The Act on the Contractor’s Liability fights against grey economy

The Act on the Contractor’s Liability has been taken into account in Fidera’s services. Fidera Oy’s personnel tracking and access control solutions have been extensively integrated with Suomen Tilaajavastuu Oy’s solutions and the service A Valtti card user can have all the advantages of remotely-read access control by partnering with Fidera in fulfilling the contractor’s liability.

A stricter Act on the Contractor’s Liability has been in force for a little more than a year. The law was enforced on 1 September 2015. As per the new law, the negligence fees have been applied for all contracts governed by the Act. The maximum amount of the negligence fee in force is 20,000 euros, and the increased fee is 65,000 euros. A significant amendment was made in the new law after increased pressure from construction companies. According to the amendment, the contractor is required to ensure that any foreign workers sent by the contracting party have valid certificates that determine their social security. The contracting party must provide the contractor a report on how social security is determined before the work is started. If this obligation is ignored, a negligence fee can be imposed to the contractor.

As compliance with the contractor’s liabilities is now monitored throughout the construction industry, the reporting obligation set forth in the Act is now better observed. According to the reports from regional administrative agencies, the reporting obligation is now better met than in the first few years. This applies to companies of all sizes.

Tilaajavastulaki estää harmaata taloutta
The Act on the Contractor’s Liability was established to fight against grey economy at work sites.


Negligence fees amount to 3 million euros during the first few years

The original Act on the Contractor’s Liability was enforced in 2007. Its objective has been to tackle grey economy. It was also set to ensure fair competition and compliance with the terms of employment within construction industry. A construction magazine Rakennuslehti writes that during the years 2007-2014, the compliance with the Act has been audited 4,408 times throughout the construction industry. A striking 784 audits, i.e. 18%, resulted in negligence fee procedures. In approximately two thirds of the cases, a negligence fee was issued. In total, the fees amounted close to three million euros.

Enhanced reporting has increased the transparency of construction projects. Also, when bidding for construction contracts, the companies have been put on the same footing.

According to the Ministry of Employment and the Economy, the amendments to the Act have improved the conditions of competition for companies that comply with the obligations. Additionally, the terms of employment, as well as the arrangement of social security for the employees, are now better observed.

The Act on the Contractor’s Liability in a nutshell

After the enforcement of the Act on the Contractor’s Liability (officially the Act on the Contractor’s Obligations and Liability when Work is Contracted Out), it has been tightened by two significant amendments. The first amendment was made in 2012 and the second in 2015. According to the Act, the contractor needs to ask the subcontractor for the information on his or her activities, as laid down in the Act. The subcontractor, on the other hand, is obliged to provide the contractor with the above-mentioned information.

As governed by the Act, the contractor shall require from the subcontractor, who must provide the requested information, the following accounts that must not be more than three months old:

  • Information on whether the company is entered in the Prepayment Register and in the Employer Register in accordance with the Act on Prepayment of Tax (1118/1996), and registered as VAT liable in the Value Added Tax Register in compliance with the Value Added Tax Act (1501/1993)
  • Extract from the trade register
  • Information showing that the company does not have tax debts, or a certificate provided by an authority showing the amount of the tax debt and the payment schedule
  • Certificates of employee’s pension insurances taken out and of pension insurance premiums paid, or an account that a payment agreement on outstanding pension insurance premiums has been made
  • An account of the collective agreement or the principal terms of employment applicable to the work
  • Information showing that the occupational health care services are provided

The contractor is liable to check the information and accounts provided prior to making the contract. If everything is in order with the subcontractor, a contract can be made with the subcontractor. The accounts checked must be kept for two years from the date on which the contracted work has been completed.

Fidera is the only provider of Contractor’s Liability and work site monitoring service that doesn’t require signing in or out

Fidera Oy’s personnel tracking and access control solutions have been extensively integrated with Suomen Tilaajavastuu Oy’s services. A Valtti card user can have all the advantages of remotely-read access control by partnering with Fidera in fulfilling the contractor’s liability. When Fidera ID service has been implemented, you don’t need to physically sign in or out. The system records persons remotely and automatically as they enter or exit the work site.

Fidera ID is the only solution in Finland that enables automatic work site monitoring. Even when there are many workers at the site, the solution can detect persons, who do not have the tags or who access the site in violation of the Act on the Contractor’s Liability. Fidera’s automatic video monitoring is integrated with access control, so any abnormal situations are detected immediately. In this way, the situations that violate the Act can be dealt with without delay.

When you are using Fidera ID solution, you can send the information on working hours directly to the Tax Administration via service. Workers and subcontractors are automatically identified with their remotely-read tags. The solution also checks, whether the person has valid certificates and a Valtti card.

The system gives an alarm, if something is unclear with the person’s information or if the identification has not been made. If there has been something strange during the identification, you can access a video linked to that particular situation.

As an option, you can integrate a hand-held scanner to our services. It provides you with a mobile monitoring device for identifying persons at the work site.