A new EU directive imposes compulsory chain liability in the construction industry

The directive is essential for the construction industry because a chain liability is imposed to the first link of subcontracting chains. Therefore, a contractor can be responsible if a subcontractor does not fulfil his obligations to his posted workers who are working for the main contractor in Denmark.

The purpose of the directive is to suppress social dumping and to improve the enforcement of the directive concerning the posting of workers so that posted workers’ rights are ensured.

The Member States decide the rules concerning due diligence

The directive applies to the situation where a Danish main contractor hires a subcontractor from another EU Member State and the subcontractor has a posted worker executing the work in Denmark. In this case the main contractor will be responsible if the subcontractor does not fulfil his obligations to the posted worker. This can be obligations such as pay, vacation, pension, contributions due to common funds and institutions of social partners etc.

The Member States have the possibility to determine that a main contractor is not liable if he has exercised due diligence. The Member States are responsible for determining the scope of due diligence, but the directive has different suggestions, e.g. measures where the main contractor requires documentation from the subcontractor to document that he has fulfilled the administrative requirements and observes the rules regarding posted workers.

The directive has not yet resulted in any Danish rules and the Member States can choose to introduce more strictly liability rules than according to the directive. For that reason, it is difficult to determine the extent of the liability in Denmark at the present time. The member states have two years – from June 2014 – to implement the directive.

IUNO’s opinion

IUNO recommends that contractors prepare themselves for the new rules by ensuring that their subcontractors act in conformity with the rules regarding posted workers. This can for example be done by incorporation of social clauses in the contracts, just like the subcontractor’s documentation can be enclosed to the contract as a part of the contractual basis. Furthermore, contractors can conduct control measures including unannounced inspections at the construction site.

The directive must be implemented into Danish law before it comes into force. We will follow the development and inform about specific measures that are carried out.

[Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014]