Posting and assignment of third-country workers from Croatia to Germany
The employment of workers from third countries, for example from India, Nepal or the Philippines, first in Croatia and then their engagement in work in Germany, is an increasingly common business model. Such a structure is not prohibited in advance, but it is legally sensitive because it is simultaneously subject to Croatian rules on the residence and work of foreign nationals, European rules on the posting of workers, and German rules on minimum working conditions, notifications and the hiring-out of workers.
Lawful start in Croatia
The starting point of any permissible model is the lawful work of the worker in Croatia. A third-country national may work on the basis of a residence and work permit, a certificate of work registration, or in other cases provided for by law. Under the regular regime, the employer first carries out a labour market test and then seeks the opinion of the Croatian Employment Service, except where the law provides for exemptions. Only after that does the procedure for obtaining a residence and work permit follow and, where necessary, a visa for entry into Croatia.
It is equally important that the Croatian permit does not grant a general right to work. A third-country worker may work only in the jobs and for the employer stated in the relevant document. Therefore, in Croatia the worker must have a genuine employment relationship, with proper registrations and the actual performance of work.
Difference between posting and hiring-out
The legally most important distinction in the entire model is the distinction between the posting of workers and the hiring-out of workers. Posting exists where the Croatian employer performs its own contracted service in Germany and, for that reason, temporarily sends its worker there. In that case, the subject matter of the relationship is the service, and the Croatian employer retains the essential elements of work organisation and responsibility for the result.
By contrast, hiring-out exists where the worker is placed at the disposal of the German user undertaking, which integrates the worker into its own work organisation and gives instructions to the worker. In that case, the subject matter of the relationship is no longer a service but labour. Precisely for that reason, German law regulates the hiring-out of workers separately and subjects it to stricter requirements, including the need for an appropriate licence and the risk of serious consequences if the worker is hired out unlawfully.
In practice, what matters is not how the relationship is described in the contract, but how it actually functions. If the German client determines working hours, assigns daily tasks and directly manages the worker, the likelihood increases that the relationship will be classified as hiring-out, even where it is formally presented as a service agreement. It is precisely misclassification that is the most common and most dangerous risk of the entire model.
How to lawfully engage workers in Germany
Once the worker has lawfully come to Croatia and entered into a valid employment relationship, the Croatian residence and work permit alone is not sufficient for work in Germany. It is first necessary to determine whether the work is carried out under a posting model or under a hiring-out model. If the Croatian company in Germany performs its own contracted service and retains actual organisational control over the worker, this is posting. If the worker is placed at the disposal of a German user undertaking that determines the worker’s daily tasks, working hours and manner of work, this is the hiring-out of workers, which in Germany is subject to a substantially stricter regime.
In the case of genuine posting, in practice several elements must be secured before work in Germany begins, namely a valid employment contract in Croatia, a service agreement with the German client, an A1 certificate on the applicable social security legislation and, for third-country nationals where required, an appropriate visa route, most commonly through the Vander Elst regime. At the same time, German notification obligations should be verified, as well as the obligation to apply the German minimum wage and other mandatory working conditions for the sector in which the work is performed.
If, however, it is established that the German partner is not in fact receiving a service but labour, then this is no longer ordinary posting, but the hiring-out of workers. In that case, it should be assessed whether German law permits such a model, whether the required licence exists and whether all requirements for lawful hiring-out are fulfilled. Misclassification of the relationship is precisely the greatest practical risk: a model that is presented on paper as the provision of a service may, in an inspection, be reclassified as unlawful hiring-out, with consequences in the fields of labour law, social contributions, taxation and regulatory liability.
German obligations and main risks
The German part of the model requires a separate review even where the Croatian part of the procedure has been properly carried out. German authorities pay particular attention to whether there is a genuine service or concealed hiring-out of workers, whether the prescribed notifications have been made, whether the minimum wage is being applied and whether there is proper documentation proving the lawfulness of the work. This means that the Croatian employer must be able to prove both the legal basis for residence and work in Croatia and the legal basis for work on German territory.
The greatest risk in practice arises where the business relationship with the German partner is agreed in overly general terms, without a clear allocation of responsibility and without a detailed arrangement of who actually manages the worker. In such situations, everyday practice on the ground becomes decisive for the legal classification of the relationship. In addition, longer residence and work in Germany may also raise issues of tax treatment, social contributions and compliance with sector-specific rules, which is why the legal analysis needs to be carried out before work begins, and not only after the worker has arrived in Germany.
Conclusion
The model of employing workers from third countries in Croatia and having them work in Germany is legally possible, but only where it is properly structured from the outset. The first condition is a genuine and lawful employment relationship in Croatia. The second, and in practice decisive, condition is the correct classification of the work in Germany – namely whether the Croatian employer provides a service and therefore posts the worker, or whether it is in fact assigning labour to a German user undertaking. The third condition is full compliance with German rules on visas, notifications, minimum wage and the regime governing the hiring-out of workers. A Croatian permit does not in itself legitimise work in Germany; rather, the lawfulness of the model is determined by the actual organisation of work and compliance with the rules of the state in which the work is performed.
