The WAS and privacy rights of employees and other subordinates. How will the courts deal with it?

In 2015, the first part of the Law on Tackling Mock Constructions (WAS) came into effect. On January 1, 2016, the second part. The purpose of the WAS is to strengthen the legal position of employees and temporary workers and prevent unfair competition between companies through underpayment.

Chain liability is limited to those cases involving a contract of assignment or contracting of work. How the WAS works is by now familiar to most employers who often work together in a chain.

The central government's five-step plan

The central government has established guidelines around compliance with the WAS and formulated a five-step plan. The five steps are reproduced below:

1. Is the company with which a subcontract or assignment agreement is concluded registered in the Commercial Register of the Chamber of Commerce?
2. Is it a certified company and/or a company working with a seal of approval?
3. Is the client paying a good price for the work?
4. Are the agreements on terms and conditions of employment, working conditions, etc. that the subcontractor must comply with well established?
5. Intervene if things do go wrong and the company receives signals that there is underpayment in the chain.

If a company does not adequately comply with the aforementioned rules, there is a risk that employees or temporary workers working for the companies engaged at the bottom of the chain may bring their wage claims directly to one of the main principals. In addition, it can be disclosed that the main client is partly responsible for underpayment through the so-called public "naming and shaming list" available on the Internet.

The duty of verification

(Main) principals are expected to take the aforementioned obligations seriously and to actively ensure that the parties they work with (who are among them in the chain) also comply with the requirements of the law and applicable collective bargaining agreement.

In some collective bargaining agreements, the so-called duty of verification is elaborated. Article 9.2 of the CAO Metalektro, for example, states in paragraphs 3 and 4 what obligations the employer must fulfill when working with temporary workers and other personnel who are not so-called "employed workers. The duty of verification is specified here by collective agreement. Article 9.2 paragraph 6 states that the employer must "ascertain with respect to the remuneration of temporary workers that the provisions of paragraph 4 are applied." This requires an active attitude on the part of the employer or client aimed at verifying the correct payments of subordinates in the chain.

The Case Study

Recently, the Subdistrict Court of the District Court of Northern Netherlands ruled on a case involving this issue and compliance with the collective bargaining agreement. A shipyard made large-scale use of externally hired personnel in the performance of its work. This mainly involved many Polish temporary workers hired from a company that dealt with payroll, temping, payroll administration, etc. FNV disagreed with the state of affairs and made agreements with the shipyard aimed, among other things, at ceasing subcontracting and the use of (sham) self-employed workers, and paying housing costs. The parties also agreed that the shipyard would provide FNV with insight into the remuneration paid to all flexibly hired personnel.

Despite the agreements made, the shipyard refused to provide FNV with information on pay. FNV eventually initiated summary proceedings and demanded that the shipyard be ordered to send the necessary documents to allow FNV to check for underpayment.

On behalf of the shipyard, the defense raised at the hearing was that it could not provide this insight because the company it was working with - which functioned as an intermediary for all the flexible staff - did not want to provide the data, claiming it would violate privacy laws.

The subdistrict court did not consider this a good defense. The information could also have been sent anonymously so that it could be verified whether there was underpayment. In doing so, the shipyard should have actively ascertained, pursuant to the CAO Metalektro, that the correct remuneration was being applied by the shipyard itself and by the parties it had engaged in the chain among itself. The fact that the employment agency had the necessary certificates and had contractually stipulated that the temporary workers would be correctly remunerated was insufficient to assume that the duty of verification had been met. The claims were therefore upheld and the shipyard was required to still provide the requested salary information to FNV to enable verification of payments.

That the judge came to this judgment and allowed the shipyard's defense focused on the privacy rights of the employees that needed to be protected to weigh less heavily than the interest in paying correctly and keeping agreements is understandable. As FNV correctly pointed out, the salary data could also be supplied anonymously. Moreover, in order to comply with legal obligations, such as correctly determining the amount of salary, privacy-sensitive information may be processed. However, it is important that the information is protected with technical and organizational measures to prevent loss or unauthorized use of that information.

Tension provides information versus privacy

Why the company that hired flexible staff was not called in indemnity does not become clear upon examination of the ruling. What is visible, however, is the area of tension in which employers sometimes operate in which, on the one hand, information must be requested and, on the other hand, stricter privacy regulations must be taken into account. A good agreement in which concrete arrangements are made about this is important to prevent employees and other flexibly hired workers from laying any wage claims directly against the main client as the higher link in the chain. If, based on all the information that must be provided, FNV comes to the conclusion that the flexibly hired workers through the company that functioned as an intermediary were underpaid, these flexible workers can also sue the shipyard directly for this. The question is whether the shipyard took this into account.