← Blog23 May 20253 min readDLP24DEUAENRU
For businesses
Client Liability: Minimum Wage, Social Security, Construction Withholding Tax
Anyone who awards work to subcontractors does not escape responsibility. An overview of the main liability risks.
Minimum wage
Under section 13 of the Minimum Wage Act in conjunction with section 14 of the Posted Workers Act, a business that commissions another business with works or services is liable like a guarantor for that business’s minimum wage duty. This includes subcontractors down the chain.
Social security
In construction, the client is liable under certain conditions for the subcontractor’s social security contributions (section 28e(3a) SGB IV). Liability can be limited by a clearance certificate (Unbedenklichkeitsbescheinigung).
Construction withholding tax
For construction services, clients who are businesses must in principle pay 15 percent of the consideration to the tax office (section 48 Income Tax Act), unless a valid exemption certificate (Freistellungsbescheinigung) is available.
How to protect yourself
- Request exemption and clearance certificates.
- Agree contractual assurances and indemnity clauses.
- Ask for proof of wage payment and notifications.
- Choose reputable providers.
FAQ
Does liability also apply to private individuals?
Minimum wage liability concerns businesses as clients. Private home builders are usually not covered.
How long are the certificates valid?
Exemption certificates have a validity period. Check the date.
Can I exclude liability by contract?
Only to a limited extent. Statutory liability remains; indemnity clauses help between the parties.
