One link too many? The act of May 15, 2024 increases transparency in subcontracting

The Belgian construction sector is ever-evolving. Over the past year, the federal legislator introduced new rules, including the act of May 15, 2024, which lays a solid foundation for transparent subcontracting collaborations. This act, coming into effect on January 1, 2025, establishes clear guidelines for subcontracting in three sectors: real estate works, the meat processing industry, and the moving sector. What do these rules mean for subcontractors in construction, and how will they shape the industry? Attorneys Lauren D’hooghe and Stefanie Claeys provide insights into the new regulations with practical examples.

European pressure on fair working conditions in subcontracting

The act of May 15, 2024 is Belgium’s response to a recent study by the European Commission, revealing that workers in subcontracting are particularly vulnerable to exploitation. Both the length and complexity of the subcontracting chain can be used by some companies to evade taxes and social security contributions. The more intricate the chain, the harder it becomes to trace liabilities. The federal legislator addressed this practice by introducing new regulations, including a ban on full outsourcing and an additional chain limit for the moving industry.

‘Real estate works’ as an overarching framework

The act of May 15, 2024 applies to the moving sector, meat processing industry, and real estate works. The latter category extends beyond construction activities and encompasses all work performed on or involving immovable property. This includes the supply of movable goods that become immovable by their nature when added to a property. Tasks such as installing central heating, plumbing, and even building cleaning fall under the new rules.

Some examples to illustrate this:

Example 1: Permitted real estate work

Example 2: Prohibited real estate work

Chain restriction in the moving sector: the rule of three

The moving industry faces additional subcontracting limitations, known as the “chain restriction” with a maximum of three subcontractors. This rule ensures no more than three links exist between the client and the contractor, preventing long, opaque chains. Key points of clarification:

1 | Subcontracting chain 
A “subcontracting chain” exists as soon as orders are (partially) outsourced to another company. It’s essential to note that work outsourced to self-employed individuals can also be considered subcontracting.

2 | Written notification requirement 
Every subcontractor in the moving industry who outsources part of their work is bound by a written notification requirement. They must inform their subcontractor of their position within the “subcontracting chain.”

3 | Impact on the construction sector? 
The chain restriction currently applies only to the moving industry, as specified in the scope of Parity Subcommittee 140.05. This includes any movement of goods for third parties, intended for furnishing or equipping private or professional spaces. It’s important to note that the nature of these tasks determines whether an activity falls under these moving regulations. Companies and workers not within Parity Subcommittee 140.05 are still subject to these rules if they engage in activities related to moving.

An example of chain restriction in a move:

Act of May 15, 2024: New regulations, strict sanctions

Subcontractors who disregard the rules risk severe penalties. The newly introduced article 184/1/3 of the Penal Code imposes strict level-four sanctions, which are:

• Either imprisonment for six months to three years and/or a fine between €4,800 and €56,000.
• Or an administrative fine of €2,400 to €28,000 (including surcharges).

Given these strict measures, it’s essential to ensure your working methods and contracts are legally sound—both today and from 2025 onwards. NOMA is here to help you navigate these new regulations, carefully tailored to your unique situation.