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LEGAL NEWS - Does a subcontractor have to comply with Danish Collective agreements?

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14. December 2016

The Danish Labour Court has recently decided that a contracting entity is not liable for the subcontractor’s lack of compliance with the rules regarding wages and terms of employment stated in the Collective Service Agreement.

The recently completed dispute between a facility service company and the Danish Unions states that the Collective Service Agreement does not compel a member to use subcontractors who have signed a collective agreement. The company in question was therefore not liable for the subcontractor’s failure to pay pension to its employees according to the Collective Service Agreement. Instead, the Unions were entitled to make the claim. This could mean fewer difficulties with employment regulations when collaborating with a Danish company in the future, since the choice of subcontractor is free to the main contractor.    

There are several circumstances to be aware of when contracting with a Danish company as a subcontractor. Especially, the distinction in Danish employment law between an employee and a subcontractor is very important, as the rules governing the two categories imply very different rights and duties. The criteria for being a subcontractor in Danish law are not defined conclusively, it is rather an assessment of different factors, such as risk, powers of direction, the possibility of working for a third party etc. that is decisive.

NJORD Law Firm assists with all kinds of questions and challenges relating to employment law and market entry.


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