Sweet dreams (are made of this): subcontracting chain liability can shackle you

On 25 October 2023, the Flemish Parliament voted on and adopted the draft decree that will amend the Act of 30 April 1999 on hiring foreign workers. The new decree, which still needs to be published in the Belgian State Gazette, will amend Article 12/4 of that Act. The subcontracting chain liability provision has been optimized in light of the Borealis case (among others). If you call on a subcontractor, you must exercise due care to exclude any liability for the direct contractor’s illegal hiring. The traditional clauses that exclude liability no longer suffice.

Liability for illegal hiring of foreigners

The Act of 11 February 2013 lays down sanctions and measures for employers of illegal residents from  non-EU or non-EFTA countries.  This Act imposes a new range of financial penalties and criminal law sanctions on employers that are found guilty of hiring illegal residents from non-EU or non-EFTA countries: individuals who are not nationals of an EEA member state or Switzerland.  The Act of 11 February 2013 also introduced a new system of joint and several liability in the event of subcontracting whereby the direct subcontractor will be punished by criminal law if it hires illegal workers. However, the liability rule does not apply if the contractor or intermediate contractor receives a written statement from its subcontractor confirming that it does not hire any illegal non-EU or non-EFTA nationals.

The sixth state reform in Belgium granted the Regions lawmaking powers concerning the authorization of labour performed by foreign workers. Since 1 July 2014, the Regions have been able to determine their own policy, and each one can set their own rules. And since 2017, Flanders has implemented its own version of Article 12/4 of the Foreign Workers Employment Act whereby every link in the contracting chain can be held liable for illegal employment violations: from the last subcontractor to the principal client. Flanders has now optimized the subcontracting chain liability provision to combat employment schemes that aim to evade accountability of the illegal hiring of foreign workers.

On 25 October 2023, the Flemish Parliament adopted the draft decree, which amends Article 12/4 of the Foreign Workers Employment Act. The decree widens the scope of violations for which the direct contractor can be held liable.


In chains: subcontracting chain liability for illegal employment violations

First of all, the anomaly in Article 12/4 has been removed. Up to now, subcontracting chain liability refers to the violations mentioned in Article 12/2. This Article 12/2 concerns only two types of violations: (i) verification of a worker’s valid residential permit or any other form of residential authorization, and (ii) failure to keep it available for the inspection department in charge. The violation of illegal employment is actually stipulated in Article 12/1, §1 of the Foreign Workers Employment Act.

Article 12/4 has now been broadened to refer to Article 12/1, §1. At the same time, it covers the hiring of illegally self-employed individuals as well. From now on, the Article will refer to Article 22, 1° of the Decree of 15 December 2021 on running self-employed business activities by foreign nationals, which are the running of self-employed business activities without being permitted or authorized to reside in Belgium for more than three months or to set up a business in Belgium.


Due care is the key expression

Subcontracting chain liability takes into account every link in the chain of contractors. The current provisions allow a simple contractual clause to be used to exclude the direct contractual party’s illegal employment. But this evasion clause will no longer suffice.

First of all, the clause will have to extend to self-employed workers. Moreover, parties must conduct a minimum due-care test to prevent their direct subcontractors from hiring illegal residents from non-EU countries or from running a self-employed business without being permitted or authorized to reside in Belgium longer than three months or to set up in Belgium. The test is an additional requirement to prevent the evasion of subcontracting chain liability.

In the due-care test, the contractor and intermediate contractor seek the following information from their direct subcontractor:

  • detailed information concerning the identification and contact of the direct subcontractor;
  • personal information, information on the residential status, and information concerning the direct subcontractor’s employment of foreign workers and foreign self-employed individuals.

The Flemish Government determines the specific information that must be provided and how they must be sought. It will draw up a checklist detailing the specific information that the company will have to provide to demonstrate that it has fulfilled the requisite due care.

To comply with the due-care test, the contractor and the intermediate contractor address the direct subcontractor if it appears that some information are missing and they ask the subcontractor to provide them. If the direct subcontractor does not provide the information when requested, the contractor and the intermediate contractor inform the labour inspectors about it immediately.

The contractor and the intermediate contractor are also punished if they meet the conditions and if they have prior knowledge of the illegal employment. The labour inspectors can use all means of evidence to prove such prior knowledge.


Role-play under the GDPR

The contractor, the intermediate contractor, and the direct subcontractor act as the data controller for the processing of personal data.



This article is written by

Looking for advice on a specific topic?

We will guide you to the right person or team.