Source: https://www.ecovis.com/wirtschaftsstrafrecht/typical-practical-pitfalls-criminal-law-risk-in-contractual-arrangements/
Timestamp: 2019-04-19 05:18:18+00:00

Document:
Employers regularly stumble across the example case described here. In the following, we will show what the risks are and what penalties can be imposed.
Contractor B, located in the border area with the Czech Republic, has an additional short-term need for employees due to the high order situation. He sees a particular need for action in the area of painting work.
However, he does not want to increase his core workforce permanently because he does not expect such a high level of orders in the long term.
Therefore he would like to borrow a few employees from a well-known entrepreneur U for the additional workload. U operates a comprehensive construction business and, depending on the contract, acts as general contractor. However, he also only serves individual trades.
The borrowed employees are supposed to help out on the construction sites and cover the additional demand for work. However, the well-known entrepreneur does not have a rental permit and has not yet applied for one.
The following must be taken into account. Entrepreneur B could become liable to prosecution if the award is carried out in accordance with § 266a (1) and (2) StGB and § 370 AO. Furthermore a substantial fine threatens.
The provision of temporary staff (also called temporary work) is always subject to permission. In the case of temporary employment, an employer (lender) makes one or more of its employees available to a third party (hirer). The hirer then employs the hired employee in his company and is entitled to issue instructions to him. The temporary worker performs the work owed to the hirer. However, the temporary worker remains an employee of his employer.
If, however, employees are lent to third parties (here B) without corresponding permission from the Federal Employment Agency, the contracts concluded between the lender, employee and hirer are invalid, § 9 No. 1 AÜG.
As a result, the hired employee is regarded as an employee of the hirer and an employment relationship arises between these two persons, § 10 (1) Hs. 1 AÜG. This gives rise to typical employer obligations on the part of the hirer, including the resulting obligations to pay the social security contributions due.
Since the known entrepreneur does not have a lending permit and has not yet applied for it, B would violate the AÜG. There would be an illegal transfer of employees.
In the absence of a lending permit pursuant to § 9 No. 1 AÜG, the temporary employment contract concluded between B and U would therefore be invalid. Consequently, an employment relationship would arise between B and the temporary workers. The content and duration of the resulting employment relationship would then be determined by the circumstances of the temporary employment agency. In addition, the temporary worker would also be entitled to the same pay as the permanent staff of the B (so-called Equal Pay) pursuant to § 10 AÜG. This means that the employer is obliged vis-à-vis the temporary worker to pay the same wage as a comparable employee of the hiring company.
However, this now gives rise to the criminal law risk for entrepreneur B. Due to the employment relationship that has arisen, he would have to pay the social security contributions and the wage tax that are attributable to this. As temporary workers usually earn less, however, too little is paid due to the principle of equal pay.
Finally, B is also a suitable offender, since he would have to be qualified as the employer of the temporary workers. He is entitled to serve and to give instructions and there is an integration of the company.
In addition, under the conditions of § 42d (7) in conjunction with (6) EStG, there would be a threat of income tax evasion under § 370 AO because B would not have paid the income tax payable.
As a consequence of this, Entrepreneur B realizes the facts of withholding and embezzlement of wages according to § 266a StGB and a wage tax reduction according to § 370 AO.
According to § 1b S. 1 AÜG, temporary employment in construction companies is generally prohibited. According to § 101 (2) SGB III in conjunction with § 1 BaubetrV, such a company is usually a company whose commercial employees mainly perform construction services on the construction market during their working hours. Construction services are all services which serve the production, repair, maintenance, modification or removal of buildings, § 101 (2) S. 2 SGB III.
However, case law interprets the term „construction companies“ more narrowly in the context of § 1b AÜG and extends it only to companies in the main construction industry, i.e. those in § 1 BaubetrV. The ancillary construction companies in the sense of the negative catalogue of § 2 BaubetrV, however, are not included.
The prohibition according to § 1b S. 2 AÜG does not apply between companies of the construction industry and other companies, if these companies allow the transfer of collective bargaining agreements which have been declared generally binding.
It must be proven that the lending enterprise has been covered by the same framework and social cash collective agreements or by their general applicability for at least three years and that it has a lending permit.
The hiring of workers in the main construction trade can be punished with a fine of up to EUR 30,000 pursuant to § 16 (1) No. 1b, (2) AÜG.
In this case, the risks and possible consequences of illegal hiring out must be clarified in advance. It must be expressly pointed out that a temporary employment contract between B and U may only be concluded once U has applied for and obtained the rental permit from the Federal Employment Agency. Otherwise, the contracts concluded are invalid and B runs the risk of not paying the social security contributions as an employer.
In addition, it is necessary to discuss for which activities exactly B the workers are required. This follows from the fact that, precisely because of the exceptions mentioned above, only the hiring out of workers in the main construction sector is prohibited.
However, if B needs painters or carpenters, they can be hired if the hirer has a permit and fulfils the above criteria of § 1b S. 2 AÜG.

References: § 266
 § 370
 § 9
 § 10
 § 9
 § 10
 § 42
 § 370
 § 266
 § 370
 § 1
 § 101
 § 1
 § 101
 § 1
 § 1
 § 2
 § 1
 § 16
 § 1