work contract

Correct invoicing of work contracts

If work is carried out by an external company on the basis of a contract for work and labour, the question arises as to how the services provided are invoiced by the contractor. Among other things, billing on an hourly wage basis is possible. What evidence can the client demand with this billing model?

Possible billing models for work contracts

In principle, the following models can be considered for the invoicing of contracts for work:

Unit price
All-inclusive price
on an hourly wage basis

When billing according to a Unit price The items required for the implementation of the Contract for work are listed and a specific price is set for each item. Alternatively, it is possible for the contracting parties to agree a Fixed or all-inclusive price for the entire agreed service. When invoicing on Hourly wage basis an hourly rate is agreed and the service is remunerated according to the hours worked.

Hourly wage labour: What does the contractor have to document?

When invoicing on an hourly wage basis, the contractor has a relatively low economic risk. However, with this variant, he can expect a higher level of effort in terms of documentation. This is because when invoicing on an hourly basis, the contractor must List working hoursin order to be able to prove this to the client at a later date.

With regard to the question of how exactly the contractor must document his hourly wage work, one can be guided by a judgement of the Federal Court of Justice from 2023 (BGH, decision of 01.02.2023, file no. VII ZR 882/21). The BGH has relaxed the obligation for contractors to provide evidence.

According to the judgement, in the case of hourly-paid work, the contractor must (only) state how many hours have been incurred for the provision of the contractual services and what hourly rates he charges for the hours incurred.

On the other hand, it is generally not necessary for the contractor to allocate the invoiced working hours to the individual activities in order to provide evidence to the client. He also does not necessarily have to break down the hours worked into time segments. A detailed breakdown of the hours worked and the allocation of the hours to the individual tasks is only required if this has been expressly agreed by the contracting parties.

Please note: According to § Section 15 (3) VOB/B further obligations to provide evidence apply to hourly-paid work in connection with the execution of construction work.

A contract for work is generally valid even if there is no agreement on remuneration. In such a case, Section 632 (1) BGB is applicable. According to this, remuneration is deemed to have been tacitly agreed if, under the circumstances, the work can only be expected to be produced in return for remuneration. If the amount of remuneration has not been specified, the "usual remuneration" is deemed to have been agreed in accordance with Section 632 (2) BGB.

Tip: Contractors and clients should agree as clearly as possible on the remuneration when concluding the contract for work and labour. This will help to prevent disputes about what the usual remuneration for a service is.

In its judgement, the BGH has relaxed the obligation for contractors to provide evidence in the case of hourly-paid work. Nonetheless, documentation that goes beyond what is required by case law can do no harm. In general, a contract for work and labour should contain as precise an agreement on remuneration as possible. This allows you to avoid disputes with an uncertain outcome right from the start.

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