Complications for the construction sector: liability for subcontractor wage claims

As of 1 January 2024, an amendment to the Labour Code came into force, which introduces an obligation for entrepreneurs in the construction sector to newly guarantee the payment of wages to the employees of their subcontractors, up to the minimum wage. This obligation is triggered by a written request from the employee and, in the event of non-compliance, a fine of up to CZK 2,000,000 is imposed.

The amendment, which is based on EU regulations, affects the construction industry. Entrepreneurs acting as general contractors must now be more careful when selecting subcontractors to avoid possible penalties. Liability applies not only to subcontractors but also to employment agencies.

Liability for wage claims will not arise unless the subcontractor presents the certificates of debt-free status provided for by the Labour Code when work commences. Contractors should therefore carefully monitor the financial condition of their subcontractors and secure the necessary certificates of debt-free status to avoid unpleasant financial liabilities. 
The full article by Markéta Polendová can be found HERE.