The December 2012 programme act: Delivering services becomes much more tricky!
Locations
The Belgian Act of 24 July 1987 (PAD Act) regulates the loan of employees to third-party 'users' and prohibits the leasing of personnel accompanied by delegation of some or all of the employer’s authority to the third-party user.
So far a third party was however not considered as exercising employer’s authority over the employees of another company as far as “authority” was exercised for one of the following three purposes:
- to comply with the applicable obligations relating to workers’ well-being and safety in the workplace;
- to give instructions, for the sake of the execution of a (service) agreement, with respect to the application of working hours and rest time as well as;
- to give instructions to the employees solely with regard to the performance of their work.
The latter paragraph, inserted by the Act of 12 August 2000, has now been amended. The last two bullets are being suppressed by the new Program Act of 27 December 2012. Instead a general paragraph is inserted in section 31§1 second paragraph of the PAD Act, which provides for more stringent requirements for being able to give instructions without triggering the application of the PAD Act: the legislative change includes that instructions given by third parties (clients) to workers of another company will have to comply with the following conditions:
- be set down in a written contract
- the contract has to state in an explicit, detailed fashion exactly what instructions can be given by the third party
- the instructions given by the third parties may not undermine the employer's authority
- the situation on the ground and the instructions laid down in the written contract need to exactly coincide.
There will therefore be deemed to be a breach of the law, and as such exercise of employer authority by a third party, where (i) instructions are given other than as set down in the contract, (ii) the contract does not fulfil the requisite conditions (the nature of the instructions and/or they are not sufficiently explicit and/or detailed), (iii) the situation on the ground does not match the written provisions of the contract.
In addition, this new legislation creates additional publicity obligations incumbent on the third parties (i.e. clients): the client’s works council has to be informed that the service contract has been signed and, on demand by the council, a copy of that part of the contract stipulating the details of the instructions has to be produced. If that part of the contract is not submitted to the works council, the contract will de deemed to be non-existent and therefore contrary to the PAD Act. If there is no works council, the Committee for Prevention and Protection at Work or the trade union delegation takes on this information right. The procedure of this communication still needs to be detailed by Royal Decree and is as such not yet of application.
Conclusion
The commented provisions will significantly increase the administrative burden for companies providing services to other companies or between group companies as the parties will have to determine the instructions which may be given by the third party (client). The challenge resides in detailing what is to be qualified as 'employer's authority' and what are 'instructions' not to be qualified as employer's authority….and in tallying exactly the text of the agreement to the situation on the ground.
Also in respect of international employment these new rules will play a significant role. Companies 'assigning/seconding' staff to the Belgian territory fall within the scope of the PAD Act.
Timing
Given the general principles in respect of timing for the application of new legislation and since the Act of 24 July 1987 is of public order, existing contracts will have to be adapted (as from 10 January 2013) and will have to provide for more details in respect of the instructions given by third parties.
In separate updates we will comment on other aspects of the Programme Act of 27 December 2012.