EU Court Ruling on Travel Time Puts German Firms at Risk of Back-Pay Claims
Published on 08/01/2026 at 20:03 | Redaktion boerse-global.de
German companies that dispatch employees to client sites across the country may be sitting on a ticking financial time bomb. A decade-old ruling from the European Court of Justice continues to catch businesses off guard, with many still failing to count travel time as working hours.
The 10 September 2015 judgment (Case C-266/14) established that workers without a fixed office location must have their journeys between home and their first or last customer counted as paid working time. The condition: the employee must be at the employer's disposal and subject to its instructions during the trip. For companies that have ignored this obligation, the prospect of retroactive wage claims looms large.
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When a contractor becomes the employer
Beyond the travel-time issue, a separate compliance minefield awaits businesses that engage staffing firms from other EU member states. Hiring personnel through companies based in Poland, Romania or Bulgaria demands particular vigilance, as the legal framework is unforgiving.
The critical requirement is that the foreign service provider holds a valid German licence for employee leasing (Arbeitnehmerüberlassung). Without this authorisation, the client is automatically deemed the legal employer of the workers in question. That status carries full liability for wage tax and social security contributions — a burden that can quickly spiral into six-figure sums.
The A1 certificate: digital-only from 2025
Central to cross-border employment is the A1 certificate, the document proving that a person working abroad remains covered by the social security system of their home country. It applies to both employees and self-employed individuals temporarily working in EU states, as well as Iceland, Liechtenstein, Norway, Switzerland and the UK.
Since 1 January 2025, applications must be submitted electronically — there is no paper alternative. Missing certificates can trigger fines and, just as damagingly, significant operational delays while authorities verify status. Relief is on the horizon at EU level, however. Planned changes would waive the A1 requirement for business trips of up to three days within any 30-calendar-day period. The construction sector is expected to be excluded from this easing, however, as regulators intend to keep strict controls in place given the persistent risk of undeclared work.
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Practical steps for vulnerable sectors
Agriculture and construction firms are the most exposed to these overlapping obligations. Regular audits of contracts with foreign service providers are essential. Verifying that every deployed individual holds a valid A1 certificate and confirming the provider's leasing licence can prevent the inadvertent assumption of employer status.
Tax authorities also scrutinise payments to related companies, particularly executive salaries and profit-sharing bonuses. These are often subject to tight limits on deductibility, and companies should review their arrangements with connected entities to avoid unwelcome surprises during tax inspections.
The combination of EU case law and tightened administrative rules means the cost of non-compliance is rising. For businesses relying on cross-border labour, the message is straightforward: documentation is not bureaucracy — it is protection.
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