← BlogJune 24, 20225 min readEditorial teamDEUAENRU
For Companies
Avoiding a Sham Contract for Work: A Checklist for Clients
A contract for work is only a contract for work if it is actually run as one. If staff are in fact being supplied, clients face serious consequences. This checklist helps you classify it.
What is a sham contract for work?
A sham contract for work exists when a contract is called a Werkvertrag but the workers are in fact used like the client’s own employees. Legally this is concealed temporary agency work. What matters is not the title but how the contract is actually carried out. We explain the basics in Contract for work vs. temporary agency work.
What are the risks?
If staff are supplied covertly and the provider has no licence under the AÜG, the contract may be void, and an employment relationship with the client may arise (sections 9 and 10 AÜG). Fines of up to €30,000 and back payment of social security contributions may follow. Since 1 April 2017 it also applies that agency work must be expressly designated as such and the person named before the assignment.
Typical criteria for genuine work performance
- Clearly defined result: a separable piece of work is owed, such as “harvest area X” or “clean 40 rooms”.
- Own organisation: the provider decides on schedule, personnel and method.
- Instructions: instructions to the staff come from the provider, not the client.
- No integration: the workers are not part of your operational organisation, rosters and teams.
- Pay by result: payment is for the work, quantity or a lump sum, not simply by hours.
- Liability: the provider is liable for defects and bears the entrepreneurial risk.
Warning signs in practice
Be careful if your supervisors assign tasks to the provider’s staff, they appear on your shift rota, billing is by hours with no result described, or the work equipment comes only from you.
Checklist before signing
- Work and acceptance described concretely in the contract
- Provider organises staff and deployment itself
- Provider’s contact person named on site
- Billing by result or lump sum
- Liability and warranty regulated
- For mixed models: also check the AÜG licence
Frequently asked questions
What is the difference between a contract for work and temporary agency work?
With a contract for work a result is owed and the provider organises the work. With agency work you direct the staff yourself.
What penalties apply to a sham contract for work?
Among others fines of up to €30,000, back payment of social security contributions and a possible employment relationship with the client.
Can a provider offer both?
Yes, if it holds an AÜG licence and keeps the two models cleanly separate.
Who decides whether it is a genuine contract for work?
The actual performance is decisive; in a dispute, authorities and courts examine it.
