration into the workplace), it constitutes a sham contract for work and services—with serious legal consequences.
Our Solution
We structure all contracts for work and services in such a way as to ensure a clear distinction from temporary employment. More on this: Contract for Services vs. Sham Contract for Services ›
When entering into service contracts with personnel from Eastern Europe, a complex web of European and German regulations must be taken into account. Here is an overview of the most important points:
1
Posting of Workers Act (AEntG)
The AEntG regulates the minimum working conditions for workers posted to Germany. It stipulates minimum wages, vacation entitlements, and working time regulations—regardless of the country in which the subcontractor is based. Industry-specific minimum wages (e.g., construction, electrical trades) must be strictly observed.
2
A1 Certificate
An A1 certificate is required for all posted workers. This certificate verifies that social security contributions are being paid in the home country and prevents duplicate social security contributions. The certificate must be available before the assignment begins and must be carried with the worker throughout the assignment.
3
Tax Considerations
There are double taxation treaties in place between Germany and most Eastern European EU countries. Depending on the duration and nature of the assignment, withholding tax obligations may still apply. This matter should be discussed with a tax advisor or an experienced recruitment consultant.
4
Proof of Qualifications
The contractor must be able to demonstrate all qualifications and expertise required to perform the work—including relevant professional degrees, certifications, and language skills. We will review and document these in advance.
5
A Clear Distinction from Temporary Employment
A contract for work and services must be clearly distinguished from a temporary employment arrangement: The subcontractor must act on its own responsibility and independently of instructions, use its own tools, and be liable for the results. If, in practice, the subcontractor is integrated into the client’s operations, the contract is considered a sham contract for services—with far-reaching consequences. More: Legal Aspects of the Contract for Work and Services ›
Fictitious Contract – When Does It Exist?
- The client provides the subcontractor with direct instructions regarding how to perform the work (how, when, where).
- The subcontractor's employees are integrated into the client's operations.
- The client will provide the tools and equipment.
- The work is not clearly defined—there is no definable product as a result.
Consequences: Retroactive social security contributions, fines, and criminal liability risks for the client. We protect you by drafting contracts that are legally sound.
Here's what you'll get
- Over 25 years of experience in brokering contracts for work with Eastern European partners
- Long-standing partner networks in Poland, Romania, Hungary, Slovakia, and other countries
- Legally Sound Contract Drafting – With a Clear Distinction from Temporary Employment and Sham Service Contracts
- Complete administrative processing (A1 certificate, posting notifications, qualification review)
- Your point of contact throughout the entire project—for both you and the subcontractor
Our Range of Services
- Contract-for-Services Solutions for Industry, Manufacturing, Logistics, Construction, and IT
- Recruitment from Eastern Europe – for permanent positions
- Temporary Employment from Eastern Europe – for flexible staffing solutions
- A combination of different employment models depending on project requirements
- Advice on Legal Aspects of the Contract for Work and Materials and optimal contract drafting
In this section, you'll find the most frequently asked questions about contracts for work in Eastern Europe and our answers to them.
A contract for work and services is a type of contract in which the contractor is obligated to produce a previously agreed-upon, clearly defined work or result—while the client is obligated to pay the agreed-upon compensation. Payment is typically made upon completion and acceptance of the work. Contracts for services are used in the construction industry, manufacturing, skilled trades, and many other sectors.
No. A contract for work and a service contract are not the same thing. The key difference lies in the subject matter of the contract: A contract for work specifies a specific result (e.g., the completion of a building) for which the contractor is liable. A service contract, on the other hand, obligates the contractor to perform a specific activity—without guaranteeing a specific result. Learn more about the difference ›
An employment contract establishes a permanent employment relationship in which the employee is paid a monthly salary regardless of specific results and is subject to the employer’s right to issue instructions. A contract for services, on the other hand, is aimed at a specific, definable result (the „work")—payment is made only after acceptance. The contractor works independently without being bound by instructions and is liable for the result.
Contracts for work and services are generally permitted when a clearly definable result or work product is to be delivered. The prerequisite is that all legal requirements are met: a clear description of services, no de facto subordination, no integration of the subcontractor into the client’s operations, and compliance with all posting regulations (AEntG, A1 certificate). A contract for services is deemed to be a sham if its actual performance corresponds to the temporary assignment of workers.
Advantages: Cost certainty due to a price agreed upon in advance, payment only after acceptance, contractor’s liability for defects (right to rectification), reduced workload for the client’s own staff, flexibility at the end of the project. Disadvantages: Less control over the work process, risk of quality defects or missed deadlines, complex legal requirements for international contracts for work and services. Learn more about opportunities and risks ›
There’s no one-size-fits-all answer—the choice depends on the area of application and the objective. A contract for work and services is appropriate when a specific, definable result is required (e.g., installation of a system, development of software). A service contract makes more sense when ongoing work is required without a defined end result (e.g., consulting engagements, support services). If you’re unsure, we’d be happy to advise you on the best way to structure your contract.
No. A contract for work and services is not an employment relationship. The contractor under a contract for work and services is not an employee of the client—he works independently and on his own responsibility, without being subject to the client’s right to issue instructions. There is no regular authority to issue instructions regarding working hours, location, or methods. It is precisely this clear distinction that is crucial for avoiding a sham contract for services.
A contract for services is deemed to be a sham when a contract designated as a contract for work exhibits the characteristics of temporary staffing: the client’s right to issue instructions, the integration of the subcontractor’s employees into the client’s operations, the provision of tools by the client, or the absence of a definable work product. Consequences: Retroactive social security contributions, fines of up to €500,000, and possible criminal prosecution. More about sham contracts ›