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Law 32/2006, recently published in the Spanish Official Gazette (BOE) No. 250 of 19/10/2006, which regulates subcontracting in the construction sector, will come into force from next April. Given the impact this may have on any company, we provide below a brief summary of its main provisions.
This new law will apply to contracts entered into under subcontracting arrangements for the following works on construction sites: excavation, earthworks, construction, assembly and disassembly of prefabricated elements, fit-out works or installations, conversion, refurbishment, repair, dismantling, demolition, maintenance, conservation, and painting, cleaning or sanitation works.
Requirements applicable to contractors and subcontractors:
1.- For a company to participate in the subcontracting chain in the construction sector, whether as a contractor or subcontractor, it must:
· Have its own productive organisation, possess the necessary material and human resources, and deploy these for the performance of the contracted activity.
· Assume the risks, obligations and responsibilities inherent to carrying out a business activity.
· Directly exercise the power to organise and direct the work carried out by its employees on site; and, in the case of self-employed workers, carry out the work with their own autonomy and responsibility and outside the organisational and managerial scope of the company that engaged them.
2.- In addition to the above requirements, companies wishing to be engaged as contractors or subcontractors for works on a construction site must also:
· Demonstrate that they have the human resources, at both management and operational level, with the necessary training in occupational risk prevention, as well as a preventive organisation structure compliant with Law 31/1995 of 8 November on the Prevention of Occupational Risks.
· Be registered in the Register of Accredited Companies referred to in Article 6 of this Law.
3.- Contractor and subcontractor companies must demonstrate compliance with the above requirements by means of a declaration signed by a legal representative submitted to the Register of Accredited Companies.
4.- Companies whose activity consists of being regularly contracted or subcontracted to carry out work on construction sites must maintain a number of employees on permanent contracts of no less than 10 per cent of their workforce during the first eighteen months following the entry into force of this Act, no less than 20 per cent during months nineteen to thirty-six, and no less than 30 per cent from month thirty-seven onwards, inclusive.
Subcontracting regime:
· First- and second-tier subcontractors may subcontract the execution of the works they have respectively been contracted to perform, except where the subcontractor's activity consists essentially of the provision of labour (understood as labour using hand tools, including portable motorised tools).
· A third-tier subcontractor may not subcontract the works it has contracted with another subcontractor or self-employed employee.
· A self-employed employee may not subcontract the works assigned to them, either to other subcontracting companies or to other self-employed workers.
· However, where the specialised nature of the works or circumstances of force majeure make it necessary to contract part of the works to third parties, subcontracting may exceptionally be extended by one additional tier, provided that prior approval and the reason for it are recorded by the project supervisor in the Subcontracting Register.
· The contractor must notify the health and safety coordinator and the workers' representatives of the various companies operating within the scope of its contract, as listed in the Subcontracting Register, of the exceptional subcontracting arrangement referred to in the preceding paragraph.
· The contractor must likewise notify the competent labour authority of the said exceptional subcontracting arrangement by submitting, within five working days of its approval, a report setting out the circumstances giving rise to the necessity, together with a copy of the entry made in the Subcontracting Register.
Registry of Accredited Companies:
· A Registry of Accredited Companies will be established, under the authority of the labour administration in the autonomous community where the registered office of the contractor or subcontractor company is located.
· Registration in the Registry of Accredited Companies will be valid throughout the national territory and will be publicly accessible.
Duty of oversight and liability arising from non-compliance:
· Contractor and subcontractor companies falling within the scope of this Act must monitor compliance with the accreditation and registration obligations, as well as with the obligations governing the subcontracting regime, on the part of any subcontractors and self-employed workers they engage.
· It should be noted that, in the event of non-compliance with the registration and accreditation formalities, and without prejudice to any other liability established under social legislation, joint and several liability will be deemed to exist between the contractor and the subcontractor company in respect of the employment and Social Security obligations arising from the contract between them.
Documentation required in subcontracting:
· Each contractor must maintain a Subcontracting Register, which must be kept on site at all times and must record:
All subcontracting arrangements entered into with subcontractor companies and self-employed workers, the subject matter of each contract, the identity of the person responsible for the organisational and managerial functions of each subcontractor and, where applicable, the legal representatives of that subcontractor's workers, and the instructions drawn up by the health and safety coordinator to govern the coordination procedure established.
Infringements and penalties:
The consolidated text of the Act on Social Order Infringements and Penalties is amended to incorporate a number of provisions.
1.- Serious infringements attributable to the contractor:
· Failure to keep the Subcontracting Register in order and up to date.
· Exceeding the legally permitted levels of subcontracting without the express approval of the project management team.
· Failure to comply with the obligation to demonstrate that the company has adequate human resources and a suitable preventive organisation.
Penalty: €300.51 to €3,005.06.
Serious infringement attributable to the contractor:
· Failure to maintain the minimum required proportion of workers employed on a permanent basis.
Fine: €3,005.07 to €90,151.82.
2.- Serious infringements attributable to the subcontractor:
· Failure to demonstrate that the company has adequate human resources and a proper health and safety organisation in place, or failure to verify the accreditation of any subcontractors engaged.
· Subcontracting to companies or self-employed workers in excess of the legally permitted limit.
· Breaching the information rights of workers' representatives with regard to contracting and subcontracting arrangements on the construction site.
Fine: €300.51 to €3,005.06.
Very serious infringement attributable to the subcontractor:
· Providing false information to the contractor.
Fine: €3,005.07 to €90,151.82.
Should you have any questions regarding this new regulatory framework governing subcontracting in the construction sector, please do not hesitate to contact us. Our firm is at your disposal to provide guidance and address any queries you may have.
