From 0.24% to 22.7%: German Lawmakers Target Subcontractor Wage Theft as EuGH and BGH Set New Rules
16.06.2026 - 22:15:51 | boerse-global.de
The disparity could hardly be starker. In 2025, checks by the Austrian construction workers' holiday and severance fund revealed suspected underpayment in just 0.24 percent of domestic companies inspected. Among firms sending posted workers to Germany, the figure stood at 22.7 percent — nearly 95 times higher. Faced with such numbers, unions are urging European authorities to crack down on letterbox companies and provide better protection for mobile employees. The Austrian and European trade union federations ÖGB and EGB are pinning hopes on the European Commission’s “Fair Mobility Package,” promised for September 2026.
The pressure is already reshaping German legislation. The coalition of the Christian Democrats (Union) and Social Democrats (SPD) has presented a draft law that would eventually restrict public procurement to companies bound by collective bargaining agreements — so-called tariff-bound firms. A central element is the expansion of the Bürgenhaftung (surety liability) for subcontractors. Under the new rules, general contractors would bear far greater responsibility for their sub-contractors' compliance with wage standards.
Business associations are up in arms. The construction industry and the Federal Association of German Employers (BDA) have branded the plans a “Bürokratiemonster” — a bureaucratic monster — arguing that the administrative burden on companies would skyrocket. The proposed law would overturn a key precedent set by the Federal Labor Court in 2019, which held that a mere client or building owner does not have to answer for subcontractors’ minimum-wage debts. Liability under Section 14 of the German Posted Workers Act (AEntG) had been limited to companies that pass on their own tasks to subcontractors. That boundary would now vanish.
In a separate but parallel development, the European Court of Justice weighed in on wage protection. On June 11, 2026, the EuGH ruled that when a business changes hands, outstanding wage claims automatically transfer to the new owner. German national rules requiring the employee’s consent for such a transfer are incompatible with EU law. Affected workers can now choose to pursue claims against either the former or the new employer.
Germany is also falling behind on pay transparency. The relevant EU directive has been directly applicable to the public sector since June 8, 2026. The general implementation deadline expired on June 7. For private companies, the Family Ministry plans to bring the rules into force in early 2027, with initial reporting obligations starting in June 2028.
Meanwhile, the Federal Court of Justice (BGH) has clarified the criminal limits of subcontractor chains. In a ruling dated July 16, 2025, the court stated that merely hiring a subcontractor who evades social security contributions does not constitute criminal aiding and abetting. Criminal liability begins only when the main contractor actively participates in sham structures or contributes to concealment through false documentation.
Unions see a need for action on multiple fronts. The data from 2025, combined with the new legislative and judicial developments, indicate that the patchwork of German and European rules is shifting — but whether it will close the loopholes for posted workers and subcontractor exploitation remains an open question. The ÖGB and EGB are calling for a coordinated EU-wide approach to bogus postings, with the upcoming Fair Mobility Package as their immediate focus.
