SAK calls for prompt action on subscriber liability

The Central Organisation of Finnish Trade Unions &#;8211 SAK is calling for decisions to be made on the question of "subscriber liability" during the autumn of this year. A party subscribing to or commissioning work without becoming an employer should be made liable for ensuring compliance with statutes and collective agreements in subcontracting arrangements, leasing of labour and outsourced work in the public sector. SAK views subscriber liability as an effective way of eradicating unscrupulous fly-by-night businesses and unofficial labour from the Finnish job market.

Together with improved redundancy security measures, introducing subscriber liability was a prime objective of SAK in the national incomes policy negotiations conducted last year. The redundancy security package agreed at that time took full effect at the beginning of July. The business of implementing subscriber liability, on the other hand, was allotted to two working groups that SAK feels should now take brisk steps to complete their assignments.

SAK has just prepared a memorandum on ways of achieving subscriber liability and combating the grey economy. The basic idea of the Organisation is for anyone ordering or commissioning work to take responsibility for ensuring that the employees of private employment agencies and subcontractors earn the collectively agreed rates for their work and that taxes and social security contributions are paid. Liability in subcontracting chains would always fall on the party ordering the work – thereby saving the original customer and principal contractor from liability for the whole chain. SAK insists, however, that the original customer and principal contractor should retain authority to inspect the entire subcontracting chain. The principal contractor would thereby be entitled to check such matters as compliance with collective agreements throughout the chain.

According to the SAK memorandum, subscriber liability would apply to enterprises and organisations, and to national and local government, but not to private individuals. A party ordering work would be required to verify the reliability of any subcontractor or employment agency in advance. It would not be acceptable, for example, to consider offers submitted by enterprises not listed in the Finnish withholding tax register, as this listing is a minimum requirement of all reputable employers. A party that orders work without conducting such prior due diligence and supervision would in practice also be held liable, for example, for any outstanding arrears of salary and taxes in the event that a subcontractor failed to meet its obligations.

This system would not set out to force honest and conscientious businesses to pay for the negligence of subcontractors with respect to employee compensation and ancillary labour costs, however. A subscriber could avoid liability for any failure on the part of a subcontractor by performing a due diligence inspection of its reputation and properly overseeing the performance of its duties.

Subscriber liability preparations directly linked to labour mobility transition period debate

The new SAK memorandum also includes various other concrete proposals for tackling the grey economy. One way to support subscriber liability is to introduce an independent locus standi for employers' federations and trade unions in civil actions. The basic idea is to enable the claims of foreign employees subject to abusive terms of employment to be pursued without requiring the individual employee to lodge the action in person.

Subscriber liability is a growing imperative for Finland as preparations for the EU Services Directive foreshadow increasing mobility of services within the Internal Market. In various forms it is also already widely used elsewhere in Europe. Indeed Finland belongs to the minority of European Union Member States with no effective regulations governing labour leasing and subcontracting. SAK feels that the Services Directive must ensure compliance with national employment terms throughout, and must allow for this compliance to be checked in the country where the work is done in all cases involving the movement of services, subcontracting and leased labour across international borders.

The progress achieved on the twin issues of subscriber liability and locus standi will also be a crucial issue when SAK determines its position on discontinuing the transitional arrangements governing mobility of labour from the new Member States. This matter is due to be reconsidered when a report on the question is submitted to the Finnish Parliament next spring. With increased mobility of services, subscriber liability and locus standi for trade unions would be effective weapons in combating the threat of an enlarged grey economy and rising migrant worker exploitation.