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Joint and Several Liability for Wage Claims in the Construction Sector

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

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 (natural person) 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 (automatically) 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 (1) the coordinates of the FOD WASO website (http://www.werk.belgie.be) and (2) 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(s). 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 (€ 50.00 to € 100.00) or administrative (€ 25.00 to € 250) fine.

Decision:

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

Authors:

Roxanne Sleeckx

Roxanne Sleeckx

The concept of reference of the carrier in terms of CMR insurance

As a result of the increase in the transportation of goods between countries by road, international regulations have been made to resolve conflicts on this issue and the need of determine the principles and rules of transportation has emerged. The aforementioned developments, the CMR Convention Convention, which contains general legal rules regarding the transportation of goods by land between countries, was signed in 1956 and came into force in 1961.Turkey agreed to join the additional protocol to CMR and CMR with the Law No. 3939 published in the Official Gazette dated 14.12.1993 and numbered 21788.

With the came into force of the convention, the rights and obligations of the carrier, the sender, the consignee or the right holder as the parties of the contract of carriage have been determined, and by whom and how the damage occurred in cases such as damage of the transported goods, partial or total loss, late delivery by exceeding the transportation period. Issues such as calculating the compensation to be paid are regulated and taken under provision

** With this type of insurance, the liability of the carrier, which is a party to a carriage contract to which the CMR is applied, is guaranteed as both the policy owner and the insured. However, in CMR insurance, every situation that causes the liability of the carrier is not included in the scope of risk. It is necessary to look at the relevant CMR Insurance policy guarantees, clauses and special conditions for each time. The other side of the CMR insurance contract is the policyholder. The insurant is the person who transfers the risk he bears to the insurer in return for the premium, that is, the “carrier” who carries out a transportation business subject to the provisions of the CMR. The insured is the person on whom the risk is incurred or on the property. Generally, in insurance contracts, the policy owner and the insured are the same person.

CMR Insurance, which is one of the liability insurance types that aims to prevent the decrease in the assets of the insured in order to compensate for the damages that may arise from the damages that the insured may cause to third parties; It aims to guarantee the risk undertaken by the carrier due to the transportation business in the transportations subject to the Convention on the International Carriage of Goods by Land (CMR). For this, at least one of the states of commencement or completion of the transport must be a party to the CMR convention.

Shipments of the carrier covered by the insurer under the CMR Insurance; damage to the goods, loss and defect or deficiency in transportation vehicles, damages arising from the faults of those assigned by the insured carrier and other risks specified in the CMR Insurance Policy. The protection provided by the CMR insurance contract will begin with the conclusion of the insurance contract or the payment of the first insurance premium.

The concept of subrogation originates from the Turkish Commercial Code; specifically TTK 1472 ”When the insurer pays the insurance indemnity, he legally replaces with the insured. If the insured has the right to file a lawsuit against those responsible for the damage occurred, this right passes to the insurer up to the amount he indemnifies. If a lawsuit or proceeding has been initiated against those responsible, the insurer may continue the lawsuit or proceeding from where it left off, by proving the payment it has made to the insured, pursuant to the Subrogation rule, without the need for the approval of the court or the other party” However, the point that should not be confused here, is the Commodity Transport Insurer of the cargo owner/sender. In other words, when a commodity is damaged or lost during transportation, the cargo insurer will have the right of subrogation against the carrier and its CMR Insurer after the cargo owner has compensated for the loss.

In the decision of the 11th LAW DEPARTMENT of the Supreme Court E. 2003/5045 K. 2004/271 T. 15.1.2004 He summarised the conditions for the formation of the concepts of Recourse and Succession in Transport Insurances. In order for the insurer to have a Right of Succession, the existence of an insurance contract, the fact that the insurer has made a payment to the insurant based on this contract, and that the insured has the right to sue the insurer against the person who harmed him, must be present. All conditions must be present at the same time.

The main legal consequences of the insurer’s succession are:

  1. A new right does not arise as a result of succession; transfer of an existing right to a new creditor (insurer). The insured’s right to claim compensation against the person who caused the damage is transferred to the insurer.
  2. The insured is obliged to provide the insurer with all available evidence and necessary information regarding the claim in question.
  3. The insured person is not responsible for the existence of the claim nor the solvency of the person responsible.
  4. The claim for compensation is transferred with the statute of limitations existing/subjected. Therefore, the statute of limitations neither begins with the succession nor is it interrupted by the succession.
  5. The claim for compensation is transferred to the insurer, together with all objection and defence rights of the party responsible for the damage against the insured person.

(Graber, VVG Art. 72, Rn. 26-30; Sieber/ Hüsser, VVG Art. 72, Rn. 43; Oftinger/ Stark, § 11,)

In the event that the subject of the insurance is damaged due to the action of a third party and any of the dangers covered by the coverage, without any fault, negligence or violation of the policy terms of the insured, the insurer becomes the owner of all legal receivables by replacing the insured, after paying the damage to the insured. It is the situation where the insurer subrogate to those who caused the damage, demanding an amount equal to the compensation paid by replacing the insured.

Like this; In property and liability insurance, the insured is prevented from claiming double compensation from both the insurance company and the person or institutions that caused the damage. However, in order for the right of recourse to arise; The damage must be covered by the guarantee and must not have been done intentionally by the insured.

In the Convention, while the responsibility of the carrier on the transported goods is broadly expressed, from the time of receipt of the goods from the sender to the moment of delivery to the sent or right owner, at the same time, general and special reasons that will allow the carrier to get rid of responsibility are also revealed in detail.

In the CMR contract, the liability of the carrier manifests itself as a narrowed strict liability, in addition to the fault of the carrier, in case of the fault of the sender, the consignee, the beneficiary or their assistants or employees involved in the transportation process, the carrier will be freed from the liability of compensation for damage arising from the goods at the rate of the detected defect. As such, it has been tried to ensure a balance of rights and interests between the parties of the contract of carriage in the provisions of the convention contract. This, in fact, regulates the recourse or non-recourse of the right holders or their insurers against the CMR Insurer due to the damage or loss on the transported goods.

The carrier cannot be held liable if the goods that are wasted or damaged due to their characteristics are not packaged or are incorrectly packaged when they are not packaged or poorly packaged. The responsibility of the carrier may not be mentioned in case of damage during the loading and stowing of the goods by the sender, the recipient or the persons acting on their behalf, but in these cases, the burden of proof is on the carrier in determining the damage liability. Again, the carrier will not be held liable, especially in case of damage to the goods that can be damaged partially or completely by breakage, rusting, rot, drying, normal fire or moth and vermin, and in cases such as insufficient or incorrect brand or numbers on the boxes or packages. While such situations are not subject to the responsibility of the carrier in terms of the CMR Convention, we can also accept them as the situations where the insurer does not guarantee and will not pay compensation to the damaged cargo persons in terms of CMR Insurances.

Both the CMR convention contract and the provisions of the TCC numbered 6102 accept that the carrier has an obligation of protection, surveillance, inspection and control over the transported goods, and that the transported goods are damaged, partially or completely lost due to the carrier’s failure to fulfil these obligations as a prudent carrier with the utmost care. It has been accepted that the carrier is directly responsible for the compensation of this damage, if the results such as late delivery by exceeding the transportation period and damage occur. These provisions of the convention on the framework of the responsibility of the carrier within the scope of the transportation process from the moment of receipt of the goods to the moment of delivery are of an imperative nature, and it will not be possible for the parties to agree on the mitigation or removal of this responsibility.

In order to reveal the responsibility of the carrier due to the goods transported in accordance with the regulations of the CMR convention, the carrier has not fulfilled its duty to protect, watch, control and seize the goods with the utmost care, such as a prudent carrier, as a result of which the goods are damaged, lost or delayed. It is necessary to determine the existence of a causal link between the damage to the goods and the violation of the carrier’s obligation to protect the goods. In practice, the Court of Cassation decides that the fault is shared between the sender and the carrier in cases where the carrier neglects its supervision responsibility and that recourse will be made at the rate of this sharing.

Another important issue in the responsibility of the carrier on the transported goods is that if the goods are damaged, partially or completely lost due to the fault of the carrier’s assistants and employees, the persons whose services are used, and if the damage occurs, such as late delivery by exceeding the transportation period and the damage occurs. The carrier will be liable as the existence of the defect. In this context, the carrier will be considered directly responsible in case of damage to the transported goods due to all faulty behaviours, especially negligence and intent, of these persons included in the transportation process by the carrier. Of course, here again, the existence of an appropriate and convenient causal link between the faulty actions or actions of the employees, men or persons whose services are used and the damage to the goods shall also be sought.

In case of damage to the transported goods, the liability of the carrier for compensation of damage will now be revealed, with the determination of the responsibility of the carrier. In this case, the carrier shall be liable to pay the compensation to be calculated according to the market price of the place where the goods are received for transport, according to the market price in the absence of the exchange price, and objectively according to the comparable values of the goods of the same type and nature, if the market price cannot be determined. Therefore, if the transported goods are damaged during the transportation process, the difference between the undamaged value and the damaged value will be compensated at the time and place of receipt for transportation. An upper limit has been imposed on the compensation amount to be paid by the carrier in this case, pursuant to the CMR contract and the provisions of the TCC. In case the transported goods are damaged within the scope of the transportation activity, it is accepted that the carrier is responsible for the missing gross weight of the whole of the goods in case of complete damage, and of the damaged part in case of partial damage, with 8.33 SDR calculation unit for each kilogram.

Since the provisions of both the CMR and the TCC regarding this liability are of an imperative nature, agreements and provisions regarding the removal or mitigation of this liability by the parties of the contract of carriage will be deemed invalid, will not have any consequences and will not bind the contract parties or third parties. On the other hand, besides the fact that it is not possible to mitigate or remove the carrier’s responsibility, it is accepted that the agreements and provisions regarding increasing this liability or raising the upper limit will also be valid. Again, in the event that the carrier itself or its employees cause damage to the goods with intent, fault equivalent to intent, reckless actions, the carrier will not be able to benefit from the provisions regarding the limitation of liability and will be liable for covering all the damage.

Another controversial issue in practice is the liability of the carrier, who is the CMR Insured, during road transport due to traffic accidents that are not at fault. SUPREME COURT 11. LAW OFFICE. 2016/7990K. In its decision dated 4.4.2018 T. 2018/2393 It has been ruled that “…the driver of the defendant carriers is faultless in the traffic accident, the fault lies entirely with the driver of the opposite vehicle, but the fault of the driver of the carrier in the traffic accident cannot relieve the carrier from contractual liability”.

The person who can claim compensation from the CMR Insurer in case of damage, loss or delay of the transported goods is the person sent or written as the rightful owner in the transport document. In order to be able to claim compensation, it is not necessary for the sent or right owner to have actually suffered damage or to receive the goods. In the lawsuits to be filed due to the damage caused by the transported goods, one and three year statute of limitations are stipulated in terms of both the CMR convention and the provisions of the TCC. In general, the statute of limitations for claims arising from transportation activities carried out within the scope of TCC and CMR Conventions is 1 (one) year. However, if the damage, loss or delay in the goods is caused by intent, fault equivalent to intent, gross fault or reckless acts, the statute of limitations is accepted as 3 (three) years.

In addition, the transportation fee, customs duty and other costs incurred due to the transportation activity will be compensated by the carrier in proportion to the calculated damage. It is also possible to demand interest on the compensation to be paid by the carrier in case the transported goods are damaged. The indemnity creditor will also have an appraisal of approximately 5 percent for the remittance or payable from the beneficiary.

As a result, it should be noted that the purpose of determining the liability of the carrier for damage and loss arising from the transportation of cargo within the framework of the CMR Convention is that the situations that the carrier is responsible or not responsible for are also valid for the CMR Insurer.