German contractor fined for dodging €340K in social security payments

A suspended sentence exposes the risks of off-the-books hiring. How one contractor’s scheme drained €340K from insurers—and what it means for employers.

, and Administrator

2025 November 20 . 1:15 AM

1 min read

The picture is taken on the street of a city. In the center of the picture there are shops, tents,... — The picture is taken on the street of a city. In the center of the picture there are shops, tents, umbrellas, auto rickshaw, motor bike, people and many other objects. In the background there are buildings. In the foreground there are waste papers on the road.

A 40-year-old construction contractor from Chemnitz has received an eleven-month suspended prison sentence. The court ruled he had evaded social security payments by employing workers off the books. His actions cost car insurance providers over €340,000 in lost contributions.

Between 2021 and 2023, the contractor hired multiple employees without registering them with social security. He also failed to pay the required contributions for their wages. To hide the undeclared payments, he created fake invoices through service companies.

The contractor’s conviction highlights the consequences of evading social security obligations. The €340,000 loss will now need to be recovered by the affected car insurance providers. The case also serves as a warning to employers who attempt to bypass legal payroll requirements.