Contracts for work and labour with subcontractors from Eastern Europe

Do you have a large order that you want to fulfil independently or directly through an Eastern European subcontractor? Then a contract for work and labour is a good option. 

In the main construction industry, contracts for work and labour are the only legal option for employing Eastern European subcontractors, as hiring out workers in this sector is traditionally prohibited in Germany.

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What is a contract for work?

A contract for work is an agreement in which a contractor is obliged to perform certain work in return for payment. In return, the client is obliged to pay the agreed remuneration. This may involve the manufacture of a product, the provision of a service or the realisation of a construction project. A contract for work is characterised above all by the success owed by the company and thus differs from a service contract. It is important that the parties clearly define and establish their obligations and rights in order to avoid misunderstandings or disputes. A clear definition of the work as well as the exact circumstances and conditions are therefore essential for the successful conclusion of a contract for work and labour.  Find out how to invoice work contracts correctly >>>

Your advantages

Clear definition of services

Clear definition of services or the work. Focus on the end product or the service provided.

Fixed price guarantee

Costs for the service are fixed, there are no unexpected cost increases.

Risk minimisation

By defining services, price and time frame, risks can be minimised for both sides.
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Components of a contract for work and labour with Eastern European subcontractors

The contract for work and services with Eastern European subcontractors usually sets out the specific conditions and agreements that apply to the provision of the agreed work or service. These agreements can vary depending on the type of project, the industry and the individual requirements. Here are some typical elements that can be agreed in a contract for work and services with Eastern European subcontractors:

Service description:
A detailed description of the services to be provided or the work to be produced, including scope, quality, time frame and delivery conditions.
Price and terms of payment:
Determination of the agreed price for the services provided and the payment modalities, such as instalment payments, payment deadlines and currency.
Rights and obligations:
Clarification of the rights and obligations of both the main contractor and the subcontractor, including responsibilities, liability, warranty and non-disclosure agreements.
Applicable law and place of jurisdiction:
Determination of the applicable law and the place of jurisdiction in the event of legal disputes.
Working hours and location:
Determination of working hours, work locations and, if applicable, travelling expenses or conditions, especially if the subcontractor is from abroad
Quality standards:
Specification of the quality standards and requirements that must be met by the subcontractor to ensure that the final product meets expectations.
Communication and reporting:
Agreement on communication channels, reporting procedures and regular updates during the project to track progress and identify problems at an early stage.
Changes and additional services:
Definition of the procedure for changes to the project scope or additional services as well as corresponding agreements on additional costs or time frames.
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Legally compliant contracts for work

As an international Personnel service providerwe offer our support in drawing up contracts for work and labour. We are familiar with a wide range of legal provisions in the partner countries and can advise you on legally compliant and clearly defined contracts for work and labour. Our services:

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Frequently asked questions

In principle, the applicable law can be specified in the contract. If it is not specified, the law of the country in which the subcontractor provides its services generally applies. However, it is advisable to clearly regulate this and possibly refer to EU regulations or international trade law.
It is advisable to draw up contracts in the native language of both contracting parties or at least in a common business language such as English in order to avoid misunderstandings and increase legal certainty.
Claims for defects should be clearly defined in the contract, including deadlines for the notification of defects, obligations to rectify defects and, if applicable, penalties or cancellation rights.
The VAT regulations vary from country to country. For cross-border transactions within the EU, the reverse charge procedure is often used, whereby the recipient of the service is liable for VAT.
Ideally, subcontractors should take out public liability insurance to cover any damage that may occur during the provision of the service. Further special insurance policies may be necessary.
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 invoicing according to a unit price, the items required to fulfil the work contract are listed and a specific price is set for each item.
Depending on the contract value and risk, collateral such as bank guarantees or warranties can be agreed to secure the fulfilment of the contract.
The payment plan should be linked to milestones and provide for instalments after acceptance of defined parts of the work. Instalment payments and final payments should be clearly regulated.
Subcontractors must comply with the labour and social standards of the country in which the work is carried out. This includes minimum wages, working hours, holiday entitlements and safety regulations.
The consequences should be specified in the contract, e.g. contractual penalties, claims for damages or the option to withdraw from the contract.
The cancellation modalities should be set out in the contract, including the notice periods and the regulations for handling ongoing work and invoicing for the services provided up to that point.
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