Deutscher Gewerkschaftsbund

Problems in the subcontracting chain

"A subcontracting chain", explains Dragana Babulj, "is established when a general contractor employs a subcontractor, who in turn employs a subcontractor, who then employs another subcontractor". “And”, she adds, “usually, the farther down the chain you go, the lower the wages get".

Dragana Babulj is a consultant at a DGB (German Trade Union Confederation) Fair Mobility Advisory Centre and she knows what she is talking about. For the number of subcontracting chains in the German construction industry is high. Frequently, the general contractors are German corporations, with which a number of subcontractors are affiliated. In this way, general contractors seek to outsource responsibility for their employees. "When people working in Germany as seconded employees contact us, we first have to try to trace the chain backwards," explains Dragana Babulj. "In Germany, general contractors can be held responsible at the very least for compliance with German minimum wage laws.”

But sometimes things are more complicated, as some legal issues are unresolved for subcontractor chains. "The problem", says Dragana Babulj, "is that responsibility and pressure are usually passed down to the lowest link in the chain – and thus placed on the backs of the workers.”

This happened in the case of the two electricians Miran B. and Ivo N. (whose real names are different). Both men were employed by a Croatian subcontractor for whom they worked on a construction site in Stuttgart. They reported to Dragana Babulj on behalf of six of the company's employees. The reason was that they had been quarantined after a corona case. The workers had to stay at home for 14 days – without pay. Their employer, the two men explained, would be willing to apply for state aid in order to be able to pay them at least part of their wages for the period during which they had been quarantined. But he didn’t know how to do that.

"Our lawyers looked into the matter and came to the conclusion that it is possible for the subcontractor to apply for reimbursement of wage costs once they have been paid," says Dragana Babulj. "The problem was that after I informed the subcontractor that he had to pay the wages in advance in order to get a refund, he broke off contact and disappeared." Shortly afterwards, we also received an e-mail from the office of the regional government, informing us that no reimbursements could be made to foreign companies even if wages were paid in advance. "We think this is contestable", says Dragana Babulj, "but in order to sue, the subcontractor would first have to have paid. However, that is difficult to achieve in the absence of legal certainty.”

Yet Dragana Babulj does not want to give up. "We’re still trying to reach the subcontractor and convince him to pay in advance, so that we can then file a petition jointly and, if necessary, have the case settled before the administrative court," she says. As this case clearly shows once again, responsibilities in this area must be clearly defined. Otherwise such cases will come up again and again".