1. General
There is increasing uncertainty among builders and contracting companies when awarding contracts to subcontractors. In the case of undeclared work, there is not only the risk that warranty claims and contractual claims for damages will lapse, but also that fines will be imposed: An administrative offense is committed if it is subsequently discovered that the contractor or subcontractor is not authorized to carry out his activities. Recently, regulatory authorities and courts have been relatively quick to impose fines for alleged violations of § 2 para. 1 of the German Act against Clandestine Employment (SchwArbG). The highest court has repeatedly dealt with the review of district court decisions and has addressed the demanding requirements of the offense. In various cases, the first-instance judgments in which the company or the building owner was convicted were overturned.
According to § 2 para. 1 SchwArbG, a natural or legal person must expect a fine of up to three hundred thousand euros if they have services or work performed on a significant scale by commissioning one or more persons to provide these services in violation of the provisions mentioned in § 1 para. 1 SchwArbG. According to the last-mentioned standard, a requirement for the independent exercise of a trade is entry in the trade register.
It follows from the wording of § 2 SchwArbG that the client of a service or work performance can only be prosecuted under two conditions: First, he must have known that the craftsman is not authorized to carry out such work. The requirement of intentional commission arises from a reverse conclusion from § 10 OWiG. This stipulates that intentional action can always be punished as an administrative offense, but negligent behavior can only be punished if the law expressly threatens such behavior with a fine. In § 2 SchwArbG, the negligent commissioning of an unregistered craftsman is not explicitly threatened with a fine, so that negligent behavior is not sanctioned. Accordingly, only the entrepreneur who had positive knowledge of the fact that his subcontractor was not registered in the tradesman's register is subject to a fine.
Furthermore, the awarding of the services must be on a significant scale.
2. intentional action on the part of the client
The question of whether the client has behaved improperly usually depends on whether he was aware that the tradesman commissioned was not authorized to work. If tradespeople assure their client when commissioning the work that they are registered in the trades register and this turns out to be incorrect in retrospect, administrative offence proceedings for violating § 2 SchwArbG are regularly initiated against the client. The primary question is whether the client was justified in relying on the tradesman's assurance. The question arises as to what the client should have done in order to avoid being accused of acting intentionally. This is a typical question of differentiation between intent and negligence. An act is deemed to have been committed intentionally if the person concerned knows or can safely foresee that his act will lead to the realization of the legal facts of the case, or if he seriously considers it possible and accepts it (so-called "contingency resolution"). On the other hand, it is to be assumed that there is non-punishable negligence if the person concerned considers it possible that he may fulfill the legal requirements of the offense, but contrary to his duty, trusts that he will not fulfill them.
The Higher Regional Courts have repeatedly dealt with the difficult practical distinction and the scope of the business owner's duty to inquire when receiving services provided by third parties in violation of the provisions of the SchwArbG. In one case, the entrepreneur erroneously assumed that his subcontractor was authorized to carry out drywall construction work because the subcontractor indicated this on the letterhead of his construction company. The Higher Regional Court of Düsseldorf (5 Ss (OWi) 145/98 (OWi) 117/98 I), NStZ-RR 2000, p. 54) found in this regard that the business owner had been mistaken in a way that precluded intent in accordance with The annulled decision by the local court had still assumed a willful act and believed that the person concerned had only been mistaken about the prohibition. Anyone who has been deceived by a subcontractor also does not have to accept a fine notice and can claim error if nothing else (past experience, known criminal record, etc.) spoke against the subcontractor being entered in the skilled trades register. In the latter case, there may be increased obligations to make inquiries, which in individual cases may lead to the client requesting information from the chamber of trade in cases of doubt. The client is also acting with conditional intent if he should have known that the agent was not registered in the skilled trades register. This is the case if obtaining information from the relevant chamber of skilled crafts or the presentation of the skilled trades card by the agent is virtually unavoidable. If the signs of a missing entry are so great that the client accepts the consequences of non-registration and accepts the risk of the realization of § 2 SchwArbG, then intentional action is to be assumed. Such an imposition can arise in the event of specific doubts regarding non-registration. These doubts may also arise from the fact that the work that the agent is supposed to perform has no similarities at all with the work that the agent uses in advertisements or on his letterhead.
What is important and undisputed in the result is that there is no principle that says that a contractor who has failed to check with the chamber of trade beforehand is per se in bad faith and thus acted intentionally. A higher court has repeatedly had to overturn a lower court ruling to the contrary (OLG Hamm IBR 2003, p. 392, 1 Ss OWi 308/02; OLG Hamm, StraFo 2000, p. 169). In this case, the court of first instance wrongly assumed that the client could have recognized the missing entry. However, in the opinion of the supreme court, this only indicates negligence that is not punishable.
3. Awarding of services to a significant extent
The fact that the offense is only relevant in the context of the Illegal Employment Act if the client has commissioned a significant amount of work from a tradesperson is often neglected by the authorities imposing fines and the local courts. This raises the question of what is meant by a significant extent and what assessment criteria are used to determine this. The case law (Higher Regional Court Düsseldorf IBR 2000, p. 397; OLG Hamm IBR 2003, p. 392) is based on the number of employees deployed, the duration of the work, the value of the materials, the qualifications required to perform the work and its value in relation to the total value of the building.
4. Result and conclusion
The prevailing practice of assuming contributory negligence on the part of the client if it is subsequently discovered that the subcontractor is not registered in the trades register must be stopped. The individual case must be considered. Fines against the client companies based on a violation of § 2 SchwArbG should not be accepted. It can be stated that an administrative offense in these cases only exists if the client knows that the contractor is not or was not registered in the trades register. Negligence is not punishable. An error on the part of the client leads to the loss of intent. If the business owner wants to avoid any confusion from the outset, he should first check with the relevant chamber of trade that the tradesman is authorized to carry out activities of the kind in question. Alternatively, the entrepreneur should be advised to ask the subcontractor to show the trade card in accordance with Section 10 HwO. This certifies the subcontractor's entry in the trade register. However, there is no legal obligation to check this.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.