Managing Purchaser’s Obligations and Liability When Work is Contracted Out
The purpose of the Act on the Contractor’s Obligations and Liability when Work is Contracted Out (the “Act”) is to promote equal competition between enterprises, to ensure observance of the terms of employment and to create the conditions in which enterprises and organisations governed by public law can ensure that enterprises concluding contracts with them on temporary agency work or subcontracted labour discharge their statutory obligations as contracting parties and employers. The Act imposes obligations on the purchaser that must be taken into account in certain commercial contracts when temporary agency workers or subcontracting are used.
When the Act Applies
• The Act applies to the use of temporary agency workers and to subcontracting where the subcontractor’s employee works at the purchaser’s premises or worksite in Finland and performs work related to tasks that are ordinarily carried out as part of the purchaser’s operations.
• Insofar as construction activities are concerned, the Act applies to purchasers acting as builders and all parties in the agreement chain in a common workplace which are acting as contractors for a contract that includes the work tasks.
The information required under the Act must be obtained when temporary agency work continues for more than 10 days in total. In the case of subcontracting agreements, the obligation to obtain the required information applies when the value of the agreement, excluding VAT, exceeds EUR 9,000. However, the obligation may also arise where the total working period or consideration under successive agreements exceeds the aforementioned thresholds, even if the value of an individual subcontracting agreement or the number of working days performed by temporary agency workers under an individual agreement does not exceed the applicable threshold.
What Information Must Be Obtained
The Act requires the purchaser to obtain, among other things, the following information and documents:
· information confirming whether the supplier is registered in the Prepayment Register, Employer Register and VAT Register
· an extract from the trade register or equivalent information otherwise obtained from the trade register
· information concerning the payment of taxes
· certificates of employee’s pension insurances taken out and of pension insurance premiums paid
· documentation showing the collective agreement or the principal terms of employment applicable to the work
· documentation showing that occupational health care services are provided
· in agreements relating to construction activities, a certificate confirming that workers’ compensation insurance covering occupational accidents and occupational diseases has also been taken out.
The documents and information must not be more than three months old.
If the agreement remains in force for more than 12 months, the supplier must provide the purchaser with updated tax and pension insurance certificates.
Information Must Be Obtained Before Entering into the Agreement
As a general rule, the required information and documents must be obtained before entering into the agreement; otherwise, the obligation to obtain the required information is considered to have been neglected.
Failure to comply with the obligation to obtain the required information may result in a negligence fee.
