Ban on financial subcontracting: a shift in the organisation of the subcontracting chain?
As part of the reform of the Social Penal Code, the legislator has provided for a number of new prohibitions to combat social dumping.
For example, from 1/01/2025 there will be a ban on so-called ‘financial subcontracting’. In concrete terms, this means that subcontractors will now have to take into account two prohibitions:
- A ban on subcontracting in full the works entrusted to him;
- A ban on subcontracting the works entrusted to him to several sub-subcontractors, with the subcontractor providing only coordination.
This ban only applies to three specific sectors, namely construction, meat and moving.
With this, the legislator wants to gain more insight into contracting chains and see these chains organised more ‘horizontally’ instead of vertically.
A concrete look at the ban
From 1/01/2025, it is prohibited for a subcontractor to fully subcontract the works entrusted to him. It is therefore important that subcontractors always have part of the contract performed by their own employees.
The prohibition extends further down the chain to all subsequent sub-subcontractors. In each case, they too must perform part of the works themselves, regardless of whether the (sub)subcontractor is an independent service provider, a sole proprietorship, or a company with its own staff. All these categories are considered (sub)subcontractors in the chain and fall within the scope of the ban. Self-employed persons also fall under the ban. Working with temporary workers, however, is possible.
It is important to note that if you are acting as the main contractor or builder, you are not subject to this ban. You are free to subcontract the entire job. Thus, property developers will generally not be affected by this new ban.
Part of the work?
To date, it is extremely unclear what is now that ‘part of the work’ that the subcontractor must perform himself.
The parliamentary preparation confirms that this can be a small part, but in any case it may not be coordination work. Thus, the subcontractor’s staff must indeed do the work themselves. Consequently, hiring a single site/project manager will not be a solution.
Specifically, in the preparatory documents, the legislator talks about ‘at least 1%’ of the work that the subcontractor must carry out himself.
For now, it remains to be seen how inspectorates and courts will interpret this concept.
Additional ban specific to the moving sector
An additional ban specifically for the moving sector is imminent.
For this sector, on top of the ban on financial subcontracting, it is also prohibited to have more than three levels of subcontracting.
Sanctions
If a subcontractor or (sub)subcontractor fails to comply with this prohibition, he commits an offence punishable by a Level 4 sanction. This sanction amounts to:
- A prison sentence of 6 months to 3 years (for legal entities, the prison sentence is converted into a fine of EUR 24,000 to EUR 576,000) and/or
- A criminal fine of EUR 4,800 to EUR 56,000, to be multiplied by the number of employees involved (maximum 100), or
- An administrative fine of EUR 2,400 to EUR 28,000, to be multiplied by the number of employees involved (maximum 100).
The same sanction applies to subcontractors who fail to comply with the ban and the ‘level restriction’ within the moving sector.
We will of course continue to closely monitor the implementation of this ban.
Would you like more information about this? Our specialists at Van Havermaet will be happy to assist you!