Tilaajavastuulaki

tilaajavastuulaki is the Finnish Act on the liability of the client for subcontractors. It establishes the obligation of a client who awards work to verify that subcontractors and their own subcontractors comply with applicable labour, tax, and social security obligations. The aim is to curb illegal work, ensure fair competition, and promote responsible subcontracting practices in Finland.

Scope and application: The act applies when a client, in both public procurement and private sector contracts, hires subcontractors to perform work. The client is required to exercise due diligence before entering into contracts or paying for work performed. While the exact requirements can vary by sector and contract, the central duty is to assess and monitor subcontractor compliance through documented evidence.

Required documentation: The client must obtain and retain documentation that demonstrates the subcontractor’s compliance with tax and social obligations. Commonly cited documents include a tax debt clearance certificate from the tax administration (verovelkatodistus) or an equivalent proof, an extract from the prepayment register (ennakkoperintärekisteriote) showing no outstanding tax debts, and evidence of appropriate statutory employee insurances and other required payments (for example pension and social security contributions). The set of documents may depend on the contract, but the underlying requirement is to verify legal and financial reliability.

Consequences and practice: If due diligence is not performed or if a client contracts without proper verification, the client may face liability regarding the subcontractor’s regulatory breaches, including wage and social security obligations. In practice, many buyers use official registers and verification tools to fulfill the obligations. The law is part of broader efforts to reduce the underground economy and improve working conditions in subcontracting chains.