Contractor’s be aware – Finland

Contractor’s be aware – Tilaajavastuulakia tiukennetaan – Finland

Contractors in Finland have liability to review that their contracting partner fulfils statutory obligations. The Act on the Contractor’s Obligations and Liability when Work is Contracted Out (1233/2006) (”the Act”) is to be amended as of 1.9.2015. The building and logistics sector should especially notice amendments. The observance of the rules is verified by documentary review as stated in the Act. In case the requirements laid down in the Act are not fulfilled a negligence fee can be determined to the contractor.

According to the Governmental decree (161/2014) amending the Act, similar regulation applicable to contractors can be found in legislation of Germany, France, the Netherlands, Belgium, Austria and Norway.

Shortly on amendments that will affect contractors as of 1.9.2015

  1. Threshold for applicability of the Act raises to EUR 9.000, being the value of the contract without VAT
  2. While a tax debt of the contracting partner is less than EUR 10.000 no payment plan is necessary to be concluded by the contracting partner
  3. The increased negligence fee is to be applicable to all contractors not only from the building sector as it is currently and the increased negligence fee is to be between EUR 20.000 and EUR 65.000
  4. The contractor’s documentary review shall include a review of documents confirming that the occupational health care is organised
  5. Building sector should notice the new section 5 a.2 § of the Act requiring that all posted workers have effective certificates indicating applicable social security regulation to their contract
  6. Amendments to the Posted Workers Act (1146/1999) should be noticed
  7. Current legal praxis is codified to the Governmental decree which strengthens its guidance to the officials
  8. Tax debt of the contracting partner does not mean automatically that the negligence fee is instructed to the contractor
  9. Tax register information is to be publicly available

General review of the effects of the amendments

According to the proposed amendments to the Act, in case a contractor breaches the requirements of the Act the applicable penalties shall be higher and the increased negligence fee is applicable to all contractors within the meaning of the Act. Further to this, in case the general documentary review requirement of the contractor is breached the negligence fee between EUR 2.000 and EUR 20.000 is applicable.

In case the contract is concluded with a party e.g. who has been barred from conducting business, or with an enterprise in which a partner, a member of the Board of Directors, the Managing Director or another person in a comparable position has been barred from conducting business the increased negligence fee between EUR 20.000 and EUR 65.000 is applicable. Further to this, when the contractor has concluded a contract being aware of that the contracting partner had no intention of discharging their statutory obligations as an employer, the increased negligence fee is applicable.

Scope of application of the Act

Contractors referred to in the Act are enterprises and organisations governed by public law that use temporary agency workers or subcontracted labour. Further to this, all traders who have an obligation to submit a basic notification when they begin trading are contractors. The contractor may also be a foreign company operating in Finland.

The Act applies to a contractor: a) who in Finland uses temporary agency workers; or b) at whose premises or work site in Finland an employee is working, who is in the service of an employer having a subcontract with the contractor, and whose tasks relate to the tasks normally performed in the course of the contractor’s operations or to transportation relating to the contractor’s normal operations.


The enactment of the Act confirms Finland’s commitment to fight against “black market” activities. For business it means further administrative burden to fulfil the new documentary review requirements. The focus of the supervisory authority during the year 2015 shall be on logistics, building, service and technology sector.

For further information on this topic please contact Liene Krumina at LKOS Law Office or visit our webpage link here.

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