Employing an external workforce? Seize your opportunity, but don’t lose sight of the rules
Businesses today operate in a climate of uncertainty. The labour market remains tight, the economic outlook is volatile and the need for flexibility is rising. Bringing in external workers – via subcontracting, secondment, temporary employment or intra-group employment – therefore seems a logical step. Yet this approach requires careful legal analysis. Indeed, Belgian regulations place clear limits on such collaborations, focusing on the prohibition of staff secondment and financial subcontracting, as well as the proper handling of third-country nationals (employees from outside the EU/EEA or Switzerland).
The legal qualification of cooperation is fundamental. An employment contract is legally defined as an agreement whereby an employee undertakes to perform work under the authority of an employer for pay. This means that three constitutive elements must be present: labour, wages and authority. It is precisely this last element – authority – that plays a key role in assessing forms of cooperation. Authority involves direction and supervision of the performance of work, and this authority can, in principle, only be exercised by the legal employer. Transferring authority to a third party, outside the company, violates this basic rule and leads to a prohibited posting of personnel.
The principle prohibition of posting is enshrined by law in Belgium. The activity whereby a natural or legal person makes employees it employs available to third parties who use those employees and exercise over them any part of the authority normally vested in the employer is prohibited. This provision leaves little room for interpretation: the exercise of authority over a third party’s personnel is in principle prohibited, unless a statutory exception (such as temporary employment or certain forms of intra-group employment, subject to the fulfilment of prior formalities) applies.
Instructions by the client: what is (not) allowed?
Nevertheless, the legislator accepts that a third party may give limited instructions to the external partner’s staff as part of a cooperation. These instructions must be strictly limited to:
- Enforcing occupational welfare obligations;
- Instructions relating to the performance of the agreed work, the courses of action to be followed and the tasks to be performed, provided such instructions are expressly set out in writing.
On the other hand, the essential aspects of employer authority are not transferable. Thus, under no circumstances may the principal interfere in:
- Hiring the employee or applying for his work permit;
- Negotiating wage conditions, payment of wages and payment of social security contributions;
- The determination of conditions of employment, career planning, the nature of work or the termination of the employment contract (such as dismissal).
(Sub)contracting and project sourcing: permitted right of instruction within strict limits
In the case of (sub)contracting or project sourcing, employer authority remains entirely with the contractor or service provider. The employees are deployed to carry out a concrete assignment that was contractually defined between the two parties. Although this work is performed on site at or at the service of the client, on behalf of the employer, they remain under the exclusive authority of their legal employer.
A user – customer – who uses a contractor or service provider may give instructions during the performance of the work with regard to welfare regulations applicable within his company, for example safety measures.
However, other instructions are allowed only if three cumulative conditions are met:
- Written agreement: There must be a written agreement between user and service provider that explicitly and in detail defines the instructions that the user may give to the service provider’s employees.
- Limitation to permitted instructions: The user’s right of instruction must not erode the service provider’s employer authority, and its effective application must be in strict accordance with the written provisions.
- Information obligation: The user must inform the works council of the existence of this agreement. If requested, a copy with the instruction clauses must be handed over. If the user refuses to do so, the agreement is considered non-existent and the cooperation qualified as a prohibited posting.
If no works council is present, the information must be communicated to the Committee for Prevention and Protection at Work. If that too is absent, the information must be provided to the trade union delegation. If there is no trade union delegation either, this information procedure need not be followed.
Sanctions
If a user gives (other) instructions to the employees of the contractor or service provider, without complying with the aforementioned terms and conditions, both user and contractor or service provider risk hefty penalties:
- The employer who provides workers (the contractor or service provider) risks criminal (from EUR 1,600 to EUR 16,000) or administrative (from EUR 800 to EUR 8,000) fines.
- The greatest risk lies with the user. The latter risks a level 4 (highest level) sanction for not fulfilling the DIMONA declaration (= undeclared work) as the workers who were made available will be considered employees of the user, consisting of either a prison sentence of 6 months to 3 years and/or a criminal fine of EUR 4,800 – EUR 56,000 or an administrative fine of EUR 2,400 – EUR 28,000. For companies, the prison sentence is converted into a fine of EUR 24,000 – EUR 576,000.
- Both user and contractor or service provider would be jointly and severally liable for the payment of social security contributions, wages, compensation and other benefits arising from the employment contract.
In each case, the amounts are to be multiplied by the number of employees concerned (with a maximum of 100 employees).
Financial subcontracting: a prohibited practice (since 1 January 2025)
Since 1 January 2025, an additional ban on so-called financial subcontracting has applied in the construction, meat and moving sectors. This new regulation aims to combat social dumping and promote more transparent and horizontal contracting structures.
What is prohibited?
It is not permissible for a subcontractor to fully subcontract the works entrusted to it, nor for it to engage several sub-subcontractors and itself only act as coordinator without carrying out actual work.
Each subcontractor should perform a concrete and executive part of the work itself, with a minimum of 1% of the work. Merely performing coordination tasks is insufficient. However, this prohibition does not apply to property developers, main contractors or building owners, who are still allowed to subcontract the entire job.
Proper employment of third-country nationals
Finally, companies should take special care when employing third-country nationals, i.e. workers from countries outside the European Economic Area or Switzerland. Such workers may be employed in Belgium only if they hold the required work and residence permits.
From 1 January 2026, a new duty of care will be introduced in Flanders for contractors and presumably professional principals to prevent illegal employment of third-country nationals. Contractors (and professional principals) will be obliged to request additional documents from their direct (sub)contractors, including residence and work permits of staff and self-employed workers. These documents should prove that there is no illegal employment and should be uploaded to a database to be developed.
Although the legislation will not enter into force until 2026, caution remains the order of the day. Contractors and principals can already be held liable today if social inspection can prove that they were aware of illegal employment by their (sub)contractors.
Importance of the agreement
It is essential that companies set out clear and detailed arrangements in their written agreement. This agreement should not only define the specific roles and responsibilities of the parties, but also contain the necessary clauses that allow the client to protect itself against potential liabilities. The contract therefore provides a legally valid and solid basis for responsible cooperation. However, companies should be aware that, despite the presence of appropriate written declarations, the factual situation is primary. Strict adherence to the agreed provisions is therefore essential to avoid legal risks.
Want to know more?
Do you want to assess the risks correctly and avoid unintentional breaches? Get in touch with Van Havermaet. Together, we will look at how you can safely and strategically deploy a flexible workforce, with no surprises afterwards.