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Who’s the Boss? Stop Exploitation in Subcontracting Chains!

05.08.2022 | 13:18

The European Federation of Building and Woodworkers (EFBWW), a social partner recognised at the level of the European Union, has launched a campaign called ‘Who’s the Boss? Stop Exploitation in Subcontracting Chains!’, the purpose of which is to draw attention to issues related to subcontracting in the construction sector and which seeks EU-level changes in legislation and more effective enforcement of rules.

Although subcontracting certain enterprises for specific technical tasks is a common phenomenon, the EFBWW claims that it often involves exploitation, misrepresentation and the abuse of labour, especially in cross-border contexts. Subcontracting chains are frequently used to conceal employment relationships, and to evade social security charges or other taxes, joint and several liability and inspections of the Labour Inspectorate.

The primary issues that the EFBWW points out are short deadlines and the pressure exerted on subcontractors by clients and main contractors to cut corners. This can often be the reason why subcontractors do not pay the remuneration stipulated under the collective bargaining agreement or minimum wage and ignore the requirements of overtime work, occupational health and safety, accommodation and transportation. In addition, subcontractors frequently vanish after months of work without paying their workers. These enterprises are often employment mediation agencies and shell companies that do not engage in actual and productive business. Mobile workers from other European Union countries and increasingly from third countries are frequently victims of undeclared and underdeclared work, fake postings and social security fraud. Instead of salaried workers, they are unknowingly declared as micro-enterprises in order to disguise the real dependency between workers and employers.

According to the EFBWW, a potential solution could be, among other things, to limit subcontracting chains to a maximum of one or two sub-layers for both public and private procurement contracts. Namely, the longer the subcontracting chain, the less transparent it is and the more difficult it is to control it and enforce existing legislation and collective agreements. The EFBWW also considers it necessary to impose stricter rules for public procurements. They call for binding legislation to ensure that only companies (including all subcontractors) which engage in collective bargaining and pay wages according to the most favourable collective agreements can win public contracts. The EFBWW believes that due diligence escape clauses should be prohibited and that Member States should introduce joint and several liability so that clients and the main contractors would always be liable for the actions of subcontractors. This would encourage enterprises to avoid engaging with shell companies and shady employment mediation providers.  

Additionally, the EFBWW and the European Construction Industry Federation, their social partner which represents employers, call for effective European digital enforcement tools, which would make cross-border subcontracting chains as fraud-proof as possible. A European Social Security Number (ESSN) or a European Social Security Pass (ESSP) should enable real-time cross-border access to data. It is also necessary to strengthen the right of trade union and workers’ representatives to monitor and enforce the rights of workers in subcontracting chains by providing them with full access to information regarding the subcontracting and by granting them the right to visit and audit worksites without prior notification. The EFBWW also believes that European and national legislation should ensure equal treatment in both public and private procurements so that subcontractors provide their workers the same working conditions and social security rights as the main contractor. Direct employment should be the norm, so that full equal treatment applies to subcontracted workers as well – equal pay for equal work.

The Labour Inspectorate hereby encourages you to contribute to raising awareness of matters regarding subcontracting and implementing changes that ensure fair competition and workers’ rights in construction. You, too, can make proposals to the European Commission on the official website of the European Union in order to improve EU legislation. The European Commission, in turn, will make legal proposals to the European Parliament and the Council of the European Union based, among other things, on the opinions of citizens and stakeholders. More information about the campaign is available on the website of the European Federation of Building and Woodworkers.

In addition, you can inform the Labour Inspectorate about violations of employment legislation at [email protected].

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