Contracts for work and labour with subcontractors from Eastern Europe - legally secure and clearly defined

In principle, the applicable law can be freely defined in the contract. Without such a specification, the law of the country in which the subcontractor provides its services generally applies. It is expressly recommended that this is clearly regulated and, if necessary, reference is made to EU regulations or international trade law. Global Business Recruiting will advise you on this decision and will include the law of the client country if required.

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 or German - in order to avoid misunderstandings and increase legal certainty. Global Business Recruiting draws up contracts for work in German and, if desired, in the respective national language of the subcontractor.

Claims for defects should be clearly defined in the contract: including deadlines for notification of defects, obligations to rectify defects and, if applicable, penalties or cancellation rights. This is a key advantage of a contract for work and labour compared to hiring out employees - in a contract for work and labour, the subcontractor is liable for the result and is obliged to rectify the defect.

The VAT regulations vary from country to country. In the case of cross-border transactions within the EU, the reverse charge procedure often applies, whereby the recipient of the service is liable for the VAT. Tax advice is recommended in individual cases - Global Business Recruiting will coordinate with specialised tax advisors if required.

Ideally, subcontractors should take out public liability insurance to cover any damage that may occur during the provision of the service. Depending on the trade and location of the assignment, other special insurances may be necessary - such as construction insurance or professional indemnity. Global Business Recruiting will clarify the insurance requirements in advance of the assignment.

There are basically three models for invoicing contracts for work: unit price (items are priced individually), lump sum price (total price for the defined work) and hourly wage basis (for work that is difficult to calculate). When billing by unit price, all items are listed and assigned a fixed price. The lump sum price offers the highest cost certainty for the client.

Depending on the contract value and risk, collateral such as bank guarantees or warranties can be agreed to secure the fulfilment of the contract. This is quite common for larger projects and protects both contracting parties.

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. A full advance payment is not recommended - it considerably weakens the subcontractor's incentives to make improvements.

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. When posting from an EU country, the regulations of the EU Posting of Workers Directive also apply. Global Business Recruiting ensures that all teams deployed fulfil these requirements.

The consequences should be clearly defined in the contract - such as contractual penalties, claims for damages or the right to withdraw from the contract. A well-drafted contract for work defines these scenarios in advance so that no ambiguities arise in the event of a dispute. Global Business Recruiting drafts contracts in such a way that both sides are protected.

The cancellation modalities should be set out in the contract, including notice periods and provisions for the completion of ongoing work and the invoicing of services rendered up to that point. Depending on the project status, cancellation can have considerable consequences - a clear cancellation framework protects both contracting parties.