European Parliament adopts resolution on social responsibility in subcontracting chains

In March 2009, the European Parliament adopted a resolution calling on the European Commission to take action at EU level to draft a legal instrument introducing joint and several liability to deal with the cross-border dimensions of subcontracting. In particular, the Parliament calls for a legal instrument extending social responsibility to general or main undertakings in production chains to ensure workersaeuroTM social and employment rights in the subcontracting chain.

On 26 March 2009, the European Parliament adopted a resolution confirming the urgent need for more social responsibility in subcontracting chains. Members of the European Parliament (MEPs) want the European Commission to launch an impact assessment on the added value and feasibility of a Community instrument on chain liability as a way of increasing transparency in cross-border subcontracting processes.

Subcontracting and risk of precarious employment relationships

During the past decades in the EU, subcontracting has experienced a boom in economic sectors such as construction, transport, tourism, and the cleaning and shipyard industries. The complexity of the links between parent companies and their subsidiaries and between main contractors and their subcontractors makes it more difficult to clearly perceive the diverse structures, operations and policies, as well as the responsibilities or liability of the various actors in the production chain.

While subcontracting often creates a possibility for a company to use workers in a flexible way, it is also generating some economic and social imbalances among the workforces and might foster a race to the bottom in terms of working conditions. According to the ParliamentaeuroTMs resolution, subcontracting has led to a redefinition of employment relationships and, simultaneously, to a reduction of the direct social responsibility of the principal contractor, as labour has been externalised by the use of subcontractors and employment agencies, making the supply of cheap, often unskilled labour an integral part of lower-level subcontracting.

The resolution also acknowledges that cross-border subcontracting processes sometimes make it difficult to determine the branch of law applicable to the relationships between the various elements of a production chain. The European Parliament thus welcomes the fact that eight EU Member States aeuro" Austria, Belgium, Finland, France, Germany, Italy, the Netherlands and Spain aeuro" have already responded in their national law to problems connected with the duties of subcontractors as employers. It urges other Member States to consider similar schemes. However, according to a research report on Liability in subcontracting processes in the European construction sector, published by the European Foundation for the Improvement of Living and Working Conditions, legal traditions and industrial relations cultures vary in the Member States. This means that, with regard to the implementation of rules in cross-border subcontracting processes, there are considerable enforcement difficulties when Member States have different systems in place.

Therefore, the European Parliament calls on the European Commission to establish a clear-cut Community legal instrument introducing aeuro~joint and several liabilityaeuroTM at European level, while respecting the different legal systems in place. MEPs believe that the scope of liability in such an instrument should cover at least wages, social security contributions, taxes and damages in relation to work-related accidents.

Commentary

The European Trade Union Confederation (ETUC) strongly supports the resolution adopted by the European Parliament. ETUC Confederal Secretary Catelene Passchier stated:

This issue is very important as one element of a package to ensure that the internal market for services is developing in a context of social responsibility. Providing for clear rules that prevent unfair competition on wages, working conditions, taxes and social security is not only in the interest of workers, but also of companies and especially of small and medium-sized enterprises who are currently suffering from such unfair competition. We urge the Commission now to take the necessary action.

In a letter (90Kb PDF) of 4 February 2009 to the Members of the European Parliament Committee on Employment and Social Affairs, BusinessEurope Director General Philippe de Buck underlined that aeuro~European legislation introducing liability rules for subcontracting undertakings would be harmfulaeuroTM. In the view of BusinessEurope:

all companies taking part in a subcontracting chain should comply with labour legislation. However, subsidiary liability is not an appropriate solution to ensure this. Companies cannot and should not assume responsibilities of public authorities to verify the application of labour laws by other companies. The main contractor is not in a position to monitor compliance in practice. It is the duty of all sub-contractors to ensure compliance with relevant labour laws when dealing with their employees. Where this is not the case, labour inspectorates and/or other appropriate public bodies should be responsible for enforcing compliance in practice.

Volker Telljohann, IRES Emilia-Romagna, Bologna

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