Legal Alert – New Employer Obligations in Building Trade
The Act on the Contractor’s Obligations and Liability when Work is Contracted Out has been amended on 1 July 2012. The reform aims to prevent the black economy especially in building trade.
In building trade the contractor’s liability to check will in future require the contractor to ensure that the employees’ accident insurance is in force by requesting a certificate of it from the contracting party. The contractor has an obligation to acquire the information also from foreign companies by an extract of register or other corresponding certificate accordant to the local legislation. The building trade shall cover building and repair, servicing and maintenance relating to building. According to the Employment Accidents Insurance Act the work done in Finland shall in principle be insured in Finland. Posted workers are an exception to this. Enterprises located in the European Union or the European Economic Area which post workers to Finland are not obligated to provide an accident insurance in Finland. When it comes to the aforementioned companies, the contractors shall, however, ensure that the employee belongs to the social security system of the posting country.
Neglecting the liability to check in building trade shall lead to a negligence fee. If the negligence of the liability to check relates, for example, to a systematic distortion of legislation, the negligence fee can be rated up. The amount of the fee can therefore be EUR 16,000 at the minimum and EUR 60,000 at the maximum. The factors affecting the amount are the value of the contract between the contractor and the contracting party as well as the attainable benefit, repetition of the procedure, orderliness and other conditions.