Contractor’s obligations and liability act is a law about contractor’s obligations and liabilities when using outside workforce. Contractor has the obligation to ensure that contract partner fulfills its legal liabilities. The main purposes of the act are the prevention of black market activities, ensuring fair competition between companies and that collective agreements are complied with.  The act is applied from the moment when; out contracted employees work duration lasts more than 10 days, or the VAT-excluded value of a subcontract is over 9000 euros. In Finland the compliance of the law is monitored by southern Finland’s Regional state administrative agency.

The responsibilities of the contractor are to examine whether contract partner is part of the prepayment and employer registries and is registered as VAT-liable in VAT register. In addition, contractor must examine items such as, has contract partner paid its taxes, taken a pension insurance and what collective agreement is applied or what are the key terms of employment. Additionally, how the occupational health care is handled must be examined. All of the information mentioned above must be obtained from both domestic and foreign companies.

Contractor who neglects his obligations is to be charged with a negligence fee. The fee amount will vary between 2000 - 20 000 euros depending on the seriousness of the negligence. In addition, if the contractor has proven excessive disregard to his obligations and liabilities, the contractor can be charged with raised negligence fee, which is worth between 20 000 – 60 000 euros.

For additional information, check the following links:

https://www.tem.fi/en/work/labour_legislation/contractor_s_obligations_and_liability

https://www.tilaajavastuu.fi/en/act-on-the-contractors-obligations-and-liability-when-work-is-contracted-out/