Principal Employer

The principal employer is the employer that gives part of the work relating to production of goods or services at its workplace to a subcontractor. Article 2 of the Labour Law imposes significant liability on the principal employer towards the subcontractor’s employees. Details of the relationship are set out in the Subcontracting Regulation.

Joint Liability

The principal employer is jointly liable with the subcontractor for obligations to the subcontractor’s employees relating to that workplace arising from the Labour Law, the employment contract or the collective agreement to which the subcontractor is party. This covers:

• Wages, bonuses and premiums,
• Overtime, weekly rest and public holiday pay,
• Severance pay and payment in lieu of notice,
• Annual leave pay.

The employee may claim these from the subcontractor, the principal employer or both. The principal employer’s liability is limited to the period the employee worked at that workplace.

Health and Safety

The principal employer must monitor the subcontractor’s compliance with occupational health and safety obligations. In workplace accidents involving subcontractor employees, the principal employer may also face civil and criminal liability.

Social Security

The principal employer is also jointly liable with the subcontractor for social security premiums of the subcontractor’s employees. Premium payments should therefore be checked regularly.

Managing the Risks

• The subcontracting agreement should clearly describe the work and the expertise justification.
• The subcontractor’s wage and premium payments should be checked monthly with documents.
• Recourse, security and deduction-from-payment clauses should be included.
• To avoid the relationship being treated as a sham, the subcontractor’s own organisation and management authority should be preserved; see Subcontractor.

Situations where a worker’s labour is transferred to another employer are governed by the rules on temporary employment.