Subcontracting of payroll on construction sites: call for vigilance!

Labor inspection controls are increasing, particularly in the building and public works (BTP) sector, to check the legality of subcontracting implemented on construction sites.

These subcontracting operations, which generally correspond to profitability imperatives and allow reducing internal staff to the minimum necessary, can be legal unless they turn out to mask a simple loan of labor carried out for profit and exclusively, or characterize a situation of illegal subcontracting when they are financially detrimental to the posted employees.

Beyond their concern to ensure that workers on construction sites have social protection, the DIRECCTE (Regional Directorates for Enterprises, Competition, Consumer Affairs, Labour and Employment) above all wish to avoid unfair competition between construction companies linked to the cost of their labour, some using temporary employment agencies in France to strengthen their workforce while others use subcontractors at much lower rates.

While subcontracting on a construction site is not prohibited, it must be justified based on specific criteria, and this requires the principal to monitor its service provider, with additional obligations if the provider is located abroad, in order to avoid criminal prosecution of the company and its manager for illegal lending of labor and/or concealed employment.

CRITERIA FOR THE LAWFULNESS OF SUBCONTRACTING:

Companies that use subcontractors must first and foremost bear in mind that this must correspond to the performance of a specific task, requiring technical specificity and particular experience from the company to which its execution is entrusted.

The pitfall that construction companies usually fall into is that they hire companies to perform part of a project for which they have taken responsibility, without being able to justify why, from a technical standpoint, the use of such a subcontractor was necessary.

During an inspection, the labor inspectorate immediately notices that the employees of the principal and the subcontractor are actually engaged in the same task, or even worse, that they are supervised by an employee of the principal.

The second sine qua non condition is indeed based on the total independence of the subcontractor who must have real autonomy. The employees mobilized within the framework of subcontracting must be supervised and directed by their employer, who provides them with the necessary equipment for the execution of the work.

Finally, the last essential criterion for the validity of subcontracting is based on the global and fixed-price nature of the subcontractor's remuneration, which must be assessed at the start of the project, based on the objective importance of the work to be carried out, without taking into account the number of employees to be mobilized or the number of hours to be devoted.

The best way to formalize the subcontractor's remuneration conditions and, more broadly, the execution of the worksite is to draft a subcontracting agreement that will detail point by point the purpose and conditions of the labor loan.

In the event of an inspection, the mere fact of not having a contract is already likely to create suspicion of false subcontracting and undeclared work: it is therefore all the more recommended to draft one with your co-contractor!

DUTY OF VIGILANCE OF THE PRINCIPAL

Principal companies must ensure they fulfill their duty of vigilance with caution given the financial solidarity that weighs on them in the event of an URSSAF adjustment for unpaid contributions when their subcontractor is prosecuted for concealed work, in addition to the fact that they may also incur criminal liability.

As part of its duty of vigilance, the principal must, at the start of the contractual relationship and then every six months, obtain a certificate of declaration and payment of contributions from its contractor, then systematically verify its authenticity on the URSSAF website, in addition to obtaining an up-to-date K bis extract of the company.

Furthermore, if he is informed that his subcontractor is in an irregular situation, he is required to urgently ask him to comply.

In such circumstances, it is strongly recommended to send a registered letter with acknowledgment of receipt, allowing a one-month period for the subcontractor to regularize their situation.

Failing that, the contracting company must then promptly terminate the subcontracting contractual relationship. Let us recall that in such situations, the labor inspectorate may decide to stop a worksite!

SPECIAL OBLIGATIONS WHEN USING FOREIGN COMPANIES:

When foreign companies operate on French soil, they must first file a posting declaration by appointing a representative in France, and finally complete an "A1" form submitted to the social security body of their country, unless they risk high administrative fines (up to 2000 euros per posted employee, 4000 euros in case of repetition).

However, many companies linked to foreign subcontracting companies are unaware that they must also verify that their co-contractor has fulfilled such obligations, by requesting a copy from them, under penalty of also being subject to a fine.

The other point that contracting companies must be attentive to concerns the fact that they are generally designated in the posting declaration as the representative in France by their subcontractor (which must nevertheless be subject to express acceptance).

As soon as they represent them, they assume the responsibility of keeping all documents relating to posted employees (including their employment contracts and pay slips) and communicating them, upon request, to the labor inspector.

As soon as certain employees do not have compliant remuneration, the contracting company, designated as the representative, runs an even greater risk of its criminal liability being engaged, particularly for illegal labor subcontracting, by being accused of having had full knowledge of the disadvantageous salary conditions of the posted employees, from which it would have profited.

In conclusion, vigilance must be exercised, preparation in advance of precise contractualization, monitoring of the conditions of execution of the mission and constant control of the subcontractor proving essential to avoid trouble with the labor inspectorate!

Business law