Wage Claims in Construction: Joint Liability

The system of joint and several liability for wage debts in the construction industry has been in place for almost ten years. Since 20121, employees have been able to claim back wages from their employer’s direct co-contractor in the event of the latter’s default.

This regime only applies to “activities in the construction sector”. Furthermore, the new regime applies both to contractors with seconded employees who come to work in Belgium and to contractors established in Belgium who hire Belgian employees.

The joint and several liability is limited to the “direct contractor”. This includes the principal, the contractor and the intermediate contractor. The principal is the party who orders the contractor to carry out, or have carried out, activities in the construction sector for a price.

The contractor is the party who binds himself to the principal.

The intermediate contractor is a subcontractor who himself engages a subcontractor to carry out the work entrusted to him. This joint and several liability is only aimed at the direct contractual relationship that these parties have with their counterparty.

Construction Workers on Work Site

The principal is jointly and severally liable for the wages due to the contractor from the employee. It is of no importance whether the contractor is established in Belgium or not. The principal who has work carried out exclusively for private purposes does not fall under this regime.

The contractor is jointly and severally liable for the wages owed to the employee by the subcontractor – with whom he has contracted directly. The law specifies that this liability applies “in the absence of a chain of subcontractors”.

The subcontractor is jointly and severally liable for the wages due to the employee by the subcontractor with whom he has directly contracted. This subcontractor is an “intermediate contractor” vis-à-vis the subcontractor with whom it has directly contracted.

Please note: in case of a chain of subcontractors, the contractor can never be held jointly and severally liable. After all, he does not have the capacity of “intermediate contractor”.

The liability regime applies immediately in the event of non-payment of the salary due. This means that the principal, contractor or intermediary contractor never has to be notified in advance by the inspection authority. The employee can jointly and severally sue his employer’s counterparty who fails to pay, without having to wait for a payment from any fund.

Usually in the building contract, the principal, the subcontractor or the intermediate contractor can exclude his joint and several liability by means of a written statement. This declaration must contain the coordinates of the FOD WASO website (http://www.werk.belgie.be) and a confirmation from the other party that it does not and will not pay the wages owed to its employee. Furthermore, this declaration must be signed by the jointly and severally liable person and the employer.

The exemption from liability is reinstated when the principal, contractor or intermediary contractor is informed that the employer is not paying the wages due to its employee. This knowledge can be proved by all means of law or when the inspectorate has sent a letter.

The renewed joint and several liability applies from the 14th day after the notification and thus only to the future wage debts. During this grace period of 14 days, the principal, contractor or intermediary contractor has time to take the necessary measures to avoid liability. He can, for example, have the breach of law stopped or terminate the contract with the direct contractor.

The employer must post a copy of the notice at the employees’ workplace. If he does not do so, the jointly and severally liable party must post the copy. Any person who believes he has been wronged may lodge an appeal with the president of the labour court.

Joint and several liability is further governed by Articles 1200 to 1216 of the Civil Code.11 Articles 3 to 6, 10, 13 to 16, 18 and 23 of the Wage Protection Act apply by equating the joint and several liability with the employer. They deal with the method of payment, the wages in nature, the interest due by law and the permitted deductions.

The jointly and severally liable person who does not pay the wages or fails to attach a copy of the notification by the inspection will be punished with a criminal or administrative fine.

Decision:

It is important to draft your contracts with contractors in a watertight manner and to include appropriate clauses to limit or exclude your potentially very large joint and several liability.