Work performed as an outsourced service

You may have nearly any work, assignments and services connected to your business carried out by another company or an entrepreneur as a commission. In a commission agreement, you agree on the end result of the commissioned work and, if necessary, on any applicable standards and work methods.

You pay a nonwage compensation for the agreed work. The contractor is responsible for their social insurance and any work-related costs. 

The contractor is also responsible for finishing the agreed work. However, the contractor operates independently, and they are not in the service of your company except when performing the commissioned work. They may also use subcontractors for the work unless the use of subcontractors is prohibited by the commission agreement.

Subcontracting means that your company provides a client a service by commissioning the work to another company, that is, a subcontractor. Thus, the client and the subcontractor are not in a contractual relationship. Your company acts as an intermediary and concludes separate agreements with both the client and the subcontractor. 

Your company may use subcontractors unless the use of subcontractors is specifically prohibited in the commission provided by the client. A confidential obligation, for example, may prevent the use of subcontractors. In general, your company is responsible for the quality of a subcontractor’s work regardless of the fact that the subcontractor performs the work independently.

Subcontracting may be a good option in situations in which it enables better quality for a lower cost, for example. Subcontracting may also lower your company’s risks. You can order risky operations, such as blasting or electrical installations, from another company.

Use your networks to find competent and reliable partners for your company. Check the background and credit history of potential partners and find out whether they are suitable for your assignment and have the required skills. Note that in general, your company is responsible for the quality of the outsourced services.

Always conclude agreements in writing. The outsourcing agreement must clearly define the content of the ordered work. You should also agree on the terms and conditions of performing the work as well as on the time frame, price and payment schedule. In addition, the agreement must state the division of responsibility between your company and the partner company in situations related to, for example, delayed or defective performance of the work.

Collaborate closely with your partner to ensure the best result.

The Contractor’s Liability Act (1233/2006) applies to your company if a subcontractor’s employee performs your company’s regular assignments at your company’s premises or work site.

Request the following documents, that may not be older than three months, from the subcontractor:

• Trade Register extract
• certificate of paid taxes
• certificate stating that employee pension insurance has been taken out and that pension insurance contributions are paid up or a statement on a payment agreement concerning outstanding pension insurance contributions
• report on whether the subcontractor has registered with the Prepayment Register, Employer Register and the VAT Register
• report on the applicable collective agreement or central terms and conditions of employment
• report on how occupational health care is provided
• if your company operates in the construction industry, a report on taking out an accident insurance is also required

Keep the reports and certificates for at least two years after finishing the work.

If the subcontracting agreement’s value exclusive of value added tax is less than EUR 9,000, there is no legal obligation to obtain the aforementioned reports and certificates. Note that if you have concluded consecutive agreements or the agreement periods are interrupted only by short intervals, the agreements are considered to constitute a single agreement, and their values are summed up.

If you do not obtain the reports and certificates in time or at all, you may have to pay a penalty fee of up to tens of thousands of euros.

You must also obtain the same information if you use a foreign subcontractor.

For more information on the obligations under the Contractor’s Liability Act see Contractor’s obligations and liability page in Tyosuojelu.fiOpens in a new window..

In general, the same laws and agreements that apply to the employees of Finnish subcontractors also apply to employees posted by a foreign subcontractor.

Request the employee posted by your foreign subcontractor to provide you with a certificate on their right to work in Finland. Take a copy of the employee’s passport. If the employee does not have a right to work in Finland, instruct them to apply for a residence permit for an employee. For more information on the role of the employer in the permit process see Finnish Immigration Service’s websiteOpens in a new window.. You can also assist an applicant using Enter Finland for EmployersOpens in a new window..

Provide the TE Services with a report on the terms and conditions of employment that concern the employees posted by your foreign subcontractor. Inform a representative of your personnel, such as a shop steward or an occupational safety and health representative, about the employees’ names and the applicable collective agreement.

Ensure that the company posting the employee submits a Notification of Posting of Workers to the Occupational Safety and Health Authority. Ensure also that they appoint a Finland-based company representative. The representative must be reached during the entire duration of the employee’s posting.

If more employees are posted to your company by your foreign subcontractor after commencing the work, request a report on their social security from the subcontractor before the employees start to work.

More information on posted workers