Changes to standard contract in public procurement, Cyprus
The Ministry of Labour and Social Insurance has introduced several measures to combat undeclared and illegal employment in Cyprus. Among these is the tightening of obligations and penalties in public work contracts in order to support the enforcement of labour legislation.
The strengthening of obligations and penalties in public works contracts has been introduced as a response to the increase of violations of labour legislation. For example, only two of the 26 public works inspected in 2011 were found to be in full compliance with labour legislation. Violations that have been identified concern both contractors and subcontractors.
During March 2012, the Council of Ministers launched a proposal (no. 340/2012 for the ‘Inclusion and Modification of Terms in Standard Contracts for Public Works and Services’). The proposal includes a series of measures in relation to public procurement in order to support the enforcement of labour legislation. The measures concern both public works contracts (technical and construction projects) and a wide range of services that are outsourced.
The measures related to undeclared and illegal employment are:
− Contractors who have committed violations of the labour legislation (illegal/undeclared employment) will be excluded from public tenders.
− Increase of the administrative penalty from €100 to €500 for each day of illegal employment.
− Contracting authorities should inform the Social Insurance Services in advance when signing contracts and send a copy of the Register of Employees, as specified in the contract.
− Specific obligations for engineers: before the approval of any subcontractor, an attestation is required from subcontractors concerning their contributions to the Social Insurance Fund, and engineers must inform the Department of Social Insurance for each new subcontractor.
The proposal was prepared by the Treasury of the Republic of Cyprus, which is the authority for public procurement. At this stage, relevant public bodies are in the process of completing the establishment of specific mechanisms for the implementation of this proposal. General conditions of contracts for technical and construction projects have been modified and incorporated into relevant documents available on the Treasury’s website. The same will be achieved very soon for public services procurement.
Outcome of evaluations; lessons and conclusions
Evaluation is not possible at this stage since these measures have been adopted only recently. However, reports from mixed teams of inspectors mention positive results.
Treasury of the Republic of Cyprus – Public Procurement Directorate: http://www.treasury.gov.cy/treasury/publicpro/ppro.nsf/dmlindex_en/dmlindex_en?OpenDocument
Yannis Eustathopoulos, INEK-PEO