The Bottom Line
- You Are Your Subcontractor’s Keeper: Under Dutch law, companies are held liable as the “functional employer” for workers hired by their subcontractors. If those workers lack the correct permits, your company faces the fines.
- Reliance is Not a Defense: Relying on a subcontractor’s assurances about compliance is not enough. The court confirmed that companies have an independent duty to verify that all workers on their projects, including those from third parties, have the legal right to work in the Netherlands.
- Procedural Delays Can Mitigate Fines: While the core violations were upheld, the authorities’ long delay in processing the case—exceeding the “reasonable term” of two years—led to a 10% reduction in the fine. This highlights that procedural fairness can offer a route to partial relief, even when liability is clear.
The Details
At the heart of this case was a company fined €55,000 for violations of the Dutch Foreign Nationals Employment Act (Wav). The company had hired a subcontractor who, in turn, employed ten workers from Kosovo without the required work permits. The primary company argued it wasn’t the direct employer and therefore shouldn’t be held liable. The court, however, strongly disagreed, reinforcing the broad definition of “employer” under the Wav. It ruled that any entity for which work is performed has a direct responsibility to ensure compliance. The court’s message was clear: simply facilitating the work is enough to establish liability, making it crucial for businesses to conduct due diligence on their entire supply chain, not just their direct hires.
The company presented several defenses, all of which were dismissed by the court. It first argued that the workers were part of a legitimate cross-border service provision from an EU member state (Slovenia), which would exempt them from certain permit requirements. However, investigations revealed that the necessary legal conditions for this, such as official notifications and A1 forms, were not met. The company also disputed the number of non-compliant workers, claiming there were six, not ten, and presented a credit note as proof. The court found this evidence, produced late in the proceedings, unconvincing, especially since the original invoice for ten workers had been paid in full without protest.
The company’s only successful argument centered on procedural delays. The court determined that the time elapsed between the government’s initial notice of a fine and the court’s final ruling exceeded the two-year “reasonable term” standard for administrative penalty cases. This procedural lapse was enough to warrant a reduction. Consequently, the court lowered the initial €55,000 fine by 10%, resulting in a final penalty of €49,500. This outcome is a crucial reminder that even when the facts of a case are not in your favor, a close look at procedural fairness can still yield a financial benefit.
Source
Source: Rechtbank Midden-Nederland
