Under the Contractor’s Liability Act, any of the following actors is considered a contractor if they use subcontracted workforce or temporary agency workers in Finland:

• a company or a public body
• a trader that must submit a start-up notification to the Trade Register
• private traders also otherwise
• a foreign company or a foreign public body.

Under the Contractor’s Liability Act, a temporary agency worker is an employee who

• has concluded an employment contract with an employer operating in Finland or in a foreign country and
• whom the employer in question has assigned for use by the contractor with the employee’s consent.

The contractor that has concluded a subcontract must carry out checks on its contracting partner in the following situations:

• The contractor and its contracting partner have agreed that the contracting partner performs the work in exchange for a compensation. The contract does not need to be in writing as it can also be an oral agreement.
• The work is performed in the contractor’s premises or work sites in Finland. The work site can also be located outside the premises controlled by the contractor. There are such work sites in the construction and transport sectors as well as in services that are provided in the purchaser’s or user’s premises.
• The work is related to tasks or transport that are part of the contractor’s regular operations. Cleaning and maintenance of equipment and premises are always considered as part of the contractor’s regular operations.
• At least one of the contracting partner’s employees perform work for the contractor.

The contractor must always carry out checks when the contract concerns construction work
even if construction work is not part of its regular operations. In addition to new construction, construction also includes maintenance, renovation and civil engineering. The contractor must obtain the information on its contracting partner required by law even if the construction work specified in the contract will not be carried out by an employee of the contracting partner and the work will only be performed by the entrepreneur acting as the contracting partner or this entrepreneur’s subcontractor (See section ‘Content of the obligation to carry out checks’).

Documents concerning the contracting partner’s tax payment status

The contractor can obtain the details of its contracting partner’s tax payment status from the public tax debt register, which is available via the online service of the Finnish Business Information System (www.ytj.fi/en). If the tax debt register shows that the contracting partner has tax debts, the contractor must also obtain an official document detailing the total amount of the contracting partner’s tax debts (for example, a tax debt certificate).

It is not always possible to obtain information on the contracting partner from the tax debt register. This can happen when the contracting partner is, for example, a foreign organisation without a branch in Finland or a self-employed person without a business ID. In such cases, the contractor can check its contracting partner’s tax payment status by obtaining any of the following documents: 

• a certificate stating that the contracting partner has paid its taxes
• contracting partner’s tax debt certificate
• a document stating that the contracting partner has prepared a payment plan for its tax debts.

The contractor must always judge whether its contracting partner intends to fulfil its statutory payment obligations. The contractor may be ordered to pay an increased negligence fee if the contractor should have understood that its contracting partner does not intend to fulfil its statutory payment obligations. This may happen when, for example, the contracting partner has tax debts for which no payment plan has been prepared and the debt can be considered substantial. 

Keeping the information up to date and retaining it

The documents and certificates must not be more than three months old when the contract is concluded. The contractor must retain all information for at least two years after the end of the work specified in the contract.

If the contractor does not request the documents and certificates directly from its contracting partner, they can also be obtained from a private service provider considered reliable.

Usually, the contractor does not have any obligation to obtain new information if it concludes a new contract with the same contracting partner within 12 months of the conclusion of the previous contract and within 12 months of obtaining the information for it. However, the contractor must always obtain all required information before concluding a new contract if the contractor has reasons to believe that the contracting partner’s circumstances have changed in a manner requiring new checks.

Information on a foreign contracting partner

If the contracting partner is a foreign company or a foreign public body, the contractor must obtain the same information on this partner as on Finnish contracting partners (see section ‘Content of the obligation to carry out checks’).

The information must be obtained from the country where the foreign contracting partner has its registered domicile. If the contracting partner has a Finnish business ID at the time of concluding the contract, the contractor must also obtain the following information from Finland:

• documents stating whether the contracting partner has been entered in the Prepayment Register, Employer Register and the VAT Register
• documents concerning the contracting partner’s tax payment status.

Document stating how the social security of posted workers is determined

If the foreign contracting partner posts workers to Finland, the contractor must obtain details of the determination of their social security before the work specified in the contract starts. Under the Contractor’s Liability Act, details of the following matters must be obtained:

• employees’ pension insurance
• employees’ accident insurance (in construction contracts).

Before the contract is concluded, the contractor must also request from its contracting partner the details of the determination of the social security of the workers that the contracting partner will post to Finland later during the contract. The contractor must present the request in writing and in a clear manner so that its contracting partner understands the matter.

In construction work, the contractor must also check that all posted workers of the contracting partner have valid certificates stating how their social security is determined before the workers in question start their work. This obligation applies to the contractor throughout the contract period.

The main principle is that all work performed in Finland must be insured in Finland. This applies to both Finnish and foreign employers and employees. An exception is made for employees that are temporarily posted to work in Finland. The social security legislation of their country of origin can be applied to them for the duration of their work in Finland.

The details of the pension and accident insurance for posted workers coming from the EU or the EEA can be demonstrated by presenting their A1 certificates. If the contracting partner posting workers to Finland fails to present to the contractor the A1 certificates for workers posted from the EU or the EEA covering the entire period of their work, the contractor must request that its contracting partner takes out pension and accident insurance policies for the workers from insurance providers that have the right to sell employees’ statutory pension and workers’ compensation insurance policies in Finland.

For more information on determining the social security of workers posted from other countries, visit Accident insurance for posted workers (Tyosuojelu.fi).

Limit values for subcontracts and contracts for temporary agency work  

In subcontracting, the contractor does not need to carry out checks if the value of a contract is less than EUR 9,000 (excluding VAT). In temporary agency work, checks are not required if the work lasts for a maximum of ten working days. The number of working days is employer-specific: if for example, the contractor concludes an agreement with an employer on using three temporary agency workers for four days, the limit value is exceeded and the contractor must carry out checks. 

The contractor cannot circumvent its obligation to carry out checks by breaking up the work into separate contracts that remain below the limit value. When the limit value is calculated, the work is considered to have continued on a continuous basis if it is based on successive contracts or contracts with only short interruptions. The limit value is not year-specific or financial-year-specific.

Justified reasons to trust the contracting partner

The contractor does not have obligation to obtain the information required under the law if it has justified reasons to believe that its contracting partner will fulfil its statutory obligations. Such justified reasons include the following:

• the contracting partner is a public body, a public limited liability company or a similar foreign organisation
• the operations of the contracting partner are on an established basis (this does not apply to construction)
• the contractor and its contracting partner have an established contractual relationship based on an earlier contractual relationship (this does not apply to construction)
• other similar reason.

In construction contracts, the contractor must always carry out checks even if the contracting partner’s operations are on an established basis or the contractual relationship between the contractor and its partner is based on an earlier contractual relationship.

The contractor must always judge whether it can trust the contracting partner’s ability to fulfil its statutory obligations. The contractor must be able to present documents proving that it carried out checks to determine whether the contracting partner’s operations were on an established basis before concluding the contract. 

Moreover, the contractor should not be aware of any circumstances that remove the justified reasons to trust the contracting partner (for example removal from the Prepayment Register).

If the contract is in effect for more than a year, the contracting partner must submit to the contractor details of its tax payment status and pension insurance matters every 12 months.

Negligence fee and increased negligence fee

If the contractor neglects its obligation to carry out checks, it may be ordered to pay a negligence fee. The minimum negligence fee is EUR 2,440 and the maximum fee is EUR 24,420.

The contractor may also be ordered to pay an increased negligence fee in the following situations:

• The contractor has concluded a contract with an entrepreneur who is barred from conducting business under the Act on Business Injunctions or with a company in which a partner, a Board member, the Managing Director or any other person in a comparable position is barred from conducting business. 
• The contractor should have understood that its contracting partner does not intend to fulfil its statutory payment obligations as a contracting partner and an employer. 

The minimum increased negligence fee is EUR 24,420 and the maximum fee is EUR 79,380.

The negligence fee and the increased negligence fee are imposed by the Occupational Safety and Health Division of the Regional State Administrative Agency for Southern Finland.

Shop stewards, elected representatives and occupational safety and health representatives have the right to receive information on subcontracts and contracts for temporary agency work.

The contractor must provide them with the following information if they request it:

• reason for using temporary agency workers
• number of temporary agency workers used
• identification details of the contracting partner
• work site
• job duties
• length of the contract period 
• collective agreement applied to the subcontracted workers or temporary agency workers
• principal terms of employment (if there is no collective agreement).

When the contractor obtains the information required under the law, it also obtains confidential information on the contracting partner. The contractor or any employee of the contractor may not disclose such information to any third parties. 

The confidentiality obligation will also remain in effect when the person that obtained the confidential information no longer performs the tasks in which they received the information. 

Confidential information includes information on tax payments, tax debts, taking out of pension insurance policies, payment of pension insurance contributions, and outstanding pension insurance contributions.