Chain liability in the ‘Bogus Construction’ Approach Act
Chain liability already has a longer history in labor law. For example, construction contractors where social insurance premiums not paid by the subcontractor can be recovered from the “main” contractor. On July 1, 2015, an important part of the Bogus construction Approach Act (in Dutch WAS) entered into force, which means that there are now far-reaching redress options for employees on the client in the chain who are not paid, or receive insufficient payment. Chain liability is regulated within the EU in the enforcement directive (Directive 2014/67 / EU), which aims to be able to enforce the obligations from the Posting of Workers Directive more effectively. Sharpening of the rules of the game is necessary in order to better combat unfair competition, for example through underpayment of employees.
Chain liability is governed by Articles 7: 616a to 616f of the Dutch Civil Code, where 7: 616a of the Dutch Civil Code stipulates that it is exclusively an assignment contract or contract for work, and 7: 616f of the Dutch Civil Code provides that it is all mandatory. These new legal obligations cannot therefore be “contracted out”.
Now that the regulation has been included in title 10 of Book 7 of the Dutch Civil Code, it follows that it concerns work performed by employees. It is therefore not applicable if it concerns work performed by a self-employed person in the chain. There may, of course, be ‘false’ independence, but then it must first be established that there is an employment contract between the parties.
In addition, the legislator has laid down in article 7: 616a paragraph 3 of the Dutch Civil Code that it is not about chain liability for natural persons who do not act in the course of a business or profession. So if you have your garden prepared for winter for a suspiciously competitive price, you do not run any chain liability risk.
The WAS actually has two types of liability. Article 7: 616a paragraph 1 of the Dutch Civil Code stipulates that the employer and his client are “jointly and severally” liable, while Article 7: 616b of the Dutch Civil Code provides that the “next to higher” client in the chain can be addressed. That is therefore chain liability.
How are things now in practice?
The employer and the client are at the top of the chain. Both are now jointly and severally liable. In the event of underpayment, the employee can (of course) go directly to his employer, but now also to the client of his employer.
If an employee does not succeed in getting paid, he can, by appealing to 7: 616b of the Dutch Civil Code, file a claim with the next higher client. So the client of the client. This is only possible if a number of conditions described in paragraph 2 are met. These conditions are summarized: (a) unknown place of residence or residence, (b) no registration at the Chamber of Commerce of employer and / or client, (c) bankruptcy of both, where the estate offers no or insufficient recourse, (d) irrevocable Judicial decision to pay wages vis-à-vis both that cannot be enforced, (e) the client has successfully invoked ‘non-realizability’.
The first four conditions speak for themselves because, of course, the employee must first do his utmost to persuade his employer or the client of his employer to pay before he focuses on others in the chain. This is to prevent sort of “shopping” at parties that may offer easier redress.
The next step is that the client being addressed can further invoke non-culpability towards the employee. When does such a profession succeed? The following scenarios from the parliamentary documents:
- If a client has chosen to work with a contractor who has a quality mark or is certified, that should in principle be sufficient for a successful appeal to the client for non-culpability. This does not provide a guarantee, but it does provide a reasonable guarantee for the client.
- The client must also be alert to a price in line with the market. If the price offered is – far too low – alarm bells must ring and the client must ask questions about the employment conditions and working conditions at the contractor. If that does not provide an adequate statement, the client must not engage with that contractor. If he does, he consciously takes a risk.
- Furthermore, it is advisable for the client to include a chain clause in the contract agreement whereby the contractor undertakes to include the provisions on underpayment again in contracts with, for example, subcontractors.
- Finally, the client must get moving if signals reach him from, for example, the trade unions about possible ‘missing teeth’. Sitting still also leads to the elimination of the possibility of relying on non-culpability.
The background to the scheme is clear and there are the necessary recent social examples that show that there is a need for it. Just think of construction workers who were employed through contracting for the construction of the new coal-fired power station in Eemshaven, or construction workers at the A2 tunnel construction near Maastricht. Both cases made ample coverage of the media and there appeared to be serious missing teeth and underpayment.
The aim of the WAS is to encourage clients to work with bona fide contractors and not to easily accept offers that are in fact far too “cheap”. The WAS seems to be a successful attempt, but there will still be some bumps in enforcement. For example, the definition of client is a bit simple and the exclusion of private individuals from this chain liability may lead to private individuals being used as a ‘cat catcher’. A seventies construction phenomenon that may start a “revival” with this.