Expansion of Contractor's Liability in Construction Activity as of 1 September
responded to the amendments to the Act on the Contractor’s Obligations and
Liability When Work Is Contracted Out and the Act on Public Contracts. The
related amendments boost efforts to prevent a grey economy.
The bill establishing the amendments is due for approval at the presidential session in July or August. They are expected to enter into force on 1 September 2012.
The amendments will provide contractors and contracting units with enhanced opportunities for ensuring that the contracting parties are reliable and comply with the basic terms of employment. The amendments were originally supposed to enter into force as of the beginning of July.
In accordance with the amendment to the Act on the Contractor’s Obligations and Liability When Work Is Contracted Out, a contractor in the construction industry will, in most situations, be obliged to request that the subcontractor provide the accounts and certificates required by the act. These include information related to the entry of the enterprise into various registries, pension insurance, tax payment, and the collective agreement or other principal terms of employment applicable. As a new matter, a certificate of accident insurance will be added to the list of items to be clarified. From now on, these accounts must also be requested from companies with established operations, or when the contractual relationship between the contractor and the subcontractor can be regarded as established.
Efficiency in law enforcement will be improved through the adoption of a higher fine for negligence in construction activity. The minimum fine is 16,000 euros and the maximum 50,000 euros. This fine can be levied if the contractor has either made an agreement with a party that is barred from conducting business, or is aware that the contracting party has no intention of fulfilling its legal obligations.
The amendment to the Act on Public Contracts changes the act in such a manner that, in future, all contracting units referred to in the act must, within the terms of the construction contract, require that the building contractor comply with the minimum terms of employment. Defined by legislation and collective agreements, the minimum terms of employment address issues such as pay, working hours and holidays.
These amendments form part of the Government’s action plan for the elimination of the grey economy and financial crime for 2012–2015. The purpose of the action plan is to achieve an annual increase of 300–400 million euros in tax and social security contributions during this electoral term.
Further information on MEE measures for prevention of a grey economy is available at: www.tem.fi/greyeconomy
Sources of further information:
Jan Hjelt, Senior Officer, Legal Affairs, MEE, at tel. +358 50 396 0199