New subscriber liability law encourages fairness at work

The Finnish government reached a settlement with both sides of industry last Friday regarding new legislation on subscriber liability. This settlement outlines the matters that a business must investigate when using outside labour. The aim is to ensure that subcontractors and employment bureaux discharge their obligations and comply with minimum employment terms.

Under the proposed subscriber liability law, a business that uses outside labour will have to investigate whether any subcontractor or employment agency that it uses is registered in Finland for income tax withholding, employment and value-added tax purposes. Documentation such as an extract from the trade register and a certificate of clearance for tax payments and employment pension contributions will also be required. The investigation will likewise cover details of the applicable collective agreement or of the principal terms and conditions of employment.

Corresponding information will also be required for foreign enterprises. However, there will be no duty to investigate the operations of established subcontractors and employment bureaux or of national or local public authorities, public limited companies, State commercial institutions or organisations of comparable standing. A partner may be considered established, for example, when it has engaged in substantial business operations for about three years.

The new subscriber liability legislation will also include a provision requiring the subscribing business to notify its shop steward and labour protection delegate of any agreement on the use of outside labour. This notification will have to give details such as the amount of labour to be used, the length of the agreement and the applicable collective agreement or principal terms and conditions of employment.

The new law will apply whenever agency workers are used for longer than a total of ten working days, or if the value of a subcontracting agreement exceeds 7,500 euros. A subscriber enterprise that fails to investigate the circumstances of its partner will be liable for a penalty fine of between 1,500 and 15,000 euros. This fine will be determined by the local labour protection authority.

The Finnish government will seek to introduce subscriber liability legislation before the end of the year.

Lauri Lyly, Director of the policy development department at the Central Organisation of Finnish Trade Unions – SAK, is satisfied that substantial progress has now been made in realising the organisation&#;8217s aim of increasing subscriber liability.

“Subscriber liability will be good news for everyone: it means that employees will be paid correctly, law-abiding employers will enjoy fair conditions of competition, and the government will receive the associated tax revenues and social security contributions,” he explains.

The subscriber liability proposal was prepared by the Ulteva 2 working group comprising representatives of various government departments and labour market organisations on both sides of industry. Besides subscriber liability, the labour market organisations are also seeking to combat the grey economy by such methods as extending taxation and supervision of foreign agency labour, requiring foreign enterprises to be listed in the tax withholding register and securing the permanent status of the foreign labour surveillance unit at the Finnish National Bureau of Investigation.