Flemish Region: Amendment of Chain Liability Regulations - Liability for Illegal Employment of Third-Country Nationals

In the context of (sub)contracting, certain tasks are not physically carried out by the company’s own employees, but by the (employees of the) subcontractor. By introducing a number of liability mechanisms, the legislator wanted to avoid the simple and complete externalisation of the risk of employing illegal third-country nationals when subcontracting work. The Flemish Government has further tightened these liability provisions in response to some recent cases.

Criminal liability in (sub)contracting varies from situation to situation depending on the economic factors involved and the presence or absence of a chain of subcontractors. In short, a distinction must be made between the liability of the (intermediate) contractor and the liability of the principal or intermediate contractor in the context of subcontracting.

Liability of (intermediate) contractor for direct subcontractor

Under current regulations, an (intermediate) contractor can protect himself from liability for employment of illegal third-country nationals by exercising due diligence, i.e., by having the subcontractor certify in writing that he does not or will not employ illegal third-country nationals. However, this protection will lapse if, prior to the breach, the (intermediary) contractor was aware that the subcontractor was employing illegal third-country nationals (through a notification by the social inspectorate).

This duty of care will be extended under the new regulations. In addition to the written declaration in which the direct subcontractor confirms that he does not or will not employ illegal third-country nationals (employees or self-employed persons), the (intermediate) contractor, when hiring a direct subcontractor, must exercise due diligence to prevent him from employing illegal third-country nationals. To fulfil this duty of care, the following documents should be requested from the direct subcontractor:

• identification and contact details of the direct subcontractor;
• personal data, data on the residence status and data on the employment of the foreign workers and self-employed persons employed by the direct subcontractor. The Flemish Government will still draw up a checklist of what concrete data must be provided and what modalities will apply. The preparatory works refer, among other things, to valid residence permits, work permits or professional cards and Limosa notifications. Consequently, this provision will not enter into force until a date to be determined by the Flemish Government.

If it appears that these data concerning the employment of foreign workers or self-employed persons are not present with the subcontractor, the (intermediary) contractor must request that they are still in order. If the subcontractor does not comply with this request, then the social inspectorate must be notified.

The new regulations also state that this protection is void if, prior to the breach, the (intermediary) contractor was aware that the subcontractor was employing illegal third-country nationals. The social inspectorate can prove this by any means of evidence. This concerns a clarification to the old legislation to emphasise that the (intermediate) contractor can be informed, not only by the social inspectorate through a notification, but also through other means of proof.

Liability of main or intermediate contractor in the framework of subcontracting

Under the current regulations, a principal or intermediary contractor in the context of subcontracting (chain liability) can only be held liable if, prior to the infringement, he was aware, for example, after a notification by the social inspectorate, that the (sub)contractor was employing illegal third-country nationals.

The new regulations also provide for the clarification that proof of prior knowledge can be demonstrated by all possible means of proof by the social inspectorate.

Sanction

In the event of a violation of these provisions, a prison sentence of six months to three years (for legal entities, a fine of EUR 24,000 to EUR 576,000) and/or a criminal fine of EUR 4,800 to EUR 48,000 or an administrative fine of EUR 1,800 to EUR 18,000 (to be multiplied by the number of workers involved with a maximum of 100) will apply.

Action point

In future, (intermediary) contractors will have to request additional data and documents related to the employment of foreign workers and self-employed persons from their direct subcontractor. What data and documents are involved and when this obligation will come into effect is yet to be determined by the Flemish Government.