EN
Corporate

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

logo
Legal news
calendar 26 January 2015
globus Denmark, Sweden, Norway

EU has adopted an enforcement directive which requires the Member States to impose chain liability in the construction industry. The chain liability entails that a main contractor risks being responsible if a subcontractor for instance does not pay his posted workers.

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]

Receive our newsletter

Aage

Krogh

Partner

Similar

logo
Corporate

13 October 2021

Resume your entrepreneurial company if it has been sent for compulsory dissolution

logo
Corporate

29 September 2021

The Danish entrepreneurial company type is being abolished - this is how you can close yours

logo
Corporate

15 September 2021

The Danish entrepreneurial company type will expire – learn how you can convert yours

logo
Corporate

23 August 2021

Prospects for new rules on transfer pricing documentation for Danish companies

logo
HR Legal Corporate Technology

28 June 2021

New Act on the protection of whistleblowers

logo
Corporate

24 June 2021

Pitfalls in intra-group support statements

The team

Aage

Krogh

Partner

Lucca

Powers Bates

Senior legal assistant

Matilde

Grønlund Jakobsen

Associate

Pernille

Skall Søby Nielsen

Legal assistant

Signe

Kræmer Pedersen

Senior legal assistant

Victoria

Valentin Olsen

Junior legal assistant